To the Members of Prestige Estates Projects Limited
REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
We have audited the accompanying standalone Ind AS financial statements of PrestigeEstates Projects Limited (the Company) which comprise the Balance sheet as atMarch 31 2019 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the standalone Ind AS financial statements including asummary of significant accounting policies and other explanatory information.
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 as amended (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 March 31 2019its profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities
in accordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the standalone Ind AS financial statements.
EMPHASIS OF MATTER - LITIGATION
We draw attention to Note 53 to the standalone Ind AS financial statements where in itis stated that the Company has gross receivables of ' 923 million from a Land Owneragainst whom winding up petitions has been ordered by the Hon'ble High Court ofJudicature. Pending resolution of the litigation against the land owner these receivablesare classified as recoverable by the Company based on rights under a Joint DevelopmentAgreement. Our opinion is not modified in respect of the above matter.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements for the financialyear ended March 31 2019. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. For each matter below ourdescription of how our audit addressed the matter is provided in that context. We havedetermined the matters described below to be the key audit matters to be communicated inour report. We have fulfilled the responsibilities described in the Auditor'sresponsibilities for the audit of the standalone Ind AS financial statements section ofour report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the standalone Ind AS financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying standalone Ind AS financial statements.
|Key audit matters ||How our audit addressed the key audit matter |
|Adoption of Ind AS 115 - Revenue from Contract with Customers (as described in note 2.3 and 52 of the standalone Ind AS financial statements) || |
| ||As part of our audit procedures: |
|During the year ended March 31 2019 the Company has adopted Ind AS 115 - Revenue from Contracts with Customers which is mandatory for reporting periods beginning on or after || We read the accounting policy for revenue recognition of the Company and assessed compliance of the policy in terms of principles enunciated under Ind AS 115. |
|April 1 2018. The application of Ind AS 115 has impacted the Company's accounting for recognition of revenue from sale of real estate inventory property and has resulted in debit to retained earnings as at April 1 2018 by ' 9001 million as per the modified retrospective method. || We obtained and examined the computation of the adjustment to retained earnings balance as at April 1 2018 upon adoption of Ind AS 115 as per the modified retrospective method. |
|In accordance with the requirements of Ind AS 115 Company's revenue from sale of real estate inventory property (other than projects executed through joint development arrangements described below) is recognised at a point in time which is upon the Company satisfying its performance obligation and the customer obtaining control of the promised asset. || We assessed the management evaluation of determining revenue recognition from sale of real estate inventory property at a point in time in accordance with the requirements under Ind AS 115. |
| || We understood and tested management process and controls around transfer of control in case of sale of real estate inventory property and further controls related to determination of fair value of estimated construction service rendered to the landowner in relation to projects executed through JDA. |
|For revenue contract forming part of joint development arrangements CJDA') the revenue from the development and transfer of constructed area/ revenue sharing arrangement and the corresponding land/ development rights received under JDA is measured at the fair value of the estimated construction service rendered to the land owner. Such revenue is recognised over a period of time in accordance with the requirements of Ind AS 115. || We on a sample basis inspected the underlying customer contracts sale deed and handover documents evidencing the transfer of control of the property to the customer based on which revenue is recognised at a point in time. |
| ||For projects executed during the year through JDA on a sample basis: |
|Application of Ind AS 115 including the impact to retained earnings balance as at April 1 2018 as per modified retrospective method requires significant judgment in determining when 'control' of the property underlying the performance obligation is transferred to the customer. Further for projects executed through JDA significant estimate is undertaken by management for determining the fair value of the estimated construction service. || We obtained and examined the computation of the fair value of the construction service under JDA |
| || We obtained the joint development agreements entered into by the Company and compared the ratio of constructed area/ revenue sharing arrangement between the Company and the landowner as mentioned in the agreement to the computation statement prepared by the management. |
| || We compared the fair value of the estimated construction service to the project cost estimates and mark up considered by the management. |
|As the revenue recognition involves significant estimates and judgement we regard this as a key audit matter. || We assessed the disclosures made in accordance with the requirements of Ind AS 115. |
|Assessing impairment of Investments and loans and advances made by the Company in subsidiaries joint ventures and associated Companies (as described in note 2.20 of the standalone Ind AS financial statements) || |
|As at March 31 2019 the carrying values of Company's investment in subsidiaries joint ventures and associated Companies amounted to ' 18902 million. Further the Company has granted loans and advances to its subsidiaries joint ventures and associates. Management reviews regularly whether there are any indicators of impairment of the investments and loans and advances by reference to the requirements under Ind AS. ||Our procedures in assessing the management's judgement for the impairment assessment included among others the following: |
