Prajay Engineers Syndicate Ltd.
|BSE: 531746||Sector: Infrastructure|
|NSE: PRAENG||ISIN Code: INE505C01016|
|BSE 00:00 | 01 Apr||4.94||
|NSE 00:00 | 03 Apr||4.90||
|Mkt Cap.(Rs cr)||35|
|Mkt Cap.(Rs cr)||34.55|
Prajay Engineers Syndicate Ltd. (PRAENG) - Auditors Report
Company auditors report
To the Members of Prajay Engineers Syndicate Limited Report on theAudit of the Standalone Financial Statements Opinion
We have audited the standalone financial statements of Prajay EngineersSyndicate Limited("the Company) Which comprise the standalone balance sheet as at 31March 2019 the standalone statement of profit and income) the standalone statement ofchanges in equity and the standalone statement of cash flows for the year than ended andnotes to the standalone financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as"Standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statement give theinformation required by the Companies Act 2013 (the Act') in the manner sorequired and give a true and fair view in Conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2019its profit/loss and other comprehensive income changes in equity and its cash flows forthe year ended on the date.
Basis for Opinion
We Conducted our audit in accordance with the Standards on Auditing(SAs)specified under section 143 (10) of the Act. Our responsibilities under those SAs arefurther described in the Auditors' Responsibilities for the Audit of the StandaloneFinancial 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 thestandalone financial statements under the provisions of the Act and Rules thereunderandwehavefulfilledour other ethical responsibilities in accordance with theserequirements and the code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matters
We draw attention to below mentioned Notes to standalone annualfinancial results : a. Note No. 44 relating to case filed in Hyderabad Bench of NCLTagainst the company b. Note No. 41 relating to a demand notice received by the company c.Note No. 45 relating to reasons for not submitting the audited financial results for thequarter and financial year ended 31 March 2019. d. Note No. 39(a) of the StandaloneFinancial Statements in respect of trade receivable considered good include an amount ofRs.19566.17 Lakhs due from customers which are outstanding for more than six months. Weare unable to comment on the realization of these receivables in the absence ofconformation from the concerned parties. An amount of Rs.1246.96 Lakhs is set asidetowards provision for trade receivables considered as doubtful. e. Note No. 39(b) of thestandalone financial statements in respect of Loans & Advances amounting toRs.6331.14 Lakhs towards purchase of Land/Development towards certain project of long termnature and an amount of Rs.1845.51 Lakhs given to suppliers etc outstanding from earlieryears. We are unable to comment on the realization of these advances. An amount ofRs.700 Lakhs is set aside towards provision for Advances considered as doubtful. Ouropinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentWere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
Revenue recognition (refer note 3.1 to the standalone financialstatements)
Inventories (refer note 11 to standalone financial statements)
Land Advances - (refer note 10 to thestandalonefinancialstatements)
Investment in subsidiaries and loans to group companies ( refer to note8 9 and 10 to the standalone financial statements)
The Company's Management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the standalone financial statements andour auditors' report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statement orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.
Management's Responsibility for the Standalone FinancialStatements
The Company's Management and Board of Directors are responsiblefor the matters stated in Section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs profit/ loss and other comprehensive income changes in equity and cash flow ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) 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 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 of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements Management and Boardof Directors are responsible for assessing the Company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using theconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.
Board of Directors is also responsible for overseeing theCompany's financial reporting process.
Auditors' Responsibility for the audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalonefinancialstatements as a whole are free from material misstatement whether dueto fraud or error and to issue an auditors'report that includes our opinion.Reasonable assurance is a high level of assurance but 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 reasonablybeexpectedtoinfluencethe economicdecisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise Professionaljudgement and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such controls.
>Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting andbased on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern . If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation. We Communicate with those charged with governance regardingamong other matters the planned scope and timing of the audit and significant auditfindings including any significant deficiencies in internal control that we identifyduring our audit. We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
As required by the Companies(Auditor's Report)Order2016(theOrder') issued by the Central Government of India in terms of Section 143(11)of theAct we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
(A) As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and Belief were necessary for the purposes of ouraudit; (b) In our opinion proper books of account as required by law have been kept bythe Company so far as it appears from our examination of those books; (c) Thestandalone balance sheet the standalone statement of profit and loss(including othercomprehensive income) the standalone statement of changes in equity and the standalonestatement of cash flows dealt with by this report are in agreement with the books ofaccount; (d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act; (e) On thebasis of the written representations received from the directors as on 31 March 2019 takenon record by the Board of Directors none of the directors is disqualified as on 31March 2019 from being appointed as a director in terms of Section 164 (2) of the act; and(f) With respect to the adequacy of the internal financial controls with reference to thestandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theExplanations given to us : (i) The Company has disclosed the impact of pending litigationsas at 31 March 2019 on its financial position in its standalone financial statements -Refer Note 34 41 & 44 to the standalone financial statements; (ii) The Company didnot have any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses; (iii) There has been no delay in transferring amountsrequired to be transferred to the Investor Education and Protection Fund by the Companyduring the year ended 31 March 2019; and (iv) The disclosures in the standalone financialstatements regarding holdings as well as dealings in Specified Bank Notes during theperiod from 8 November 2016 to 30 December 2016 have not been made in these standalonefinancial statements since they do not pertain to the financial year ended 31 March 2019.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT 31 MARCH2019
With reference to the Annexure A referred to in the IndependentAuditors' Report to the members of the Company on the standalone financial statementsfor the year ended 31 March 2019 we report the following: (i) (a) The Company hasmaintained proper records showing full particulars including quantitative details andsituation of property plant and equipment and investment properties.
(b) The Company has a regular programme of physical verification of itsproperty plant and equipment and investment properties by which the property plant andequipment and investment properties are verified by the management according to a phasedprogramme designed to cover all the items over a period of three years.
In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets. In accordance withthe policy the Company has physically verified certain property plant and equipment andinvestment properties during the year and no discrepancies were noticed in respect ofassets verified during the year.
(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.
(ii) The company inventory includes construction work in progressaccordingly the requirements under paragraph 3(ii) of the Order is not applicable forconstruction work in progress. The inventory comprising of finished goods has beenphysically verified by the management during the year. In our opinion the frequency ofsuch verification is reasonable. No discrepancies were noticed on verification between thephysical stocks and the book records. (iii) The Company has granted unsecured loans tocompanies limited liability partnerships covered in the register maintained under Section189 of the Companies Act2013 (the Act'). The Company has not granted anyloans secured or unsecured to firms or other parties covered in the register required tobe maintained under Section 189 of theAct.
(a) According to the information and explanations given to us and basedon the audit procedure conducted by uswe are of the opinion that the rate of interest andother terms and conditions of unsecured loans granted by the Company to companies andlimited liability partnerships covered in the register required to be maintained underSection 189 of the Act are not prima facie prejudicial to the interest of the Company.
(b) According to the information and explanations given to us and basedon the audit procedures conducted by us the unsecured loans granted to companies andlimited liability partnerships and the interest there on are repayable on demand. Theborrowers have been regular in payment of principal and interest as demanded.
(c) There are no overdue amounts of more than 90 days in respect of theunsecured loans granted to companies and limited liability partnerships by the Company.
(iv) In our opinion and according to the information and explanationsgiven to us and based on the audit procedures conducted by us the Company has compliedwith the provisions of Section 185 and 186 of the Act with respect to loans grantedguarantees provided and investments made by the Company. The Company has not provided anysecurity during the year to the parties covered under Section 185 and 186 of the Act.Accordingly compliance under Section 185 and 186 of the Act in respect of providingsecurities is not applicable to the Company. (v) In our opinion and according to theinformation and explanations given to us the Company has not accepted deposits as per thedirectives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 orany other relevant provisions of the Act and the rules framed there under. Accordinglyparagraph 3 (v) of the Order is not applicable of the Company. (vi) We have broadlyreviewed the books of accounts maintained by the Company pursuant to the rules prescribedby the Central Government for the maintenance of cost records under Section 148 (1) of theAct and are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. However we have not made a detailed examination of the records.
