The Members of Marathon Nextgen Realty Limited
Report on the Audit of theStandalone Financial Statements
We have audited the accompanying Standalone Financial Statements of Marathon NextgenRealty Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2020 the Statement of profit and loss(Including Other Comprehensive Income)Statement of changes in equity and Statement of Cash Flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "Standalone FinancialStatements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 312020 and its Profit including OtherComprehensive Income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of Standalone Financial Statementsin accordance with theStandards on Auditing specified under section 143(10) of the Act. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of theStandalone Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the Standalone Financial Statements under the provisions of the Act and theRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and theICAI's Code of Ethics. We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our opinion onStandalone Financial Statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the Standalone Financial Statements for the financial yearended March 31 2020. These matters were addressed in the context of our audit of theStandalone Financial Statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context. We have determined thematters described below to be the key audit matters to be communicated in our report. Wehave fulfilled the responsibilities described in the Auditor's responsibilities for theaudit of the Standalone Financial Statements section of our report including in relationto these matters. Accordingly our audit included the performance of procedures designedto respond to our assessment of the risks of material misstatement of the StandaloneFinancial Statements. The results of our audit procedures including the proceduresperformed to address the matters below provide the basis for our audit opinion on theaccompanying Standalone Financial Statements.
1. Investment in subsidiaries & joint ventures and loans/financial instruments togroup entities
(Refer note no 5A 5B 6 & 15 of standalone financial statements)
Recoverability of investment in subsidiaries & joint ventures: The Company'sinvestments in subsidiaries & joint ventures are carried at cost less any diminutionin value if any. The investments are assessed for impairment at each reporting date. Theimpairment assessment involves the use of estimates and judgements. The identification ofimpairment event and the determination of an impairment charge also require theapplication of significant judgement by the Company. The judgement in particular is withrespect to the timing quantity and estimation of projected cash flowsof the real estateprojects in these underlying entities. In view of the significance of these investmentsand above we consider valuation / impairment of investments in subsidiaries & jointventures to be a key audit matter.
How the matter was addressed in our audit
Our audit procedures included:
Evaluating design and implementation and testingoperating effectiveness ofcontrols over the Company'sprocess of impairment assessment and approval offorecasts.
Assessing the financial position of the subsidiaries & joint venturesassessingprofit history and project details of those subsidiaries & joint ventures.
Verifying the inputs used in the projected profitability.
Testing the assumptions and understanding theforecasted cash flows ofsubsidiaries &joint ventures based on our knowledge of the Companyand the markets inwhich they operate.
Assessing the comparability of the forecasts withhistorical information.
Analysing the possible indications of impairmentand understanding Company'sassessment of thoseindications.
Considering the adequacy of disclosures in respect of the investment insubsidiaries & joint ventures.
Recoverability of loans in the nature of project advances to and investment infinancial instruments of group entities:
The Company has extended loans to and invested in financial instruments of groupentities. These are assessed for recoverability at each period end. Due to the nature ofthe business in the real estate industry the Company is exposed to heightened risk inrespect ofthe recoverability of the loans/financial instruments granted to theaforementioned parties. In addition to nature of business there is also significantjudgment involved as to the recoverability of the project specific loans/financialinstruments. This depends on property developments projects being completed over the timeperiod specified in agreements. We have identified measurement of loans/financialinstruments to group entities as key audit matter because recoverability assessmentinvolves Company's significant judgement and estimate.
How the matter was addressed in our audit
Our procedures included:
Evaluating the design and implementation and testing operating effectiveness ofkey internal controls placed around the impairment assessment process of therecoverability of the loans/financial instruments.
Assessing the net worth of subsidiaries and joint ventures on the basis oflatest available financial statements.
Assessing the controls for grant of new loans/financial instruments and sightingthe Board approvals obtained.
Tracing loans/financial instruments advanced / repaid during the year to bankstatement.
Obtaining confirmations to assess completeness and existence of loans/financialinstruments and advances given to subsidiaries and joint ventures as on 31 March 2020.
2. Impact of COVID-19 Pandemic
(Refer note 50 to standalone Financial Statement)
Pursuant to outbreak of Coronavirus Disease (Covid-19) worldwide and its declaration asglobal pandemic the Government of India declared lockdown on March 24 2020 which led thetemporary suspension of operations of the Company and has impacted the overall businessactivities of the Company. The Company is in business of Real Estate development on itsown and through joint ventures and leasing of commercial space. These lockdowns andrestrictions due to COVID-19 pandemic have posed significantchallenges to the businessesof the Company.This required the Company to assess impactof COVID-19 on its operations.The Companyhas assessed the impact of COVID-19 on thefuture cash flow projections. In viewof the above weidentified impact of COVID-19 on going concernas a key audit matter.
How the matter was addressed in our audit
Obtained an understanding of key assumptions adopted by the Company in assessing theImpact based on our understanding of the Company's business.
