Rajsanket Realty Ltd.
|BSE: 512409||Sector: Infrastructure|
|NSE: N.A.||ISIN Code: INE314F01016|
|BSE 00:00 | 08 Mar||Rajsanket Realty Ltd|
|NSE 05:30 | 01 Jan||Rajsanket Realty Ltd|
|BSE: 512409||Sector: Infrastructure|
|NSE: N.A.||ISIN Code: INE314F01016|
|BSE 00:00 | 08 Mar||Rajsanket Realty Ltd|
|NSE 05:30 | 01 Jan||Rajsanket Realty Ltd|
The Member of Rajsanket Realty Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Rajsanket Realty Limited("the Company") which comprise the Balance Sheet as at 31 March 2019 and theStatement of Profit and Loss (including other comprehensive income) Statement of Changesin Equity and Statement of Cash Flows for the year then ended and notes to the standalonefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid standalone financial statements given theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardprescribed under section 133 of the Act read with the Companies (Indian AccountingStandard) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2019and its loss (including other comprehensive income) changes in equity and its cash flowsfor the year ended on that date.
Basis for Qualified Opinion
The Company's current loans (Refer Note no. 15 of the standalone financial statements)under current financial assets as on 31st March 2019 include the unsecuredloans given to a related company amounting to Rs. 1081716804/- and to another companyamounting to Rs. 402846529/-. At the request of these borrower companies the Companyhas waived the interest receivable on these loans amounting to Rs. 183394636/- for thecurrent year considering various factors including financial position of the borrowercompanies which is not in compliance of section 185 and 186 of the Companies Act 2013.The management has considered these unsecured loans as good and recoverable in thestandalone financial statements and no provision is made for the possible impairment.
As per the latest audited financial statements of these borrower companies for the yearended 31st March 2018 they have huge accumulated losses and their net worthis fully eroded. Further these companies are facing liquidity constraints due to whichthey may not be able to realize projections made as per their respective business plans.In the absence of sufficient appropriate evidence and considering the prevalent situationof the real estate sector we are unable to comment upon the carrying value of these loansand recoverability of the same and the consequential impact if any on the accompanyingstandalone financial statements.
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the Standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our qualified opinion.
Key Audit Matters ("KAM")
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Inaddition to the matters described in the Basis for Qualified Opinion section wehave determined the matters described below to be the key audit matters to be communicatedin our report.
Information Other than the Standalone Financial Statements and Auditor's Report thereon
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Standalone Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit / loss(including other comprehensive income) changes in equity and cash flows 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. 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 judgement and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating 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 and Board of Directors areresponsible for assessing the Company's ability to continue as a going concern disclosingas applicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Board of Directors is also responsible for overseeing the Company's financial reportingprocess.
Auditor's 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 auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional scepticism throughout the audit we also:
Identify and assess the risks of material misstatement of the standalonefinancial 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 misstatement resulting from fraud is higher thanfor one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal control.
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 with reference to standalone financial statements inplace and the operating effectiveness of such 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent 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 statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
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 in terms of Section 143(11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.
2. (A) 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 other comprehensiveincome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account;
d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014;
e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2019 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 control with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(B) 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 in our opinionand to the best of our information and according to the explanations given to us:
i) The Company has disclosed the impact of pending litigations as at 31stMarch 2019 on its financial position in its standalone financial statements as mentionedin Note No. 38;
ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii) There has been no amount required to be transferred to the Investor Education andProtection Fund by the Company.
(C) With respect to the matter to be included in the Auditors' Report under section197(16) as amended: According to the information and explanations given to us in ouropinion the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 read with Schedule V to the Act.
Annexure A to the Independent Auditors' Report
(Referred to in paragraph 1 under Report on other Legal & RegulatoryRequirements' Section of our report of even date)
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets
(b) These fixed assets have been physically verified by the management at reasonableintervals during the year and no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us the company does nothold any immovable property as its fixed assets.
(ii) As informed to us the inventory in the company's possession has been physicallyverified at reasonable intervals during the year by the management.
The discrepancies noticed on verification between physical stock and book records werenot material.
