To the members of
PSP Projects Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of PSP ProjectsLimited (the "Company") which comprise the Balance sheet as at March 31 2020the Statement of Profit and Loss including the statement of Other Comprehensive Incomethe Cash Flow Statement and the Statement of Changes in Equity for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Companies Act 2013 (the "Act") in the manner so required and give atrue and fair view in conformity with the accounting standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2020 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing ('SAs') as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditors'Responsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the 'Code of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and ICAI's Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our opinionon the Standalone Financial Statements.
Emphasis of Matter
We draw attention to Note 44 of the Standalone Financial Statements as regards theBoard of Directors' evaluation of COVID-19 impact on the future performance of theCompany. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements for the current period.These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
We have fulfilled the responsibilities described in the Auditor's responsibilities forthe audit of the financial statements section of our report including in relation tothese matters. Accordingly our audit included the performance of procedures designed torespond to our assessment of the risks of material misstatement of the StandaloneFinancial Statements. The results of our audit procedures including the proceduresperformed to address the matters below provide the basis for our audit opinion on theaccompanying Standalone Financial Statements.
|Key audit matters ||How our audit addressed the Key Audit Matter |
|Revenue Recognition and Trade Receivables || |
|There are significant accounting judgements including estimation of costs to complete determining the stage of completion and the timing of revenue recognition. ||Our procedures included : |
|The company recognises revenue and profit/loss on the basis of stage of completion based on the proportion of contract costs incurred at balance sheet date. ||- Testing of the design and implementation of controls involved for the determination of the estimates used as well as their operating effectiveness; |
|The accounting standard requires an entity to select a single measurement method for the relevant performance obligation that depicts the entity's performance in transferring goods or services or if a contract is onerous present obligations are recognized and measured as provisions. ||- We selected a sample of contracts to test using a risk based criteria which included individual contracts with: |
| ||- significant revenue recognised during the year or |
| ||- significant accrued value of work done balances held at the year-end; |
| ||- Obtained an understanding of management's process for reviewing long term contracts the risk associated with the contract and any key judgments. |
|We identified contract accounting as a key audit matter because the estimation of the total revenue and total cost to complete the contract prepared based on the prevailing circumstances is inherently subjective complex and require significant management judgment and forecast of contract revenue and/or contract cost may get subsequently changed due to change in prevailing circumstances assumptions contract variations or any other factor and could result in material variance in the revenue and profit or loss from contract for the reporting period. ||- Evaluated the design and implementation of key internal controls over the contract revenue and cost estimation process through the combination of procedures involving inquiry and observations reperformance and inspection of evidence in respect of operations of these controls. |
|Receivables has been considered a key audit matter in the current year due to the significance of the amount and element ofjudgement involved in overall management assessment of the customers' ability to repay the outstanding balance during COVID 19 disruption. ||- Verified underlying documents such as original contract and its amendments if any key contract terms and milestones etc. for verifying the estimation of contract revenue and costs and /or any change in such estimation. |
| ||- Inquired with management on the progress of works and collections from customers to identify specific customers with which the company might have disagreements or disputes. |
|Refer to note number 2.1512 and Note 39 of the Standalone Financial Statements ||- Tested samples of un-invoiced revenue entries with reference to the reports from the records and costs incurred against the services delivered to confirm the work performed and application of appropriate margin applied for the respective services. |
| ||- Tested cut-offs for revenue recognized against un-invoiced amounts by matching the revenue accrual against accruals for corresponding cost; |
| ||- Reviewed the work done and collection history of customers against whose contracts unbilled revenue is recognised; and verification of subsequent receipts post balance sheet date. |
| ||- Obtained confirmations from customers on sample basis to support existence assertion of trade receivables and assessed the relevant disclosures made in the Standalone Financial Statements; to ensure revenue from contracts with customers are in accordance with the requirements of relevant accounting standards. |
| ||- Evaluated the nature and status of customers and obtained the understanding from management about whether ongoing business relationship with the customers past payment history of customers and any impact on those customers because of COVID 19 pandemic. |
| ||- Reviewed the Liquidated damages clause or force majeure clause of the contracts with the customers to evaluate the potential impact on the Standalone Financial Statements. |
Information Other than the Standalone Financial Statements and Auditors' Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the financial statementsand our auditors' report thereon. The other information is expected to be made availableto us after the date of this auditors' report.
Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the Standalone Financial Statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to communicate the matter to thosecharged with governance as required under SA 720 'The Auditors' responsibilities relatingto other Information.
