TO THE MEMBERS OF MVL LTD
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of MVL Limited ("theCompany") which comprise the balance sheet as at 31st March 2018 and thestatement of Profit and Loss (including other comprehensive income) the Statement ofChanges in Equity and statement of cash flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information.
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 Act in the manner so required and give a qualified opinion in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at March 312018 and profit/loss and its cash flows for the year ended on thatdate.
II. Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
1. a) Note No. 31 in respect of non-provision of interest with retrospectiveeffect from 01.04.2014 (vide Board Resolution dated 17.02.2015) on loans from banks andfinancial institutions declared as Non-Performing Account (NPA). As a resultof non-provision of said interest of Rs.444261296/- (Previous Year 474140387/-)payable during the year on the said NPA Accounts: -
b) Revenue from operation has been understated by Rs.47886134/- (previousyear Rs.44998789/-) arising out of percentage of completion (POC) method of accountingdue to non-capitalization of interest directly attributable to project work-in-progress.
c) Loss from operation has been understated by Rs. 393913501/- (previous yearRs.429141598/-)
IV. Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements to give a true and fair view of the financialposition financial performance (including other comprehensive income) cashflows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards specified in the Companies(Indian Accounting Standards) Rules 2015 (as amended) under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
V. Auditor's Responsibilities for the Audit of the Financial Statements
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. Our objectives are to obtain reasonable assurance aboutwhether the financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurancebut is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken onthe basis of these financial statements. Paragraph40(b) of this SA explains that the shaded material below can be located in an Appendix tothe auditor's report. Paragraph 40(c) explains that when law regulation or applicableauditing standards expressly permit reference can be made to a website of an appropriateauthority that contains the description of the auditor's responsibilities rather thanincluding this material in the auditor's report provided that the description on thewebsite addresses and is not inconsistent with the description of the auditor'sresponsibilities below.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
a) Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
b) Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(10) of theCompanies act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
c) Conclude on the appropriateness of management's use of the goingconcern basis ofaccounting 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 inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
d) Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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.
VI. Other Matter
Our opinion is empasshized in respect of following matters. Attention is invited to: -
a) Note No. 41 of the accompanying financial statements there exists materialuncertainty over the realizability of certain loans and advances claimed as given/advancedfor purchase/acquisition of land rights projects or properties which are pending eitherfor transfer of property or refund of advances aggregating Rs. 1161.46 Lacs as on31.3.2018 (previous year Rs. 1469.70 lacs). Out of these advances we are unable toascertain whether the outstanding advances are fully recoverable/ adjustable since thesame are outstanding/remained unadjusted for long. In the absence of some of confirmationswe are unable to ascertain the impact if any that may arise on any future date in caseany of these advances are subsequently determined to be doubtful for recovery.
b) Note No. 29 in respect of non-availability of confirmations in respect of somedebit and/or credit balances. In the absence of such confirmations any provision to bemade for the adverse variation in carrying amounts of these balances are not quantifiedas well as the quantum of adjustment if any required to be made remain unascertained.
VII. 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 Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143 (3) of the Act based on our audit we report to theextent applicable 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on31st March 2018 taken on record by the Board of Directors none of thedirectors is disqualified as on 31st March 2018 from being appointed as adirector in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule11 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:
i. The company has disclosed the impact of pending litigation on its financial positionin its financial statement.
ii. The company has made provision as required under the applicable law or IndianAccounting Standards for material foreseeable losses if any on long term contractsincluding derivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor's Education and Protection Fund by the company.
For GARG SANDEEP& CO.
Chartered Accountants Firm Registration No.029283N
Place : New Delhi Date : 29/05/2018
(CA. Sandeep Garg)
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THEFINANCIAL STATEMENTS OF MVL LIMITED
Report on the Internal Financial Controls Over Financial Reporting under Clause(i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of MVL LIMITED("the Company") as of 31st March2018 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date
Management's Responsibility for Internal Financial Control
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.
Our responsibility is to express an opinionon the Company's internal financial controlsover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India andthe Standards on Auditing prescribed under Section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting 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 over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the 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 systemover financial reporting.
Meaning of Internal Financial Control over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312018 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
For GARG SANDEEP& CO.
Chartered Accountants Firm Registration No.029283N
Place : New Delhi Date : 29/05/2018
(CA. Sandeep Garg)
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' Section of our report of even date)
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Major fixed assets were physically verified during the year by the Management inaccordance with a regular program of verification which in our opinion provides forphysical verification of the fixed assets at reasonable intervals. No materialdiscrepancies were noticed on such verification.