(iii) According to information and explanation given to us the Company has not grantedany fresh unsecured loans to company after the day the said company is covered in theregistered maintained u/s 189 of the Companies Act 2013. During the year the Company haswaived interest chargeable on such loans to the extent of Rs. 139732569/- (Principalamount of such loans outstanding as at the balance sheet date Rs. 1081716804/-) whichis not in compliance of section 186(7) of the Act and hence in our opinion the same isprejudicial to the interest of the Company. Other terms and conditions of such loans andthe schedule of repayment of principal and payment of overdue interest has not beenclearly stipulated. Hence we do not comment on regularity of repayment of principalamount or receipt of interest.
(iv) According to the information and explanations given to us in our opinion theCompany has complied with the provisions of section 185 and 186 of the Companies Act2013 to the extent applicable in respect of loans and investments made except in therespect of following cases where interest is not charged at the prescribed rate during theyear which is not in compliance of section 186(7) of the Act-
(v) The Company has not accepted any deposits from the public.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto Rules made by the Central Government for maintenance of the cost records under section148(1) of the Act in respect of the construction activities and are of the opinion thatprima facie the accounts and records have not been made and maintained as prescribedunder the Rules. However we have not made a detailed examination of the cost records.
(vii)(a) In our opinion and according to the information and explanations given to uscompany has not been regular in depositing with the appropriate authorities the undisputedstatutory dues applicable to it. There were no arrears of outstanding undisputed statutorydues as at the last day of the financial year concerned for a period of more than sixmonths from the date they became payable except Provident Fund dues for the period fromApril 2012 to September 2018 amounting to Rs. 9603940/- property tax dues for the periodfrom April 2012 to September 2018 amounting to Rs. 56154344/- and Maharashtra VATamounting to Rs. 301924/- for the period April 2017 to June 2017.
(b) According to the information and explanations given to us there are no dues ofincome tax sales tax custom duty service tax excise duty goods and service tax valueadded tax which have not been deposited on account of any dispute.
(viii) According to the information and explanations given to us the Company has notdefaulted in the repayment of loans to the bank during the year. However the amount ofoverdue interest payable to IndusInd Bank as at balance sheet date was Rs.32591580/-.As informed to us the Company has not obtained any loan from the financial institution orgovernment nor issued any debentures.
(ix) According to the information and explanations given to us the terms loans havebeen applied for the purposes for which they were raised. The Company did not raise anymoney by way of initial public offer or further public offer (including debt instruments)during the year.
(x) According 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 to us the Company haspaid/provided for managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Act.
(xii) According to the information and explanations given to us the Company is not anidhi company. Accordingly paragraph 3 (xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year. Accordingly paragraph 3(xiv) of the Order is notapplicable.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him.Accordingly paragraph 3 (xv) of the Order is not applicable.
(xvi) Accordingly 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.
Annexure B to the Independent Auditors' Report
(Referred to in paragraph 2 (A)(f) under Report on other Legal & RegulatoryRequirements' Section of our report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of RajsanketRealty Limited ("the Company") as of 31st March 2019 in conjunctionwith out audit of the standalone financial statements of the Company for the year ended onthat 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 Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the 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 Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of 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.
Basis for Qualified opinion
In our opinion according to the information and explanations given to us and based onour audit procedure performed the following material weakness has been identified in theoperating effectiveness of the Company's internal financial control over financialreporting as at 31 March 2019:
The Company's internal financial controls in respect of supervisory and review controlsover process of determining of recoverability of current loans and other current financialassets due from related parties and other companies were not operating effectively.Absence of aforesaid assessment in accordance with the accounting principles generallyaccepted in India could potentially result in a material misstatement in the carryingvalue of the aforesaid dues from such related parties and other companies andconsequently could also impact the financial position and performance including othercomprehensive income of the Company.
A material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.
In our opinion except for the possible effects of the material weakness describedabove in the Basis for Qualified Opinion paragraph the Company has in all materialrespects maintained adequate internal financial controls over financial reporting andsuch internal financial controls over financial reporting were operating effectively as at31 March 2019 based on the internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.
We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalonefinancial statements of the Company as at and for the year ended 31 March 2019 and thematerial weakness has affected our opinion on the standalone financial statements of theCompany and we have issued a qualified opinion on the standalone financial statements.