Our procedures included:
Reviewed the status of long-term borrowings and company's availment ofmoratoriumto the repayment;
Reviewed the receivables and inventory position as at 31st March 2020 on thedate of report
Assessed impact of Government's announcement to lift the lockdown restrictionsand Company's plan to re-start the construction activity in a phased manner;
Assessed disclosures made in the standalone financial statementswith regard tothe above Refer to note 50.
The Company's Board of Directors is responsible for the Preparation of otherinformation. The other information comprises of the information included in theAnnualReport but does not include the Financial Statements and our auditor's report thereon.Our opinion on theStandalone Financial Statements does not cover the other information andwe do not express any form of assurance conclusion thereon. In connection with our auditof the Standalone Financial Statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with theStandalone Financial Statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors are responsible for the matters stated in section134(5) of the Act with respect to the preparation of theseStandalone Financial Statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including theIndian Accounting Standards specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of theStandalone Financial Statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.
In preparing theStandalone Financial Statements the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so. The Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of theStandalone Financial Statements
Our objectives are to obtain reasonable assurance about whether theStandalone FinancialStatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Standalone Financial Statements.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional scepticism throughout the audit.
Identify and assess the risks of material misstatement of theStandaloneFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 as amended we are also responsible for expressing our opinionon whether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures intheStandalone Financial Statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of theStandaloneFinancial Statements including the disclosures and whether theStandalone FinancialStatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Financial Statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 197(16) of the Act we report that the company has paidremuneration to its directors during the year in accordance with the provisions of thelimits laid down under Section 197 read with Schedule V of the Act.
3. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid Standalone Financial Statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2015 as amended.
(e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B''.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us :
1. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone Financial Statements - Refer Note no 39 to the StandaloneFinancial Statements
2. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
3. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
For Rajendra & Co
Firm's Registration No. 108355W
Akshay R. Shah
Membership No. 103316
Date: June 29 2020
"ANNEXURE A" TO THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONE FINANCIALSTATEMENTS OF MARATHON NEXTGEN REALTY LIMITED
(Referred to in Paragraph 1 under the heading of "Report on other legal andregulatory requirements" of our report of even date)
i. In respect of its fixed assets :
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.
b. As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable havingregard to the size of the Company and nature of its assets. No material discrepancies werenoticed on such physical verification.
c. The title deeds of immovable properties recorded as fixed assets in the books ofaccount of the company are in the name of the company except for the details given below:
|Land/Building ||Total number of cases ||Leasehold/ Freehold ||Gross block as on March 31 2020 (Rs. In lakhs) ||Net Block as on March 31 2020 (Rs. In Lakhs) ||Remarks |
|Land ||1 ||Freehold ||1.49 ||1.49 ||Unused FSI of self-developed project |
ii. Inventories comprise of car parking units unsold inventory expenditureincurred on acquisition of land development rights and other expenditure on constructionand development of the project of the company. As explained to us physical verificationof the inventories have been conducted at reasonable intervals by the management which inour opinion is reasonable having regard to the size of the Company and nature of itsinventories. No material discrepancies were noticed on such physical verification.
iii. The company has granted unsecured loans to Companies and a Limited LiabilityPartnerships covered in the register maintained under Section 189 of the Act.
(a) According to the information and explanations given to us and based on the auditprocedures conducted by us we are of the opinion that the terms and conditions of theaforesaid loans granted by the Company are not prejudicial to the interest of the Company.
(b) According to the information and explanations given to us and based on the auditprocedures conducted by us the unsecured loans granted to companies and limited liabilitypartnership and interest thereon are repayable on demandand schedule of repayment ofprincipal and payment of interest in respect of such loans has not been stipulated andhence we are unable to comment whether the repayments or receipts are regular and reporton amounts overdue for more than ninety days if any as required under Paragraph 3(iii)of the Order.
iv. According to the information and explanations given to us in respect of loansgranted investments made guarantees provided and securities provided the Company hascomplied with the provisions of Section 185 of the Act. Further the provisions of section186 of the Act except Sub section 1 are not applicable to the Company as it is engaged inthe business of providing infrastructural facilities.
v. In our opinion and according to the information and explanations given to usthe Company has not accepted any deposits within the meaning of provisions of sections 73to 76 or any other relevant provisions of the Act and the rules framed there under.Therefore the clause (v) of paragraph 3 of the Order is not applicable to the Company.
vi. The Central Government has prescribed the maintenance of cost records under subsection (1) of Section 148 of the Act and rules framed there under. However at presentthe Company does not fall under the criteria for which such records are required to bemaintained. Hence the said rules are not applicable to the Company.
