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Prajay Engineers Syndicate Ltd.

BSE: 531746 Sector: Infrastructure
NSE: PRAENG ISIN Code: INE505C01016
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VOLUME 35774
52-Week high 26.00
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Mkt Cap.(Rs cr) 104
Buy Price 14.65
Buy Qty 548.00
Sell Price 14.79
Sell Qty 500.00
OPEN 14.79
CLOSE 14.36
VOLUME 35774
52-Week high 26.00
52-Week low 12.50
P/E
Mkt Cap.(Rs cr) 104
Buy Price 14.65
Buy Qty 548.00
Sell Price 14.79
Sell Qty 500.00

Prajay Engineers Syndicate Ltd. (PRAENG) - Auditors Report

Company auditors report

To the Members of Prajay Engineers Syndicate Limited

Report on the Audit 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 2022 the standalone statement of profit and loss (including other comprehensiveincome) the standalone statement of changes in equity and the standalone statement ofcash flows for the year than ended and notes to the standalone financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation (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 recognition and measurementprinciples laid down in the applicable Indian Accounting Standards and other accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2022 its profit/loss and other comprehensive income changes in equity and its cashflows for the 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 SAsare further described in the Auditors' Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of the companyin accordance 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 there under andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Emphasis of Matters

We draw attention to below mentioned Notes to standalone annualfinancial results:

a. Note 41 relating to the Hon'ble NCLT Hyderabad bench orderreferring the matter for resolution by way of mediation to the International CommercialArbitration and Mediation Centre (IAMC) Hyderabad in the matter of cases filed byInvestor Companies M/s Whitestock Limited in Prajay Properties Private Limited (anassociate company) and M/s Belclare Limited in Prajay Holdings Private Limited (subsidiarycompany).

b. Note 39(a) of the Standalone Financial Statements in respect oftrade receivable considered good include an amount of Rs.16375.58 Lakhs due from customerswhich are outstanding for more than six months. We are unable to comment on therealization of these receivables in the absence of conformation from the concernedparties. An amount of Rs.1246.96 Lakhs is set aside towards provision for tradereceivables considered as doubtful.

c. Note 39(b) of the standalone financial statements in respect ofLoans & Advances amounting to Rs.6090.31 lakhs towards purchase of Land/Developmenttowards certain project of long term nature and an amount of Rs.1031.46 Lakhs given tosuppliers etc. outstanding. We are unable to comment on the realization of theseadvances. An amount of Rs.700 Lakhs is set aside towards provision for Advances consideredas doubtful.

As more specifically explained in Note 2 to the financial statementsthe Company has made a detailed assessment of its liquidity position for the next year andthe recoverability and carrying value of its assets comprising property plant andequipment investments inventory and trade receivables. Based on current indicators offuture economic conditions the Company expects to recover the carrying amount of theseassets. The Company continues to evaluate them as highly probable considering the ordersin hand. The situation is changing rapidly giving rise to inherent uncertainty around theextent and timing of the potential future impact of the COVID-19 pandemic which may bedifferent from that estimated as at the date of approval of the financial results. TheCompany will continue to closely monitor any material changes arising of future economicconditions and impact on its business.

We draw attention to the standalone financial results. There are someuncertainties and possible effects of Covid-19 on the operations of the Company.

Our opinion 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)