| || We examined the management assessment in determining whether any impairment indicators exist. |
| ||As regards investments made: |
|For cases where impairment indicators exist management estimated the recoverable amounts of the investments being higher of fair value less costs of disposal and value in use. Significant judgements are required to determine the key assumptions used in determination of fair value/ value in use. || We assessed the Company's valuation methodology and assumptions applied in determining the recoverable amount. |
| || We compared the recoverable amount of the investment to the carrying value in books as at March 312019. |
| || |
| || We examined the disclosures made in the financial statements regarding such investments. |
|We focused our effort on those cases with impairment indicators. ||As regards loans and advances granted: |
|As the impairment assessment involves significant assumptions and judgement we regard this as a key audit matter || We obtained and considered management evaluation of recoverability of loans and advances granted to its subsidiaries joint ventures and associate entities. |
| || We assessed the financial condition of entities to whom loans and advances were granted by obtaining the most recent audited financial statements of such entities. |
| || We performed inquiries with management on the project status and future business plan of entities to whom loans and advances were granted to evaluate their recoverability. |
|Accuracy and completeness of related party transactions and disclosures (as described in note 51 of the standalone Ind AS financial statements) || |
|The Company has undertaken transactions with its related parties in the normal course of business at arm's length. These include making new or additional investments in its subsidiaries associates joint ventures and other related parties and lending and borrowing of Inter-corporate deposits ('ICD') to or from the related parties. ||As part of our audit procedures our procedures included the following: |
| || Obtained and read the Company's policies processes and procedures in respect of identifying related parties evaluation of arm's length obtaining approval recording and disclosure of related party transactions. |
|We identified the accuracy and completeness of the said related party transactions and its disclosure as set out in respective notes to the financial statements as a key audit matter due to the significance of transactions with related parties during the year ended March 312019 and regulatory compliance thereon. || We tested on a sample basis related party transactions with the underlying contracts and other supporting documents and for appropriate authorization and approval for such transactions. |
| || We read minutes of shareholder meetings board meetings and minutes of meetings of those charged with governance in connection with Company's assessment of related party transactions being in the ordinary course of business at arm's length. |
| || Agreed the related party information disclosed in the financial statements with the underlying supporting documents on a sample basis. |
|Assessing the carrying value of Inventory (including advances paid towards land procurement) and Refundable deposit paid under JDA (as described in note 2.18 of the standalone Ind AS financial statements) || |
|As at March 31 2019 the carrying value of inventory comprising of Work in progress and Stock of units in completed projects is ' 80607 million. The inventory is valued at the lower of the cost and net realisable value ("NRV"). ||As part of our audit procedures our procedures included the following: |
|The determination of the NRV involves estimates based on prevailing market conditions and taking into account the estimated future selling price cost to complete projects and selling costs. || Evaluated the design and operation of internal controls related to testing recoverable amounts with carrying amount of inventory and advances including evaluating management processes for estimating future costs to complete projects. |
| || We assessed the Company's methodology applied in assessing the carrying value. |
|Further advances paid by the Company to the landowner/ intermediary towards outright purchase of land is recognised as land advance under other assets during the course of transferring the legal title to the Company whereupon it is transferred to land stock under inventories. For land acquired under joint development agreement the Company has paid Refundable deposits for acquiring the development rights. || We obtained and tested the computation involved in assessment of carrying value including the NRV/ net recoverable value. |
| || We made inquiries with management to understand key assumptions used in determination of the NRV/ net recoverable value. |
| ||For inventory balance: |
| || We compared the total projected budgeted cost to the total budgeted sale value from the project. |
|The aforesaid deposits and advances are carried at the lower of the amount paid/ payable and net recoverable value which is based on the management's assessment including the expected date of commencement and completion of the project and the estimate of sale prices and construction costs of the project. || We compared the NRV to recent sales in the project or to the estimated selling price. |
| || We Compared the NRV to the carrying value in books. |
| ||For land advance/ refundable deposits: |
| || Obtained and assessed the management assumptions relating to launch of the project development plan and future sales. |
|We identified the assessment of the carrying value of inventory and land advances/ deposits as a key audit matter due to the significance of the balance to the financial statements as a whole and the involvement of estimates and judgement in the assessment || Obtained status update from the management and verified the underlying documents for related developments in respect of the land acquisition and expected realization of deposit amount. |
| || Carried out external confirmation procedures to obtain evidence supporting the carrying value of land advance and refundable deposits on sample basis. |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe Standalone Ind AS financial statements and our auditor's report thereon. The annualreport is expected to be made available to us after the date of this auditor's report.
