The Members of
PODDAR HOUSING AND DEVELOPMENT LIMITED
REPORT ON THE STANDALONE IND AS FINANCIAL STATEMENTS
We have audited the accompanying standalone Ind AS financial statements of PODDARHOUSING AND DEVELOPMENT LTD. ("the Company") which comprise the Balance Sheetas at 31st March 2020 the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as the standalone financialstatements'').
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India including India Accounting Standards (Ind AS') specified under section 133of the Act of the state of affairs (financial position) of the Company as at 31stMarch 2020 and its loss (financial performance including other comprehensive income) itscash flows and the changes in equity for the year ended on that date.
BASIS OF OPINION
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our Opinion thereon and we do not provide aseparate opinion on these matters.
We have determined the matters described below to be the key audit matters to becommunicated in our report:
|Key audit matter ||How our audit addressed the key audit matter |
|Revenue Recognition for Real Estate Development activity ||Our audit procedures included among others the following: |
|Ind AS 115 on "Revenue from Contracts with Customers" inter alia could have the significant impact on the manner in which an entity in real estate industry recognises its revenue. Under Ind AS 115 revenue is recognised over a period (as known a Percentage of Completion Method POCM) or at a point in time (as known as Project Completion Method - PCM). || Evaluated the structure of the internal controls in terms of the requirements of Ind AS 115 for the manner of recognising revenue; |
|To determine the revenue to be recognised under Ind AS 115 and the impact thereof the management undertook assessment of its contracts with customers that were not completed and more particularly for its upcoming Real Estate Development Project ("the upcoming project"). || Evaluated the accounting policies in relation to recognising revenue; |
|On assessment the management considered to recognise revenue from the upcoming project at a point in time (PCM) that is upon receipt of Occupation Certificate ("OC"). || Evaluated its existing contracts with customers as well as template contracts to be used henceforth and the analysis performed by management for each contract by selecting samples for such contracts with customers; |
|For its ongoing project the Company has been following Percentage of Completion Method POCM during the year ended March 31 2019 and March 31 2020 respectively. || Based on the evaluation of contracts assessed the appropriateness to adopt POCM and PCM as policy for revenue recognition for the ongoing and upcoming projects; |
|Accordingly on satisfying performance obligations under contracts the Company has recognised revenue as per POCM that is at a point in time. || Examined the process and related documents (like phase wise OC possession letters) to determine the satisfaction of performance obligations of contracts under ongoing project during the year; |
|For the upcoming projects the company will be following PCM method and till that period the cost incurred is carried as Work-in-progress. || Evaluated the appropriateness and assessed the completeness of disclosures in accordance with the requirements of Ind AS 115. |
|[Refer Note "1(m)" to significant accounting policy and Notes 27 to the standalone financial statements] || |
|Physical Verification of Inventories: || |
|The Company's inventories include raw materials work-in-progress finished goods stock-in-trade stores spares. ||Since it was impracticable for us as auditors to attend in the physical verification of inventories our alternative audit procedures to obtain sufficient appropriate audit evidence regarding the existence and condition of inventories include the following: |
|The Company has adequate inventory records and system as also internal controls over inventory movements and records. || Evaluated the control design in respect of inventory process and testing (encompass the processes around inventory movements) whether such controls have operated effectively during the period of audit; |
|Physical verification of inventories at site was carried out during the year and details thereof were provided to us. || Obtained details/documents of existence and condition of physical inventories as carried out by the management during the year and subsequent to the year-end as the case may be; |
|Due to various restrictions imposed under COVID-19 outbreak physical verification could not be carried out at the year-end but the same was carried out subsequent to the year-end. || Verification of stock-in-trade subsequent to the year- end where physical verification was attended by us |
|At the time of such subsequent verification we have ascertained consumption and purchases made after 31st March 2020. We have applied rollback procedures and calculated stock as at 31st March 2020 and the same matches in principle. || The count was carried for all items of inventories on sample basis and in some cases of on the best judgement basis as also on the basis of previous experience of conducting inventory count; |
|This matter is considered to be key audit matter given the circumstances of physical verification of inventories under COVID-19 vis--vis non-COVID-19 scenario. || Rollback procedures were applied to arrive at the inventories as verified by the Company as at the year- end; |
| || Related documents were verified that indirectly support and corroborate the existence of inventories at the year- end; |
|External Confirmations: ||Our audit procedures included among others the following: |
|COVID-19 has impacted the procedure of external confirmation request to vendors and customers at the year-end and therefore positive external confirmation request was sent through electronic mode. However due to suspension of business activities of the many confirming parties most confirmations were not received. || Revised assessed risk and modify our audit procedures to mitigate these risks; |
|The Company seeks and had sought confirmations from vendors and customers during the year. || Obtained a reliable assurance pertaining to transactions with confirming parties in sense for accurate and complete process of routine and significant classes of transactions such as revenue purchases etc.; |
|In such events we auditors performed alternative audit procedures. || Selected samples and tested the effectiveness of controls related to accuracy and completeness of transactions in totality considering the frequency and regularity of transactions; |
|This matter is considered to be key audit matter given the circumstances || |
|of the year-end confirmations under COVID-19 vis--vis non-COVID-19 scenario. || Performed alternative audit procedures like |
| ||- For accounts receivable balances: scrutiny of ledger accounts and verification of subsequent receipts; |
| ||- For accounts payable balances: scrutiny of ledger accounts and other documents/records such as bills from vendors supported by goods received notes. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS REPORT THEREON
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report including Annexuresto Board's Report Management Discussion and Analysis Corporate Governance andShareholder's Information and Business Responsibility Report but does not include thestandalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the state of affairs(financial position) profit or loss(financial performance including other comprehensive income) changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statement as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalscepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to standalone financial statements inplace and the operating effectiveness of such controls.
- Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern 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 standalone 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 the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant de_ciencies 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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.
The financial statements of partnership firm's and LLP are audited by other auditorswhose reports have been furnished to us by the Management and our opinion on thestandalone financial statements in so far as it relates to the amounts and disclosuresincluded in respect of these partnership firms and LLP is based solely on such auditedfinancial statements.
The financial statements of partnership firms and LLP are audited by other auditorswhose reports have been furnished to us by the Management. The financial information(before eliminating inter-company balances) reflect total assets of H3607.57 lakhs andnet assets of H47.01 lakhs as at 31st March 2020 and total revenues of H Niland Total Loss of H Nil lakhs for the year ended on that date. Our opinion on thestandalone financial statements in so far as it relates to the amounts and disclosuresincluded in respect of these partnership firms and LLP is based solely on such auditedfinancial statements. These firms and LLP have been treated as jointly controlledoperations by the management.
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" a statement on the mattersspecified in the paragraphs 3 and 4 of the Order to the extent applicable.
2. 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 purpose 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) Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014.
e) On the basis of 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 termsof 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 B"; and
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:
i. The Company has disclosed the impact of pending litigations on the financialposition in the standalone Ind AS financial statements - refer Note 36 to the standalonefinancial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure A to the Auditor's Report
The Annexure referred to in Paragraph 1 of the Auditors Report of Even date to theMembers of PODDAR HOUSING AND DEVELOPMENT LTD.
Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
1) a. The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.
b. We are informed that the Company has carried out physical verification of fixedassets during the year.
c. According to information and explanations given to us and on the basis ofexamination of the documents the title deeds of the immovable property included in thefixed assets are registered in the name of the Company.
2) a. The inventories have been physically verified by the management and by us duringthe year. In our opinion the frequency of verification is reasonable.
b. The procedures for physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
c. The Company is maintaining stock records and discrepancies noticed were notsignificant between book records and physical verification.
3) The Company has granted unsecured loans to companies covered in the registermaintained under Section 189 of the Act; and with respect to the same:
a. in our opinion the terms and conditions of grant of such loans are not prima facieprejudicial to the Company's interest;
b. the schedule of repayment of principal and payment of interest has been not beenstipulated as such payment is in the nature of quasi capital and repayment thereof woulddepend on surplus cash flow with that subsidiary. The repayment/receipts of the principalamount and the interest are regular;
c. Since repayment is dependent on surplus cash flow there is no overdue in respect ofloans granted to such company.
4) As per the information and explanations given to us there are no transactionsduring the year in respect of loans investments guarantees and security in contraventionto section 185 and 186 of the Act.
5) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
6) We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records undersubsection (1) of Section 148 of the Act in respect of Company's products and services andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. However we have not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.
7) a. The Company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax goods and services tax duty ofcustoms cess and other material statutory dues as applicable with the appropriateauthorities. Further no undisputed amounts payable in respect thereof were outstanding atthe year-end for a period of more than six months from the date they became payable.
b. The are no dues outstanding in respect of income-tax goods and services tax dutyof customs or any other statutory dues on account of any dispute.
8) The Company has not defaulted in the loans or borrowings to a financial institutionbank and government.
9) The Company did not raise moneys by way of initial public offer or further publicoffer. The Company has raised money by way of term loans during the year. Accordingly theamount were utilised for the purpose it was raised.
10) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud on or by the Company noticed or reported during the year nor have webeen informed of such case by the management.
11) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has complied with the provisions ofSection 197 read with Schedule V of the Act in respect of the managerial remuneration.
12) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
13) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in standalone Ind AS financial statements as required bythe applicable Indian accounting standards.
14) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares.
15) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.
16) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Annexure B to the Auditor's Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of PODDARHOUSING AND DEVELOPMENT LIMITED ("the Company") as of 31st March 2020in conjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company are responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial control andboth issued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial 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 standalone Ind AS financial statements whether due to fraudor 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 Controls 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 standalone Ind AS financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone Ind AS 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 Ind AS 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2020based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.