(c) The title deeds of immovable properties are held in the name of the company.
a) The inventory includes land material at site and project work in progress which isinclusive of other direct and indirect costs. As explained to us inventories of buildingmaterials are physically verified by the management at reasonable intervals.
b) In our opinion and according to the information and explanations given to us theprocedure of physical verification of inventories followed by the management wasreasonable and adequate in relation to the size of the company and the nature of itsbusiness.
c) In our opinion and according to the information and explanations given to us thecompany has maintained proper records of its inventories of building material. No materialdiscrepancies were noticed on verification between physical stocks and book records.
In respect of unsecured loans granted to the companies firms or other parties coveredin the register-maintained u/s 189 of the Companies Act 2013 according to the explanationand information given to us: -
a) The company has granted loans to their group companies as at the year end theoutstanding balance of such loan was Rs.2726.45 Lacs and the maximum outstanding at anytime during the year was Rs. 2726.45 Lacs. In our opinion loans to their group companiesare prima facie prejudicial to the interest of the company.
b) Company is not receiving the principal amounts as stipulated and restipulated and nointerest is charged on loan of Rs.239.56 Lacs to group companies. Repayments and receiptsare not regular from group companies.
c) Since the loan is repayable on demand but company is doubtful about recovery.
d) Since the company has not taken any loans secured or unsecured provisions of clause4 (iii) (e) (f) & (g) of the company (Auditors Report) Order 2016 are not applicable.
The Company has provided guarantees and has complied with the provisions of section 185and section 186 of Company Act 2013 in respect of grant of loan making investment andproviding guarantees and securities as follow:-
a) The provision of section 185 are not applicable since the company has not advancedany loan to directors
b) Loan and advance / guarantee provided to related parties are detailed under note no.38 are not in conformity with sub clause 5 of section 186 of Companies Act 2013.
The company has not accepted deposits during the year and does not have any unclaimeddeposits as at 31st March 2018. Hence reporting under clause 3(v) of the Orderis not applicable to the Company.
The maintenance of cost records has not been specified by the Central Government undersection 148(1) of Company Act 2013 for the business activities carried out by thecompany. Hence reporting under clause 3(vi) of the Order is not applicable to the Company.
According to the information and explanations given to us in respect of statutorydues:
a) According to the information and explanations given to us company is not regular indepositing undisputed amounts in respect of provident fund investor education andprotection fund employee state insurance income tax sales tax wealth tax service taxcustom duty excise duty cess and any other material statutory dues as applicable whichwere outstanding as at 31st March 2018 for a period of more than 6 months from the datethey became payable are Rs. 242.25 Lacs (Previous year Rs. 312.85 Lacs) as the balancesheet date.
b) According to the information and explanations given to us following dues have notbeen admitted payable on account of disputes /appeals pending with appropriateauthorities: -
|S. No. ||Name of the statute ||Period ||Amount under dispute (Rs. in Lacs) ||Forum where dispute is pending |
|1. ||Income Tax ||A.Y. 2012-13 ||3.01 Lacs ||CIT (Appeals) New Delhi |
|2. ||Income Tax ||A.Y. 2013-14 ||41.47 Lacs ||CIT (Appeals) New Delhi |
|3. ||Income Tax ||A.Y. 2014-15 ||62.56 Lacs ||CIT (Appeals) New Delhi |
|4. ||Service Tax ||Upto 31.03.2015 ||589.39 Lacs* ||CSTAT New Delhi |
| || ||Total ||696.43 Lacs || |
*The above figures are exclusive of interest if any payable thereon
c) Based on the information and explanations obtained the company has no liability orrequirement to transfer any amount to Investor Education & Protection Fund inaccordance with the relevant provisions of the Act and the Rules there-under.
viii) Refer note no. 34 the Company has defaulted in the repayment of loans orborrowings to banks. The Company has taken borrowings from financial institutions anddeclared NPA and has not issued any debentures.
ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3 (ix)of the Order is not applicable to the Company.
x) To the best of our knowledge and according to the information and explanations givento us no fraud by the Company and no material fraud on the Company by its officers oremployees has been noticed or reported during the year.
xi) In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
xii) The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theOrder is not applicable to the Company.
xiii) The provisions of section 177 of the Act are not applicable to the Company. Inour opinion and according to the information and explanations given to us the Company isin compliance with Sections 188 of the Act where applicable for all transactions withthe related parties and the details of related party transactions have been disclosed inthe financial statements etc. as required by the applicable Indian accounting standards.
xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause 3(xiv) 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 transactions with itsdirectors or persons connected with them and hence provisions of section 192 of the Actare not applicable.
xvi) The Company is required to be registered under section 45-IA of the Reserve Bankof India Act 1934 and it has obtained the registration.
For GARG SANDEEP& CO.
Chartered Accountants Firm Registration No.029283N
Place : New Delhi
(CA. Sandeep Garg)
Date : 29/05/2018