To the Members of
M/s. SETUBANDHAN INFRASTRUCTURE LIMITED
(Formerly Known as Prakash Constrowell Limited)
Report on the Audit of Standalone Financial Statements Opinion
We have audited the accompanying Standalone financial statements ofM/s. SETUBANDHAN INFRASTRUCTURE LIMITED (Formerly Known as Prakash Constrowell Limited )which comprise the Balance Sheet as at March 31 2020 the Statement of Profit and Loss(including Statement of Other Comprehensive Income) Statement of changes in equity andStatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.In our opinion and to the best of our information and according to the explanations givento us the aforesaid Ind AS standalone financial statements give the information requiredby the Companies Act2013 ('the act'') in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the act read with Companies (Indian Accounting Standard Rules2015as amended(Ind AS'') and other accounting principles generally acceptedin India of the state of affairs of the Company as at 31st March 2020 and itsprofit total comprehensive income its cash flows and changes in equity for the yearended on that date. Basis for Opinion We conducted our audit in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the financial statements under the provisions of the Companies Act 2013and the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance 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 opinionon the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|1 Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind ASc 115 "Revenue from Contracts with Customers"(new revenue accounting standard) ||Principal Audit Procedures |
|The application of the new revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised overall period. Additionally new revenue accounting Standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. ||We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard. |
| ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| ||Evaluated the design of internal controls relating to implementation of the new revenue accounting standard. |
| ||Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation re-performance and inspection of evidence in respect of operation of these controls. |
| ||Tested 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. |
| ||Selected a sample of continuing and new contracts and performed the following procedures: |
| || Read analyzed and identified the distinct performance obligations in these contracts. |
| || Compared these performance obligations with that identified and recorded by theGroup. |
| || Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. |
| || Samples in respect of revenue recorded for time and material contracts were tested using a combination of approved time sheets including customer acceptances subsequent invoicing and historical trend of collections and disputes. |
| || In respect of samples relating to fixed price contracts progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual and estimated efforts from the time recording and budgeting systems. We also tested the access and change management controls relating to these systems. |
| || Sample of revenues disaggregated by type and service offerings was tested with the performance obligations specified in the underlying contracts. |
| || Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings. |
| || We reviewed the collation of information and the logic of the report generated from the budgeting system used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. |
|2 Accuracy of revenues and onerous obligations in respect of fixed price contracts involves critical estimates ||Principal Audit Procedures |
|Estimated effort is a critical estimate to determine revenues and liability for onerous obligations. This estimate has a high inherent uncertainty as it requires consideration of progress of the contract efforts incurred till date and efforts required to complete the remaining contract performance obligations. ||Our audit approach was a combination of test of internal controls and substantive procedures which included the following: |
| || Evaluated the design of internal controls relating to recording of efforts incurred and estimation of efforts required to complete the performance obligations. |
| || Tested the access and application controls pertaining to time recording allocation and budgeting systems which prevents unauthorized changes to recording of efforts incurred. |
| || Selected a sample of contracts and through inspection of evidence of performance of these controls tested the operating effectiveness of the internal controls relating to efforts incurred and estimated. |
| || Selected a sample of contracts and performed a retrospective review of efforts incurred with estimated efforts to identify significant variations and verify whether those variations have been considered in estimating the remaining efforts to complete the contract. |
| || Reviewed a sample of contracts with unbilled revenues to identify possible delays in achieving milestones which require change in estimated efforts to complete the remaining performance obligations. |
| ||Performed analytical procedures and test of details for reasonableness of incurred and estimated efforts. |
|3 Evaluation of uncertain tax positions ||Principal Audit Procedures |
|The Group has material uncertain tax positions including matters significant judgment to determine the possible outcome of these disputes. ||Obtained details of completed tax assessments and demands for the year ended March 31 2020 from management. We involved our internal experts to challenge the management's underlying under dispute which involves assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2019 to evaluate whether any change was required to management's position on these uncertainties. |
|4 Recoverability off direct tax receivables ||Principal Audit Procedures |
|As at March 31 2020 non- current assets in respect of withholding tax recoverable amounting to 39.98 Lakhs which are pending adjudication. ||We have involved our internal experts to review the nature of the amounts recoverable the sustainability and the likelihood of recoverability upon final resolution. |
Information other than the Financial Statements and Auditor reportthereon.
1. The Company's Board of directors is responsible for the preparationof other information. The other information comprises the information included in themanagement discussion and analysis Board's report including Annexures toBoard's report but does not include the standalone financial statements and ourauditor's report thereon.
2. Our opinion on the standalone financial statements does not coverthe other information and we do not express any form of assurance conclusion thereon.