The key Audit Matter How the matter was addressed in our audit
Revenue from sale of residential and commercial units represents 92.53% of the total revenue from operations of the company. Our audit procedures on revenue recognition included the following;
Revenue recognition Fixed price development contracts ? Evaluating that the company's revenue recognition accounting policies are in line with the applicable Accounting standards and their application to the key customer contracts including consistent application;
The Company inter alia engages in fixed price development contracts where revenue is recognized using the percentage of completion computed as per the input method based on management's estimate of contract costs ( Refer Note 3.1 to the standalone financial statements). Sales cut-off procedures for determination of revenue in the current reporting period.
Measurement of revenue recorded over time which is dependent on the estimates of the costs to complete ? Scrutinizing all the revenue journal entries raised throughout the reporting period and comparing details of a sample of these journals Which met certain risk-based criteria with relevant underlying documentation;
Revenue recognition involves significant estimates related to measurement of costs to complete for the projects. Revenue from projects is recorded based on management's a ssessment of the work completed costs incurred and accrued and the estimate of the balance costs to complete. ? Conducting site visits during the year for selected projects to understand the scope and nature of the projects and to assess the progress of the projects and
Due to the inherent nature of the projects and significant judgment involved in the estimate of costs to complete there is risk of overstatement or understatement of revenue. ? Considered the adequacy of the disclosures in note 2 & 3 to the standalone financial statement in respect of the judgment taken in recognizing revenue for residential and hospitality sector.
At Year-end a significant amount of work in progress related to these contracts is recognized on the balance sheet. In addition we have the performed the following procedures:
Revenue recognition prior to receipt of OC / similar approval and intimation to the customer
? Discussing and challenging key management judgments in interpreting contractual terms including obtaining in- house legal interpretations;
? Testing sample sales of units for projects with the underlying contracts completion status and proceeds received from customers;
? Identified and tested operating effectiveness of key controls around approvals of contracts milestone billing intimation of possession letters / intimation of receipt of occupation certificate and controls over collection from customers; and
? We have obtained confirmations on a sample basis from major customers for selected projects to confirm revenue recognized during the year end performing alternative procedures by comparing details with contracts collection details and other underlying project related documentation for cases where confirmations are not received.
Measurement of revenue recorded over time which is dependent on the estimates of the costs of complete
Compared on a sample basis revenue transactions recorded during the year with the underlying contracts progress reports invoices raised on customers and collections in bank accounts and whether the related revenue had been recognized in accordance with the Company's revenue recognition policies;
? Identification and testing operating effectiveness of key controls over recording of actual costs incurred for the projects;
? Review of the costs to complete workings comparing the costs to complete with the budgeted costs and inquiring into reasons for variance; and
? Sighting approvals for changes in budgeted costs with the rationale for the changes and assessment of contract costs to determine no revenue nature costs are taken to inventory.

Inventories (refer note 11 to standalone financial statements)

The key Audit Matter How the matter was addressed in our audit
Inventories comprising of land construction work in progress food & beverages represent 26.24% of the Company's total assets. Our audit procedures to assess the net realizable value (NRV) of inventories included the following:
Assessing net realizable value ? Discussion with the management to understand the basis of calculation and justification for the estimated recoverable amounts of the unsold units ("the NRV assessment");
The Company recognizes profit on each sale by reference to the overall project margin which is the projected profit percentage for a phase that may comprise multiple units and can last a number of years. The recognition of profit is therefore dependent on the estimate of future selling prices and build costs including an allowance for risk. Further estimation uncertainty and exposure to cyclicality exists within the long term projects. ? Evaluating the design and implementation of the Company's internal controls over the NRV assessment.
Forecasts of future sales are dependent on market conditions which can be difficult to predict and be influenced by political and economic factors. Our evaluation included assessing whether the NRV assessment was prepared and updated by appropriate personnel of the Company and whether the key estimates including estimated future selling prices and costs of completion for all property development projects used in the NRV assessment were discussed and challenged by management as appropriate;
Inventory represents the capitalized project costs to date less amounts expensed on sales by reference to the aforementioned projections. It is held at the lower of cost and net realizable value the latter also being based on the forecast for the project. As such inappropriate assumptions in these forecasts can impact the assessment of the carrying value of inventories. ? Evaluating the management's valuation methodology and assessing the key estimates data inputs and assumptions adopted in the valuations which included comparing expected future average selling prices with available market data such as recently transacted prices for similar properties located in the nearby vicinity of each property development project and the sales budget plans maintained by the Company;
Further due to their materiality in the context of total assets of the Company this is considered significant to our overall audit strategy and planning. ? Re-performing the calculations of the NRV assessment and comparing the estimated construction costs to complete each development with the Company's updated budgets.

Land Advances - (refer note 10 to the standalone financial statements)

The key Audit Matter How the matter was addressed in our audit
Assessment of recoverability of land advances Our audit procedures to assess the recoverability of land advances included the following;
Land advance represents a sizeable portion of the Company's total assets. ? For our samples verified the underlying agreements in possession of the Company based on which land advances were given;
Land advance represents the amount paid towards procurement of land parcels to be used in the future for construction of residential projects. These advances are carried at cost less impairment losses if any. These land advance will be converted into land parcels as per the terms of the underlying contract under which these land advances have been given. To assess the carrying value of land advances these advances are tested for recoverability by the Company by comparing the valuation of land parcels in the same area for which land advances have been given. ? Discussion with the management to understand their plan for conversation of these land advances into land parcels; and
Further due to their materiality in the context of total assets of the company this is consider significant to our overall audit. ? For our samples verified the valuation reports of land stock.