(vii) (a) According to the information and explanations given to us andon the basis of our examination of records of the Company amounts deducted / accrued inthe books of account in respect of undisputed statutory dues including Provident FundEmployees' State Insurance Goods and Service Tax Labour Cess Professional TaxCess and other material statutory dues have been regularly deposited during the year bythe Company with the appropriate authorities. Amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues of Income Tax have generally beenregularly deposited during the year by the Company with the appropriate authoritiesthough there have been slight delays in a few cases. As explained to us the Company didnot have any dues on account of wealth tax. According to the information and explanationsgiven to us no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Professional Tax Property Tax Labour Cess Goods and Service Tax Cessand other material statutory dues were in arrears as at 31 March 2019 for a period of morethan six months from the date they became payable.
(b) According to the information and explanations given to us thereare no dues of Income Tax Sales Tax Service Tax Value Added Tax Goods and Service Taxas at 31 March 2019 which have not been deposited with the appropriate authorities onaccount of any dispute except as stated below:
(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted during the year in repayment of loans orborrowings to banks or financial institutions or dues to debenture holders. The Companydoes not have any loans or borrowings from government during the year.
(ix) According to the information and explanation given us and based onour examination of the records of the Company the Company has not raised any moneys byway of initial public offer or further public offer (including debt instruments) and hasnot obtained any term loans during the year. Accordingly paragraph 3(ix) of the Order isnot applicable to the Company. (x) During the course of our examination of the books andrecords of the Company carried out in accordance with the generally accepted auditingpractices in India and according to the information and explanations give to us we haveneither come across any instance of material fraud by the Company or on the Company by itsofficers or employees noticed or during the year nor have we been informed of any suchcase by the management.
(xi) Based upon the audit procedures performed and the information andexplanations given by the management during the year the managerial remuneration is notpaid or provided. Hence specific approvals from Central Government with reference tosection 197 read with Schedule V to the companies Act does not arise.
(xii) In our opinion and according to the information and explanationsgive to us the Company is not a Nidhi company and the Nidhi Rules 2014 are notapplicable to it. Accordingly paragraph 3 (ix) of the Order is not applicable to theCompany. (xiii) In our opinion and according to the information and explanations given tous the Company has entered into transactions with related parties in compliance with theprovisions of Section 177 and 188 of the Act. The details of such related partytransactions as been disclosed in the standalone financial statements as required byIndian. Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section133 of theAct.
(xiv) Based upon the audit procedures performed and the information andexplanations give by the management the Company as not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review. Accordingly the provisions of clause 3 (xiv) of the Order are notapplicable to the company and hence not commented upon.
(xv) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not enteredinto any non-cash transactions with directors or persons connected with them. Accordinglyparagraph 3 (xv) of the Order is not applicable to the Company.
(xvi) In Our opinion and according to the information and explanationsgiven to us the company is not required to be registered under Section 45 IA of theReserve Bank of India Act 1934. Accordingly paragraph 3 (xvi) of the Order is notapplicable to the Company.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT 31 MARCH2019
Report on the Internal Financial Controls with reference to theaforesaid standalone financial statements under Clause (I) of Sub-section 3 of Section 143of the Companies Act 2013 ("the Act") (Referred to in paragraph (A) (f) underReport on Other Legal and Regulatory Requirements' section of our report ofeven date)
We have audited the internal financial controls with reference tostandalone financial statements of Prajay Engineers Syndicate Limited (" TheCompany") as of 31 March 2019 financialstatements of the Companyconjunctionwithourauditofthestandalone for the year ended on the date.
In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls were operating effectively as at 31 March 2019 based on theinternal financial financialstatements criteria established by the Company considering theessential controlswithreferencetostandalone components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe institute of Chartered Accountants of India (the "Guidance Note").
Management's Responsibility by Internal Financial Controls
The Company's management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal controls with reference to standalone financial statements criteria establishedby the Company considering the essential components or internal control stated in theGuidance Note. These responsibilities include the design. Implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to the Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationor reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company'sinternal financial controls with respect to standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note and the Standards onAuditing prescribed under Section 143 (10) of the Acttotheextentapplicableto financialcontrolswith reference to auditofinternal standalone financial statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to standalone financial statements were established and maintainedand whether such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system with respect to standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with respect an understanding of internal financial controls with respect tostandalone tostandalone financial financial statements assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system with reference to standalone financial statements.
Meaning of Internal Financial Controls with reference to StandaloneFinancial Statements
A Company's internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purpose in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to financial statements includethose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could havea material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference toStandalone Financial Statements
Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluations 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.