THE MEMBERS OF
RDB REALTY & INFRASTRUCTURE LIMITED
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying standalonefinancialstatementsofRDBREALTY&INFRASTRUCTURE LIMITED ("the Company") whichcomprise the Balance Sheet as at 31st March 2021 the Statement of Profit and Loss(including Other Comprehensive Income) the Statement of Cash Flows the Statement ofChanges in Equity for the year then ended on that date and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation (herein after referred to as "Standalone Financial Statements").
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 a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2021 its profit (including OtherComprehensive Income) changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
2. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section
143(10) of the Act. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matters
3. Key Audit Matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of 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.
|Sr. Key Audit Matter No ||Auditor's Response |
|1 Investment in Subsidiaries/ Joint Ventures and Associates ||Principal Audit Procedures |
|The impairment review of unquoted equity instruments and debt with a carrying value of Rs.5188.52 lakhs is considered to be a risk area due to the size of the balances as well as the judgmental nature of key assumptions which may be subject to management override. The carrying value of such unquoted equity instruments and debt is at risk of recoverability. The net worth of the underlying entities has significantly eroded and the orders in hand are below the break-even production levels of this facility. The estimated recoverable amount is subjective due to the inherent uncertainty involved in forecasting and discounting future cash flows. ||Besides obtaining an understanding of Management's processes and controls with regard to testing the impairment of the unquoted equity instruments in loss making subsidiaries and joint ventures. Our procedures included the following: |
| || Engaged internal fair valuation experts to challenge management's underlying assumptions and appropriateness of the valuation model used; |
| || Compared the Company's assumptions with comparable benchmarks in relation to key inputs such as long-term growth rates and discount rates; |
| || Considered historical forecasting accuracy by comparing previously forecasted cash flows to actual results achieved; and |
| || Performed a sensitivity analysis in relation to key assumptions |
|2 Revenue recognition - accounting for construction contracts ||Principal Audit Procedures |
|There are significant accounting judgements including estimation of costs to complete determining the stage of completion and the timing of revenue recognition. 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 relative to the total estimated costs of the contract at completion. The recognition of revenue and profit/loss therefore rely on estimates in relation to total estimated costs of each contract. Cost contingencies are included in these estimates to take into account specific uncertain risks or disputed claims against the Company arising within each contract. These contingencies are reviewed by the Management on a regular basis throughout the contract life and adjusted where appropriate. ||In responding to the identified key audit matter we completed the following audit procedures: |
| || Testing of the design and implementation of controls involved for the determination of the estimates used as well as their operating effectiveness; |
| || Testing the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard; |
| || Testing a sample of contracts for appropriate identification of performance obligations; |
| || For the sample selected reviewing for change orders and the impact on the estimated costs to complete; |
| || Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings |
4. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and Analysis;Board's Report including Annexures to Board Report Corporate Governance and Shareholders'Information but does not include the standalone financial statements and our auditor'sreport thereon. The aforesaid documents are expected to be made available to us after thedate of this auditor's report.
5. Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
6. In connection with our audit of the standalone financial statements ourresponsibility is to read the other information when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
7. When we read the aforesaid documents if we conclude that there is a materialmisstatement therein we are required to communicate the matters to those charged withgovernance.
Management's Responsibility for the Standalone Financial Statements
8. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
9. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
10. The Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibility for the Audit of the Financial Statements
11. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
12. 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtained 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 Companies Act 2013 we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating 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 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
13. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
14. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about thematters or when we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh thepublic interest benefits of such communication.
16. Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
Report on Other Legal and Regulatory Requirements
17. 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-A a statement on the matters specified in paragraphs 3and 4 of the Order to the extent applicable.
18. 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) and the Cash Flow Statement Statement of Changes in Equity dealt with by thisreport 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 Rule 7 of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in termsof Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of 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 in our opinionand to the best of our information and according to the explanations given to us:
a. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 35 of the standalone financialstatements.
b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
ANNEXURE A to the independent auditor's report
To the Members of RDB REALTY & INFRASTRUCTURE LIMITED
[Referred to in paragraph 17 of the Auditors' Report of even date]
1. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of Property plant and equipments.
(b) As explained to us the company has a system of verifying all its major PropertyPlant & Equipments over a period of three years. The Property Plant & Equipmentsso scheduled for verification during this year have been physically verified. Thediscrepancies noticed on such verification were not material and have been properly dealtwith in the books of accounts.
(c) According to the information and explanations given to us and the records of thecompany examined by us the company does not have any immovable properties.
2 The inventory has been physically verified by the management during the year. Thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material and have been properly dealt with in the books of account.