Investment in subsidiaries and loans to group companies (refer to note8 9 and 10 to the standalone financial statements)

The key Audit Matter How the matter was addressed in our audit
The carrying amount of the investments in subsidiaries held at cost represents 9.02% to associate represents 3.90 of the Company's total assets respectively. Recoverability of investment in subsidiary joint ventures and an associate
Recoverability of investment in subsidiary joint ventures and an associate Our audit procedures included:
The Company has investments in subsidiaries joint ventures and an associate company which are considered to be associated with significant risk in respect of valuation of such investments. These investments are carried at cost less any diminution in value of such investments. ? Comparing the carrying amount of investments with the relevant subsidiaries joint ventures and associate balance sheet to identify whether their net assets being an approximation of their minimum recoverable amount were in excess of their carrying amount and assessing whether those subsidiaries joint ventures and an associate have historically been profit-making;
In addition considering the materiality of the investments in subsidiaries joint ventures and an associate vis-?-vis the total assets of the Company this is considered to be significant to our overall audit strategy and planning. ? For the investments where the carrying amount exceeded the net asset value comparing the carrying amount of the investment with the projected profitability based on approved business plans of the subsidiaries joint ventures and an associate;
Recoverability of loans to subsidiaries and joint ventures ? Considering the adequacy of disclosures in respect of the investment in subsidiaries joint ventures and an associate.
The Company has extended loans to joint ventures and subsidiaries that are assessed for recoverability at each period end. Recoverability of loans to subsidiaries and joint ventures
Financial assets which include current loans to joint ventures and subsidiaries aggregated to Rs 1725.42 lakhs at 31 March 2022 Due to the nature of the business in the real estate industry the Company is exposed to heightened risk in respect of the recoverability of the loans and advances granted to the aforementioned related parties. Our procedures included:
There is also judgment involved as to the recoverability of the working capital and project specific loans Which rely on a number of property developments being completed over the time period specified in agreements. ? We reviewed the controls in place for issuing new loans and evidenced the Board/MD approval obtained. We obtained management's assessment of the recoverabi lity of the loans which includes cash flow projections over the duration of the loans. These projections are based on underlying property development appraisals;
? We tested cash receipts received in relation to these loans during the year through to bank statement; and
We have obtained independent confirmations to ensure completeness and existence of loans and advances held by related parties as on 31 March 2022.

Other Information

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 there on.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion there on.

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fs 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 theAct. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing 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f Responsibility for the audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to 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 reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.As part of an audit in accordance with SAs we exercise Professional judgment and maintainprofessional 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 and based 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 regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

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) Order 2020(‘the Order') issued by the Central Government of India in terms of Section143(11 )of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 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 havebeen kept by the Company so far as it appears from our examination of those books;

(c) The standalone balance sheet the standalone statement of profitand loss (including other comprehensive income) the standalone statement of changes inequity and the standalone statement of cash flows dealt with by this report are inagreement with the books of account;

(d) In our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards (Ind AS) specified under Section 133 of theAct;

(e) On the basis of the written representations received from thedirectors as on 31 March 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2022 from being appointed as a director in termsof Section 164 (2) of the act; and

(f) With respect to the adequacy of the internal financial controlswith reference to the standalone financial Statements of the Company and the operatingeffectiveness of such controls 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 litigations as at31 March 2022 on its financial position in Its standalone financial statements - ReferNote 34 & 41 to the standalone financial statements;

(ii) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

(iii) There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company during the yearended 31 March 2022; and

(iv) a) The management has represented that to the best of itsknowledge and belief no funds have been advanced or loaned or invested (either fromborrowing funds or share premium or any other sources or Kind of funds) by the Company toor in any other person or entities including foreign entities("Intermediaries") with the understanding whether recorded in writing orotherwise that the Intermediary shall:

? Directly or indirectly lend or invest in other persons or entitiesidentified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalfof the company or

? Provide any guarantee security or the like to or on behalf of theUltimate Beneficiaries.

b) The Management has represented that to the best of its knowledgeand belief no funds have been received by the Company from any persons or entitiesincluding foreign entities("Funding Parties") with the Understanding whetherrecorded in writing or otherwise that the Company shall:

? Directly or indirectly lend or invest in other persons or entitiesidentified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalfof the Funding Party or

? Provide any guarantee security or the like from or on behalf of theUltimate Beneficiaries.

c) Based on such audit procedures as considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause (iv) (a) and (iv) (b) contain anymaterial mis-statement.