Our opinion on the Standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether such other information is materially inconsistent withthe Standalone Ind AS financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE INDAS 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 Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance
of adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone Ind AS 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.
Those charged with governance are also responsible for overseeing the Company'sfinancial reporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial statements 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 Ind AS financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone Ind AS financialstatements for the financial year ended March 31 2019 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
We did not audit the financial statements and other financial information as regardsCompany's share in profits of partnership firm/limited liability partnership investments(post tax) amounting to ' 1833 million for the year ended March 31 2019. The Ind ASfinancial statements and other financial information has been audited by other auditorswhose reports have been furnished to us and the Company's share in profits of partnershipfirm/ limited liability partnership investments has been included in these standalone IndAS financial statements based solely on the report of such other auditors. Our opinion isnot modified in respect of the above matter.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor's Report) Order 2016 (the Order)issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure 1 a statement on the matters specified inparagraphs 3 and 4 of the Order.
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 purposes of our audit;
(b) I n 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 the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these standalone Ind AS financial statementsand the operating effectiveness of such controls refer to our separate Report inAnnexure 2 to this report;
(g) In our opinion the managerial remuneration for the year ended March 31 2019 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act;
(h) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements - Refer Note 40 to the standaloneInd AS financial statements;
ii. The Company had made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts - Refer Note 30to the standalone Ind AS financial statements. The Company did not have any derivativecontracts for which 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.
For S.R. Batliboi & Associates LLP
ICAI Firm Registration Number: 101049W/E300004
per Adarsh Ranka
Membership Number: 209567 Place of Signature: Bengaluru India
Date: May 27 2019
ANNEXURE1 REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS OF OUR REPORT OF EVEN DATE
Re: Prestige Estates Projects Limited (the Company)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets comprising of investment propertyand property plant and equipment except for particulars of quantitative details incertain cases which the Company is in the process of updating.
(b) All property plant and equipment and investment property have not been physicallyverified by the management during the year but there is a regular program of verificationwhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management and based onthe examination of the registered sale deed/ transfer deed/ registered joint developmentagreements provided to us we report that the title deeds of immovable propertiesincluded in property plant and equipment and investment property are held in the name ofthe Company. Immovable properties of land and buildings whose title deeds have beenpledged as security for term loans and guarantees are held in the name of the Companybased on confirmations received by us from lenders.
(ii) The inventories held by the Company comprise stock of units in completed projectsand work in progress of projects under development. Having regard to the nature ofinventory the management has conducted physical verification of inventory by way ofverification of title deeds site visits conducted and certification of extent of workcompletion by competent persons at reasonable intervals during the year and no materialdiscrepancies were noticed on such physical verification.
(iii) (a) The Company has granted loans to eighteen parties covered in the registermaintained under section 189 of the Companies Act 2013. In our opinion and according tothe information and explanations given to us the terms and conditions of the grant ofsuch loans are not prejudicial to the Company's interest considering the interest chargedand/or furtherance of the business objectives of the Company. The Company has also madeinterest- free loans to certain subsidiaries. According to the information andexplanations given to us and having regard to management's representation that theinterest free loans are given to subsidiaries of the Company in the interest of theCompany's business the terms and conditions for such loans are not prima facieprejudicial to the interest of the Company.
(b) I n respect of loans granted to parties covered in the register maintained underSection 189 of the Companies Act 2013 the principal and interest are repayable ondemand. The repayments of principal amounts and interest have been regular as perstipulations.
(c) There are no amounts of loans granted to companies firms or other parties listedin the register maintained under section 189 of the Companies Act 2013 which are overduefor more than ninety days.
(iv) In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Companies Act 2013 in respect of loans todirectors including entities in which they are interested and in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the Company as applicable.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to the construction of buildings/structures and other related activities and are of the opinion that prima facie thespecified accounts and records have been made and maintained. We have not however made adetailed examination of the same.
(vii) (a) Undisputed statutory dues including employees' state insurance income-taxsales-tax service tax duty of customs duty of excise value added tax goods andservice tax cess and other statutory dues have generally been regularly deposited withthe appropriate authorities though there have been serious delays in large number of casesin deposit of tax deducted at source and provident fund.
(b) According to the information and explanations given to us no undisputed dues inrespect of provident fund employees' state insurance income-tax service tax sales-taxduty of custom duty of excise value added tax goods and service tax cess and otherstatutory dues which were outstanding at the year end for a period of more than sixmonths from the date they became payable.