3. In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.
4. If based on the work we have performed we conclude that there ismaterial misstatement of this other information; we are required to report that fact. Wehave nothing to report in this regard. Responsibility of Management for the StandaloneFinancial Statements The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these standalone financial statements that give a true and fair view ofthe financial position financial performance including other comprehensive income changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the accounting Standards specified undersection 133 of the Act and Companies (Indian Accounting Standards) Rules2015 as amended. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate implementation and maintenance of accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error. In preparing thefinancial statements management is responsible for assessing the Company's abilityto continue as a going concern disclosing as applicable matters related to goingconcern and using the going concern basis of accounting unless management either intendsto liquidate the Company or to cease operations or has no realistic alternative but to doso. Auditor's Responsibilities for the Audit of the Standalone Financial StatementsOur objectives are to obtain reasonable assurance about whether the standalone 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 ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud 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 standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control. Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.Conclude on the appropriateness of management's use of the 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 ability ofthe Group to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the standalone financial statements or if such disclosures are inadequateto modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theGroup to cease to continue as a going concern. Evaluate the overall presentationstructure and content of the standalone financial statements including the disclosuresand whether the standalone financial statements represent the underlying transactions andevents in a manner that achieves fair presentation. Obtain sufficient appropriate auditevidence regarding the financial information of the entities or business activities withinthe Group t express an opinion on the standalone financial statements. We are responsiblefor the direction supervision and performance of the audit of the financial statements ofsuch entities included in the standalone financial statements.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions 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.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to out weigh the public interest benefits of suchcommunication.
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 of the Companies Act 2013 we give in the Annexure A statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable. 2. Asrequired by Section 143(3) of the Act we report that: a. We have sought and obtained allthe information and explanations which to the best of our knowledge and belief werenecessary for the purposes of our audit. b. In our opinion proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose books. c. The Balance Sheet the Statement of Profit and Loss including OtherComprehensive income and the Cash Flow Statement dealt with by this Report are inagreement with the books of account. d. In our opinion the aforesaid Standalone Ind ASfinancial statements comply with the Accounting Standards specified under Section 133 ofthe Act read with Rule 7 of the Companies (Accounts) Rules 2014. e. On the basis of thewritten representations received from the directors as on 31st March 2020 taken on recordby the Board of Directors none of the directors is disqualified as on 31st March 2020from being appointed as a director in terms of Section 164 (2) of the Act. f. With respectto the adequacy of the internal financial controls over financial reporting of the Companyand the operating effectiveness of such controls refer to our separate Report in"Annexure B". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting; and g. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
1. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements Refer Note 29(A) of the Standalonefinancial statement. 2. The Company does not have any long-term Contract. The Company wasnot required to make any provisions for material foreseeable losses. 3. There has been nodelay in transferring amounts required to be transferred to the Investor Education andProtection Fund by the Company during the year.
Annexure - A to the Auditors' Report
The Annexure referred to in our Independent Auditor's Report tothe members of Setubandhan Infrastructure Limited on standalone Ind-AS financialstatements for the year Ended on 31/03/2020. We report that:
1) In respect of fixed assets:
(a) The Company is maintaining proper record to show full particularsincluding quantitative details and situation of all property plant and equipment assetson the basis of available information.
(b) We are informed that the company has a regular programme ofphysical verification of its fixed assets by which fixed assets are verified in a phasedmanner over a period of three years. In accordance with this programme certain fixedassets were verified during the year and no material discrepancies were noticed on suchverification. In our opinion this periodicity of physical verification is reasonablehaving regard to size of the Company and the nature of its assets.
(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company.
2) In respect of its inventories:
(a) As explained to us inventories i.e. WIP of construction activityhave been physically verified by the management at reasonable intervals during the yearother than loose tools machinery spares and inventory sold to customers for whichdelivery is yet to be made. In our opinion the frequency of such verification isreasonable.
(b) As per the information given to us the procedures of physicalverification of inventory followed by the management are in our opinion reasonable andadequate in relation to the size of the company and the nature of its business.
(c) The company is maintaining proper records of inventory. Thediscrepancies noted on physical verification of inventories as compared to books recordswere not material and have been properly dealt with in books of accounts.
3) According to the information and explanation given to us TheCompany has not granted any loans to the companies firms and other parties covered inregister maintained under section 189 of the companies act 2013. Accordingly paragraph3(iii) of the order is not applicable.
4) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 185 and 186 of theAct with respect to the loans and investments made.
5) According to the information and explanation given to us theCompany has not accepted any deposits from the public and accordingly paragraph 3(v) ofthe Order is not applicable.