vii. In respect of Statutory dues :
a. According to the records of the Company undisputed statutory dues includingProvident Fund Employees'State Insurance Income Tax Sales Tax Service Tax CustomDuty Excise Duty Value Added Tax Cess Goods and Service tax and any other statutorydues have been generally regularly deposited with appropriate authorities. According tothe information and explanations given to us no undisputed amounts payable in respect ofthe aforesaid dues were outstanding as at 31st March 2020 for a period ofmore than six months from the date becoming payable.
b. According to the information and explanations given to us the dues outstanding withrespect to Income tax Excise duty Sales tax Value added tax on account of any disputeare as follows:
|Name of the statute ||Nature of dues ||Amount (Rs.in Lakhs)# ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise Act 1944 ||Excise duty including penalty ||24.58 ||1994- 95 1995- 96 ||Central Excise & Service tax Appellate Tribunal (CENSTAT) |
|Central Excise Act 1944 ||Penalty ||0.15 ||1998-99 ||Commissioner of Central Excise (Appeal) |
|Central Excise Act 1944 ||Excise duty ||14.63 ||1977-78 1983-84 ||Deputy Commissioner of Central Excise (Appeal) |
|Income Tax Act 1961 ||Income Tax ||4.31 ||Asst. year 2010-11 2011-12 2012-13 ||Deputy Commissioner of Income tax |
|The Maharashtra Value Added Tax Act 2002 ||Value Added Tax ||4131.10* ||2006-07 2007-08 2009-10 ||Deputy Commissioner Sales Tax (Appeal) |
^Excluding applicable interest and penalties #Net of Amount paid under protest.
viii. In our opinion and according to the information given to us the Company hasnot defaulted in repayment of loans or borrowings to financial institution or bank and didnot have any outstanding dues payable to Government or to debenture holders.
ix. In our opinion and according to the information and explanations given to usthe money raised by way of term loan has been applied by the Company for the purpose forwhich they were raised. The Company has not raised money by way of initial public offer orfurther public offer (including debt instruments)
x. In our opinion based on the audit procedures performed for the purpose ofreporting the true and fair view of the Standalone Financial Statements and as perinformation and explanations given to us no fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year.
xi. According to the information and explanations given to us managerialremuneration has been paid/ provided in accordance with the requisite approvals mandatedby the provisions by the provisions of Section 197 read with Schedule V to the Act.
xii. In our opinion Company is not a Nidhi Company and hence reporting under theprovisions of clause (xii) of paragraph 3 of the Order is not applicable to the Company.
xiii. In our opinion and according to the information and explanations given to usall transactions with related parties are in compliance with sections 177 and 188 of theAct and details of related party transactions have been disclosed in the StandaloneFinancial Statements etc. as required by the applicable accounting standards.
xiv. In our opinion and according to the information and explanations given to usthe Company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year and hence reporting under clause(xiv) of paragraph 3 of the Order is not applicable to the Company.
xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transaction with thedirectors or persons connected with him and covered under section 192 of the Act and hencereporting under clause (xv) of the paragraph 3 of the Order is not applicable to theCompany.
xvi. In our opinion and according to the information and explanations given to usthe Company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934.
For Rajendra & Co
Firm's Registration No. 108355W
Akshay R. Shah
Membership No. 103316
Date: June 29 2020
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT ON THE STANDALONE FINANCIALSTATEMENTS OF MARATHON NEXTGEN REALTY LIMITED
(Referred to in paragraph 3 (f) under 'Report on Other Legal and RegulatoryRequirements' of our report of even date)
Report on the Internal Financial Controls with reference to Standalone FinancialStatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act")
We have audited the Internal Financial Control with reference to standalone financialstatements of MARATHON NEXTGEN REALTY LIMITED ("the company") as of 31stMarch 2020 in conjunction with our audit of the Standalone Financial Statements of theCompany for the year ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at March 312020 based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls With reference to standalone financial statementsissued by the Institute of Chartered Accountants of India (the "Guidance Note").
Management Responsibility for the Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to standalone financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls Withreference to standalone financial statements (the "Guidance Note") issued by theInstitute of Chartered Accountants of India ("ICAI"). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note issued by ICAI and the Standardson auditing prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to standalonefinancial statements was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to standalone financial statementsand their operating effectiveness. Our audit of internal financial controls with referenceto standalone financial statements included obtaining an understanding of internalfinancial controls with reference to standalone financial statements assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Standalone Financial Statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to standalone financial statements.
Meaning of Internal Financial Controls with reference to Standalone FinancialStatements
A company's internal financial control with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of Standalone Financial Statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial control with reference to standalone financial statements includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of Standalone Financial Statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone Financial Statements.
Inherent Limitations of Internal Financial Controls with reference to StandaloneFinancial Statements
Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
For Rajendra & Co
Firm's Registration No. 108355W
Akshay R. Shah
Membership No. 103316
Date: June 29 2020.