(v). During the year the company has not declared any dividend.

(C) With respect to the matter to be included in the Auditor'sReport under Section 197(16) of the Act:

In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the act. The Remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) ofthe Act which are required to be commented upon by us.

For and on behalf of

Karumanchi & Associates

 

Chartered Accountants

Firm's registration number: 001753S

Sd/-

K.Peddabbai

 

Partner

M.No : 025036

UDIN No : 22025036AJRZPF8005

Place : Hyderabad

Date : 27.05.2022

ANNEXURE A TO THE INDEPENDENT AUDITORfS REPORT 31 MARCH 2022

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 2022 we report the following:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant and equipmentand 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.

(d) 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 revaluedits Property plant and equipment (including Right-of-use assets) or Intangible assets orboth during the year.

(e) According to the information and explanations given to us and onthe basis of our examination of the records of the Company there are no proceedingsinitiated or pending against the Company for holding any benami property under theProhibition of Benami Property Transactions Act 1988 and rules made thereunder.

(ii) (a) 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.

(b) The Company has not been sanctioned working capital limits inexcess of 5 crore in aggregate at any points of time during the year from banks orfinancial institutions on the basis of security of current assets. Accordingly paragraph3 (ii)(b) of the Order is not applicable.

(iii) The Company has granted unsecured loans to companies limitedliability partnerships covered in the register maintained under Section 189 of theCompanies Act2013 (‘the Act'). The Company has not granted any loans securedor unsecured to firms or other parties covered in the register required to be maintainedunder Section 189 of the Act.

(a) According to the information and explanations given to us and basedon the audit procedure conducted by us we are of the opinion that the rate of interestand other 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 the information and explanationsgiven to us the Company has not accepted deposits as per the directives issued by theReserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and the rules framed there under. Accordingly paragraph 3 (v) ofthe Order is not applicable of the Company.

(vi) We have broadly reviewed the books of accounts maintained by theCompany pursuant to the rules prescribed by the Central Government for the maintenance ofcost records under Section 148 (1) of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed 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 explanations given to us noundisputed amounts payable in respect of Provident Fund

Employees' State Insurance Professional Tax Property Tax LabourCess Goods and Service Tax Cess and other material statutory dues were in arrears as at31 March 2022 for a period of more than 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 2022 which have not been deposited with the appropriate authorities onaccount of any dispute except as stated below:

Particulars Amount (Rs.Lakhs) Period To Which Amount Relates (FY) The Forum Where the Dispute Is Pending
Income Tax 841.48 2011-12 ITAT
Service Tax 1820.62 2006-07 To 2010-11 CESTAT

According to the information and explanations given to us and on thebasis of our examination of the records of the Company the Company has not surrendered ordisclosed any transactions previously unrecorded as income in the books of account inthe tax assessments under the Income Tax Act 1961 as income during the year.

(viii) (a) In our opinion and according to the information andexplanations given to us the Company has not defaulted during the year in repayment ofloans or borrowings to banks or financial institutions or dues to debenture holders. TheCompany does not have any loans or borrowings from government during the year.

(b) According to the information and explanations given to us by themanagement the Company has not obtained any term loans . Accordingly clause3(ix)(c) ofthe Order is not applicable.

(c) According to the information and explanations given to us and on anoverall examination of the balance sheet of the Company we report that no funds have beenraised on short-term basis by the Company. Accordingly clause 3(ix)(d) of the Order isnot applicable.

(d) According to the information and explanations given to us and on anoverall examination of the financial statements of the Company we report that the Companyhas not taken any funds from the entity or person on account of or to meet the obligationsof its subsidiaries as defined under the Companies Act 2013. Accordingly clause 3(ix)(e)of the Order is not applicable.