3 (a) According to the information and explanations given to us and based on the auditprocedures conducted by us the Company has granted unsecured loans to subsidiariescompanies covered in the register maintained under section 189 of the Companies Act 2013.The terms and conditions of these loans in our opinion are not prejudicial to theinterests of the Company.
(b) There is no stipulation regarding recovery of loans as these loans are repayable ondemand.
(c) The aforesaid loans being repayable on demand there is no amount overdue for morethan ninety days in respect of recovery of principal and interest of the above loans.
4 According to the information and explanations given to us and the records of theCompany examined by us the provisions of section 185 and 186 of the Companies Act 2013have been complied with in respect of loans investments guarantees and securities givenby the Company.
5 The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the rules framed there under.
6 The Central Government of India has prescribed maintenance of cost records undersection 148(1) of the Act for the product of the Company. However as the turnover of suchproduct is lower than the prescribed threshold limit in our opinion maintenance of costrecords is not applicable.
7 (a) According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company is generally regular in depositing theundisputed statutory dues including provident fund employees' state insuranceincome-tax duty of customs goods and services tax cess and any other statutory dues asapplicable with the appropriate authorities.
(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of Income Tax as at 31st March2021 which has not been deposited on account of a dispute are as follows.
|Name of the statute ||Nature ||Amount (Rs. in lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
|Income tax Act 1961 ||Income Tax ||103.66 ||2011-12 ||Commissioner Appeal (Income Tax) |
|Income tax Act 1961 ||Income Tax ||102.36 ||2012-13 ||Commissioner Appeal (Income Tax) |
8 According to the information and explanation given to us and the records of theCompany examined by us the Company has not defaulted in repayment of dues of any of loansor borrowings to any banks.
The Company has neither taken any loan from financial institutions or Government norissued any debentures.
9 In our opinion and according to the information and explanation given to us on anoverall basis the money raised by Company during the year by way of term loan have beenapplied for the purpose for which they were obtained.
The Company has not raised any money by way of initial public offer or further publicoffer (including debt instruments).
10 During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud on or by the Company noticed or reported during the year nor have webeen informed of such case by the management.
11 In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
12 The related statutes are not applicable as the Company is not a Nidhi Company.
13 According to the information and explanations given to us and the records of theCompany examined by us the company has complied with the requirements of sections 177 and188 of the Act with respect to its transactions with the related parties. Pursuant to therequirement of the applicable Accounting Standard details of the related partytransactions have been disclosed in Note 34 of the standalone financial statements for theyear under audit.
14 The Company has neither made any preferential allotment of shares nor fully orpartly convertible debentures during the year under audit.
15 According to the information and explanations given to us and the records of theCompany examined by us the Company has not entered into any non-cash transactions withany director of the Company and the holding company or persons connected with theminvolving acquisition of assets by or from them for consideration other than cash.
16 In our opinion and according to the information and explanations given to us notbeing a non-banking financial company the Company is not required to be registered undersection 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE B to the independent auditor's report
To the Members of RDB REALTY & INFRASTRUCTURE LIMITED
[Referred to in paragraph 18 (f) of the Independent Auditor's Report of even date]
Report on the Internal Financial Control under Clause (i) of Sub -sections 3 of Section143 of the Companies Act 2013("the Act")
1. We have audited the internal financial controls over financial reporting of RDBREALTY & INFRASTRUCTURE LIMITED ("the Company") as of 31st March2021 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Control
2. The Company's management is responsible for establishing and maintaining internalfinancial control 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 (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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.
3. 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" and the Standard on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includesobtaining an understanding of internal financial control over financial reportingassessing the risk that a material Weakness exists and testing and evaluating the designand operating effectiveness of internal controls based on the assessed risk. The procedureselected depends on the auditor's judgment including the assessment of the risk ofmaterial misstatement of the financial statement whether due to fraud or error.
5. 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 Control over Financial Reporting
6. A Company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that
1) Pertain to the maintenance of the records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2) provide reasonable assurance that the transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditure of the Company are being madeonly in accordance with authorization of management and directors of company; and
3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Control over Financial Reporting
7. Because of inherent limitation of internal financial control over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to errors or fraud may occur and not be detected.Also projections of any evaluations of the internal financial control 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.
8. In our opinion the Company has in all material respect an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2021based on the internal control over financial reporting criteria established by the companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Control Over Financial Reporting issued by ICAI.
| ||For L. B. Jha & Co. Chartered Accountants |
| ||Firm Registration No : 301088E |
| ||(S. Tibrewal) |
|Place : Kolkata ||Partner |
|Date : 28.06.2021 ||Membership No. 300388 UDIN: 21300388AAAADC5237 |