Responsibilities of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and the accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the Standalone Financial Statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditors' Responsibilities for the audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the Standalone FinancialStatements whether due to fraud or
error design and perform audit procedures responsive to those risks and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3X0 of theAct 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 reasonableness ofaccounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' 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 auditors'report. 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 FinancialStatements including the disclosures and whether the Standalone Financial Statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant 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 Financial Statementsfor the financial year ended March 31 2020 and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on other legal and regulatory requirements 1. As required by the Companies(Auditors' Report) Order 2016 (the 'Order') issued by the Central Government of India interms of sub-section (11) of section 143 of the Act we give in the ''Annexure A" astatement on the matters specified in paragraphs 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) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) The Balance Sheet the Statement of Profit and Loss including 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 Financial Statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 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 Financial Statements and theoperating effectiveness of such controls refer to our separate Report in "AnnexureB" to this report;
(g) In our opinion the managerial remuneration for the year ended March 31 2020 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 Auditors' 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 Ind AS financial statements - Refer Note 38 to the Standalone FinancialStatements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the company.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report to the members PSP Projects Limited of even date)
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the Standalone Financial Statements for the year ended March 312020.
We report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) According to the information and explanations given to us the Company has aregular programme of physical verification of its fixed assets by which fixed assets areverified on an annual basis. In accordance with this programme fixed assets were verifiedduring the year. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings are held in the name of the company as at thebalance sheet date.
(ii) As explained to us inventories have been physically verified at reasonableintervals by the management during the period. In our opinion the frequency of suchverification is reasonable. No material discrepancies were noticed during suchverification.
(iii) According to the information and explanations given to us the company hasgranted unsecured loan to a wholly owned foreign subsidiary company and an Indiansubsidiary company covered in the register maintained u/s 189 of the Companies Act 2013in respect of which:
(a) The terms and conditions of the loans granted are prima facie not prejudicial tothe Company's interest.
(b) The borrower has been regular in the payments of the interest as stipulated. Theterms of arrangements do not stipulate any repayment schedule and the loans are repayableon demand.
(c) There is no overdue amount remaining outstanding as at the year end.
(iv) In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Act in respect of loans to directors includingentities in which they are interested and in respect of loans and advances giveninvestments made and guarantees and securities given have been complied with by theCompany as applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposit from the public within the meaning of section 73 to 76 of the Act andthe Rules framed under. Therefore the provision of clause 3(v) of the Order is notapplicable.
(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 Act related to the projects of the company and are of the opinionthat prima facie the specified accounts and records have generally been made andmaintained. We have not however made a detailed examination of the records with a viewto determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employee stateinsurance income-tax duty of customs goods and services tax and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax duty of customs goods and services taxand other material statutory dues were in arrears as at March 31 2020 for a period ofmore than six months from the date they became payable.
(b) According to the records of the Company the dues of income tax duty of customduty of excise and goods and services tax which have not been deposited as on March 312020 on account of disputes are as follows:
|Sr. Name of No. the statute ||Nature of the dues ||Amount (Rs in Lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
|1 Excise & Customs ||Dispute in relation to Classification of Excise Chargeability on Ready Mix Concrete. ||4.76 ||2014-15 & 2015-16 ||SCN reply filed to Assistant Commissioner Central Excise |
|2 Income Tax ||Dispute in relation to disallowance of purchase ||2.93 ||AY 2013-14 ||Commissioner of Income Tax (Appeals). Application is filed under Vivad se Vishwas Tax Scheme |
|3 Income Tax ||Disallowance U/S 36(1) (va) ||3.26 ||AY 2017-18 ||Commissioner of Income Tax |
(viii) According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any bank as at the balance sheet date. The company did not have any outstanding dues todebenture holders during the period.
(ix) Based on the information and explanations given by the management and on anoverall examination of the balance sheet the Company did not raise any money by way ofinitial public offer or further public offer (including debt instruments) and that theterm loans have been applied for the purposes for which they were raised.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practice in India andaccording to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
(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 Act.
(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.
(xiii) Based on our examination of records of the Company and according to theinformation and explanations given to us the transactions with related parties are incompliance with the provisions of Section 177 and 188 of the Act. The details of suchrelated party transactions have been disclosed in the Standalone Financial Statements asrequired by the applicable accounting standard.
(xiv) According to the records of the Company examined by us and the information andexplanation given to us the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly provisions of clause 3(xiv) are not applicable to the Company.
(xv) Based on the examinations of the records and according to the information andexplanations given by the management during the year the Company has not entered intoany non-cash transactions with directors or persons connected with him. Accordinglyparagraph 3(xv) of the Order is not applicable.
(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Accordingly the provisions of Clause 3(xvi) of the Order are not applicable to theCompany.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of PSP Projects Limited of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of the Companyas of March 31 2020 in conjunction with our audit of the Standalone Financial Statementsof the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective 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 Act.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the 'Guidance Note') issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors' judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting of the Company.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
|For Kantilal Patel & Co. ||For Riddhi P. Sheth & Co. |
|Chartered Accountants ||Chartered Accountants |
|ICAI Firm registration number: 104744W ||ICAI Firm registration number: 140190W |
|Jinal A. Patel ||Riddhi P. Sheth |
|Partner ||Proprietor |
|Membership No.: 153599 ||Membership No.: 159123 |
|Place: Ahmedabad ||Place: Ahmedabad |
|Date: June 9 2020 ||Date: June 9 2020 |
|UDIN: 20153599AAAAEW7575 ||UDIN: 20159123AAAAAG9603 |