(e) According to the information and explanations given to us andprocedures performed by us we report that the Company has not raised loans during theyear on the pledge of securities held in its subsidiaries as defined under the CompaniesAct 2013. Accordingly clause 3(ix)(f) of the Order is not applicable.

(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(x) of the Order isnot applicable to the Company.

(x) (a) During the course of our examination of the books and recordsof the Company carried out in accordance with the generally accepted auditing practicesin India and according to the information and explanations give to us we have neithercome across any instance of material fraud by the Company or on the Company by itsofficers or employees noticed or reported during the year nor have we been informed ofany such case by the management.

(b) According to the information and explanations given to us noreport under sub-section (12) of Section 143 of the Companies Act2013 has been filed bythe auditors in Form ADT-4 as prescribed under Rule 13 of the Companies (Audit andAuditors) rules 2014 with the Central Government.

(c) We have taken into consideration the whistle blower complaintsreceived by the Company during the year while determining the nature timing and extent ofour audit procedures. . (xi) Based upon the audit procedures performed and the informationand explanations given by the management during the year the managerial remuneration isnot paid or provided.

(xiii) 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 (xii) of the Order is not applicable to theCompany.

(xiv) In our opinion and according to the information and explanationsgiven to us the Company has entered into Transactions with related parties in compliancewith the provisions 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 the Act.

(xv) (a) Based on the information and explanations provided to us andour audit procedures in our opinion the Company has an internal audit systemcommensurate with the size and nature of its business.

(b) We have considered the internal audit reports of the Company issuedtill date for the period under audit.

(xvi) Based upon the audit procedures performed and the information andexplanations given by the management the Company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures during the yearunder review. Accordingly the provisions of clause3 (xiv) of the Order are not applicableto the company and hence not commented upon.

(xvii) 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.

(xviii) In Our opinion and according to the information andexplanations given to us the company is not required to be registered under Section 45 IAof the Reserve Bank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is notapplicable to the Company.

(xix) The company has not incurred any cash losses in the financialyear and also in the immediately preceding financial year.

(xx) There is no resignation of statutory auditors during the year.Accordingly paragraph 3(xviii) of the Order is not applicable.

(xxi) According to the information and explanations given to us on thebasis of the financial ratios ageing and expected dates of realization of financialassets and payment of financial liabilities other information accompanying the financialstatements our knowledge of the Board of Directors and management plans and based on ourexamination of the evidence supporting the assumptions nothing has come to our attentionwhich causes us to believe that any materials uncertainty exists as on the date of theaudit report that the Company is not capable of meeting its liabilities existing at thedate of balance sheet as and when they fall due within a period of one year from thebalance sheet date. We however state that this is not an assurance as to the futureviability of the Company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the Company as and when they fall due.

(xxii) There were no unspent amounts towards Corporate SocialResponsibility. Accordingly Paragraph 3(xx)(a) and (b) of the Order is not applicable forthe year.

For and on behalf of

Karumanchi & Associates

 

Chartered Accountants

Firm's registration number: 001753S

Sd/-

K.Peddabbai

 

Partner

M.No : 025036

UDIN No : 22025036AJRZPF8005

Place : Hyderabad

Date : 27.05.2022

ANNEXURE B TO THE INDEPENDENT AUDITORfS REPORT 31 MARCH 2022

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 (gthe Acth)

(Referred to in paragraph (A) (f) under eReport on Other Legaland Regulatory Requirementsf section of our report of even date)

Opinion

We have audited the internal financial controls with reference tostandalone financial statements of Prajay Engineers Syndicate Limited ("TheCompany") as of 31 March 2022 in conjunction with our audit of the standalonefinancial statements of the Company 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 2022 based on theinternal financial controls with reference to standalone financial statements 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 (the "Guidance Note")

Managementfs 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.

Auditorsf Responsibility

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 Act to the extent applicable to anaudit of internal financial controls with reference to standalone financial statements.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to standalone financial statements were established andmaintained and 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 to standalone financial statements included obtaining anunderstanding of internal financial controls with respect to standalone financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud 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.

For and on behalf of

Karumanchi & Associates

 

Chartered Accountants

Firm's registration number: 001753S

Sd/-

K.Peddabbai

 

Partner

M.No : 025036

UDIN No : 22025036AJRZPF8005

Place : Hyderabad

Date : 27.05.2022

.