6) We have broadly reviewed the books of account and record maintainedby the Company pursuant to the rules prescribed by the Central Government for themaintenance of the cost records under section 148(1) of the Companies Act 2013 in respectof all its construction activities and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. The contents of these accounts andrecords have not been examined by us.
7) (a) According to the information and explanations given to us andthe records of the company examined by us the company is generally regular in depositingwith appropriate authorities undisputed statutory dues including Provident Fundemployee's state insurance income tax service tax sales tax tax deducted atsource cess and other material statutory dues applicable to it except as mentioned below:
According to the information and explanations given to us and therecords of the company examined by us TDS amounting to Rs. 3998551/- is payableundisputed which were in arrears as at 31st March 2020 for a period of morethan six months from the date they become payable.
(b) According to the information and explanations given to us thefollowing dues of income tax have not been deposited by the Company on account ofdisputes:
|Name of Statue ||Nature of Dues ||Amount ||Period to which amount related ||Forum where Dispute is Pending |
| || ||(Rs. In Lakh) || || |
|Income Tax Act 1961 ||Income tax assessment dues under Section 153A of the act. ||35.15 ||2007-08 ||Assistant Commissioner of Income Tax (Appeals) |
| || ||20.04 ||2009-10 || |
| || ||14.11 ||2010-11 || |
| || ||345.74 ||2011-12 || |
| || ||2774.77 ||2012-13 || |
| || ||227.48 ||2013-14 || |
*Also employee state insurance corporation matter has been disputed theamount which is not quantified by the management because of extension of ESI Scheme toconstruction site workers reg. order dated 26th September 2018 which states that Supremecourt of India vide its orders dated 06th July 2018 has granted stay for collection ofESIC for construction site workers. The company has deposited Rs 85395/- for furtherappeal against the notice for non- payment of ESIC.
8) According to the records of the company examined by us andinformation and explanations given to us the company has defaulted in repayment of duesto any financial institutions or bank as at the balance sheet date. And Company does nothave any loans or borrowings from government or debenture holders during the year. Thedetails of which has been mentioned below:
|Nam of bank or Financial Institution ||Account number ||Type of facility ||Outstanding amount as on 31.03.2020 |
|State bank of India ||32899386345 ||CC limit ||Rs 6208.54 lakhs |
|Andhra bank ||113931100000423 ||CC limit ||Rs 597.89 lakhs |
9) The Company did not raise any money by way of initial public offeror future public offer (including debt instruments) and term loans during the year.Accordingly paragraph 3(ix) of the Order is not applicable.
10) According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the course of our audit.
11) According to the information and explanations given to us and basedon our examination of the records of the Company the Company has paid or provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.
12) In our Opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.
13) According to the information and explanations given to us and basedon our examination of the records of the Company transactions with the related partiesare in compliance with Sections 177 and 188 of the Act where applicable and details ofsuch transactions have been disclosed in the financial statements as required by theapplicable accounting standards.
14) According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
15) According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.
16) The Company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934.
Annexure B to Independent Auditors' Report
Referred to in paragraph 2(f) of the Independent Auditors' Reportof even date to the members of Setubandhan Infrastructure Limited on the Ind-AS standalonefinancial statements for the year ended 31 March 2020
Report on the internal financial controls under clause (i) ofsub-section 3 of section 143 of the Act
1. We have audited the internal financial controls over financialreporting of Setubandhan Infrastructure Limited (Formerly known as Prakash ConstrowellLimited) . (the Company') as of 31 March 2020 in conjunction with our audit ofthe Ind-AS standalone financial statements of the Company for the year ended on that date.
Management's responsibility for internal financial controls
2. The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI).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 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.
3. Our responsibility is to express an opinion on the company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the Guidance Note') and the Standards on Auditing deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit an internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls system over financial reporting andtheir operating effectiveness. Our audit of internal financial controls over financialreporting included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment includingthe assessment of the risks of material misstatement of the financial statement whetherdue to fraud or error.
5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of internal controls over financial reporting
6. A company's internal financial control over financial reportingis a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statement for external purposes inaccordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.
Inherent Limitations of internal financial controls over financialreporting
7. Because of the inherent limitations of internal financial controlsover financial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of change in conditions orthat the degree of compliance with the policies or procedures may deteriorate.
8. In our opinion the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at 31 March2020 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.
| ||For G A G And |
|Associates ||Chartered |
|Accountants ||FRN: 009758C |
| ||Sd/- |
| ||CA Sahaj Arora |
| ||(Partner) |
|Place: Ujjain ||M. No. 429634 |
|Date: 29.07.2020 ||UDIN: 20429634AAAAAE2647 |