(c) According to the records of the Company the dues of income- tax sales-taxservice tax duty of custom duty of excise value added tax and cess which have not beendeposited on account of any dispute are as follows:
|Name of the statue ||Nature of dues ||Amount # Rs. In Million ||Period to which the amount relates ||Forum where the dispute is pending |
|Finance Act 1994 ||Service tax interest and penalties ||7 ||2000-05 ||Customs Excise and Service Tax Appellate Tribunal |
|Finance Act 1994 ||Service tax ||30 ||Various ||High Court of Karnataka |
|Finance Act 1994 ||Interest on delayed payment of service tax ||212 ||June 2007 to June 2010 ||Customs Excise and Service Tax Appellate Tribunal |
|Finance Act 1994 ||Service tax including penalties ||259 ||July 2010 to July 2012 ||Customs Excise and Service Tax Appellate Tribunal |
|Finance Act 1994 ||Service tax including penalties ||14 ||July 2010 to September 2012 ||Customs Excise and Service Tax Appellate Tribunal |
|Karnataka Value Added Tax Act ||Value added tax and interest ||55 ||2007-2010 ||Deputy Commissioner of Commercial Taxes (Intelligence & Co-ordination) Bangalore |
|Karnataka Value Added Tax Act ||Value added tax and interest ||Nil ||April 2006-August 2007 ||Karnataka Appellate Tribunal |
|Kerala Value Added Tax Act ||Value added tax and interest ||Nil ||2006-2007 ||High Court of Karnataka |
|Kerala Value Added Tax Act ||Value added tax ||72 ||April 2009- March 2011 ||Assistant Commissioner (Works Contract) Ernakulam |
|Income Tax Act 1961 ||Tax deducted at source and penalty ||10 ||2013-2014 ||Income Tax Appellate Tribunal |
|Income Tax Act 1961 ||Tax deducted at source and penalty ||7 ||2015-2016 ||Commissioner of Income Tax (Appeals) Bengaluru |
# Net of ' 249 million paid under protest
(viii) In our opinion and according to the information and explanations given by themanagement and based on confirmations given by banks and financial institutions theCompany has not defaulted in repayment of loans or borrowing to a financial institutionbank or government or dues to debenture holders.
(xi) In our opinion and according to the information and explanations given by themanagement the Company has utilized the monies raised by way of term loans (representingloans with a repayment period beyond 36 months) and debt instruments for the purposes forwhich those were raised other than temporary deployment pending application of proceeds.The Company has not raised any monies by way of initial public offer or further publicoffer.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no fraud on the Companyby the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/ provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.
(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act
2013 where applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards except disclosure fortransactions as mentioned in Note 51 (D) to the standalone Ind AS financial statements.
(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013.
(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
For S.R. Batliboi & Associates LLP Chartered Accountants ICAI Firm RegistrationNumber: 101049W/E300004
per Adarsh Ranka Partner
Membership Number: 209567
Place of Signature: Bengaluru India Date: May 27 2019
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE IND ASFINANCIAL STATEMENTS OF PRESTIGE ESTATES PROJECTS LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (the Act)
TO THE MEMBERS OF PRESTIGE ESTATES PROJECTS LIMITED
We have audited the internal financial controls over financial reporting of PrestigeEstates Projects Limited (the Company) as of March 31 2019 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended on that date.
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (theGuidance Note) issued by the Institute of Chartered Accountants of India.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements based on our audit. We conducted our audit in accordance with the Guidance Noteand the Standards on Auditing as specified under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls both applicableto an audit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the
Guidance 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 with reference to these standalone Ind AS financial statementswas established and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting with reference to thesestandalone Ind AS financial statements and their operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting with reference to these standaloneInd AS financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the standalone Ind AS financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting with reference to these standalone Ind AS financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESESTANDALONE IND AS FINANCIAL STATEMENTS
A company's internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation ofstandalone Ind AS financial statements for external purposes in accordance with generallyaccepted accounting principles.
A company's internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone Ind AS financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the company's assets that could have a material effect on thefinancial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITHREFERENCE TO THESE STANDALONE IND AS FINANCIAL STATEMENTS
Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone Ind AS financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone Ind AS financial statements to future periods are subject to the riskthat the internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting with reference to these standalone IndAS financial statements and such internal financial controls over financial reporting withreference to these standalone Ind AS financial statements were operating effectively as atMarch 31 2019 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India.
For S.R. Batliboi & Associates LLP Chartered Accountants ICAI Firm RegistrationNumber: 101049W/E300004
per Adarsh Ranka Partner
Membership Number: 209567
Place of Signature: Bengaluru India
Date: May 27 2019