TO THE MEMBERS OF SHELTER INFRA PROJECTS LIMITED
Shelter Infra Projects Limited
Report on the Audit of the Financial Statements of Shelter Infra Projects Limited
We have audited the accompanying financial statements of Shelter Infra Projects Limited("the Company") which comprise the Balance Sheet as at 31st March 2019the statement of profit and loss (including other comprehensive income) the statement ofchanges in Equity and the cash flow statement for the year on that date and a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the financial statement").
In our opinion and to the best of information and according to the explanations givento us. the aforesaid financial statements subject to items referred to in the basis ofqualified opinion give the information required by the Companies Act. 2013 (the"Act") in the manner so required and give a true and fair view in conformitywith Indian Accounting Standards prescribed under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules. 2015. as amended ("Ind AS") andother accounting principles generally accepted in India of the state of affairs of thecompany as at March 31 2019. the profit comprehensive income changes inequity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act (SAs). Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the companyin accordance with the Code of Ethics issued by the Institute of the Chartered Accountantsof India (ICAI) together with independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made there underand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide the basis for our audit opinion on thefinancial statements.
Attention is invited to our following observations
(i) Payment against directors remuneration in the earlier year amounting to Rs.0.76lacs needs to be debited to non reclassifiable to profit or loss account component of OCIas against shown under reclassifiable component.
(ii) Non provision against development rights cost amounting to Rs.556.30 lakhs (referto note No.30(j) which appears unrecoverable.
(iii) Liability of lease rent against land taken from local municipality for a periodof 99 years has not been provided for in terms of Ind AS - 17 (refer to note no.30(i)
(iv) Non provision for obsolete stores [Note No.3()(o)]
(v) Management's inability to determine fair value of non-current investments in equityinstruments book valuing Rs.98.43 lakhs with consequent impact on OCI.
Key Audit Matters
Key audit matters are those matters that in our professional judgement 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 of opinion thereon and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matters |
|A. Revenue Recognition ||Our key procedures included the following: |
|Revenues for the company are primarily from construction contract on cost plus profit basis and related income. ||a) Assessed the appropriateness of the company's revenue recognition accounting policies by comparing with the applicable accounting standards. No discount incentive or rebate is involved in respect of the company. |
| || |
|Hills are raised against construction contract upto progressive billing stage in terms of certification / acceptance by client as per contract rates. || |
|Rental income is recognized on actual basis which are free from dispute ||b) Tested the operating effectiveness of the general IT control environment and key IT application controls over recognition of revenue. |
| ||c) Performed test of details: |
|Non recurring income Rs.660 lacs approximately shown under miscellaneous income relate to waiver of dues under one time settlement with erstwhile lender bank which constitute major source of Income of the year ||i) Agreed samples of contractual agreements & tenancy agreement documentation and approvals; and |
| || |
| ||ii) Obtained supporting documents for transactions recorded either side of year end to determine whether revenue was recognized in the correct period. |
| ||d) Performed focused analytical procedures: |
|Further the company focuses on revenue as a key performance measure. Therefore revenue was our area of focus included whether the accruals were misstated and appropriately valued whether the significant transactions had been accurately recorded in the Statement of Profit and Loss. || |
|Refer corresponding note for amounts recognized as revenue from sale of products ||i) Compared the revenue for the current year with the prior year for variance/ trend analysis and where relevant completed further inquiries and testing to corroborate the variances by considering both internal and external benchmarks overlaying our understanding of enterprise; and |
| ||ii) Income from OTS with Bank has been checked with the agreement of settlement arrived at between bank and the company. |
| ||e) Considered the appropriateness of the company's description of the accounting policy disclosures related to revenue and whether these are adequately presented in the financial statement. |
|B. Litigations and claims - provisions and contingent liabilities ||Our key procedures included the following: |
|As disclosed in Notes detailing contingent liability and provision for contingencies the company is involved in direct indirect tax and other litigations ('litigations') that are pending with different statutory authorities. || Assessed the appropriates of the company's accounting policies including those relating to provision and contingent liability by comparing with the applicable accounting standards; |
|Whether a liability is recognized or disclosed as a contingent liability in the financial statements is inherently judgmental and dependent on a number of significant assumptions and assessments. || Assessed the company process for identification of the pending litigations and completeness for financial reporting and also for monitoring of significant developments in relation to such pending litigations; |
| || |
| || Engaged subject matter specialists to gain an understanding of the current status of litigations and monitored changes in the disputes if any through discussions with the management and by reading external advice received by the company where relevant to establish that the provisions had been appropriately recognized or disclosed as required; |
|The amounts involved are potentially significant and determining the amount if any to be recognized or disclosed in the financial statements is inherently subjective. || Assessed the company's assumptions and estimates in respect of litigations including the liabilities or provisions recognized or contingent liabilities disclosed in the financial statements. This involved assessing the probability of an unfavorable outcome of a given proceeding and the reliability of estimates of related amounts; |
| || Performed substantive procedures on the underlying calculations supporting the provisions recorded; |
| || Assessed the management's conclusions through understanding precedents set in similar cases; and |
| ||Considering the appropriateness of the company's description of the disclosures related to litigations and whether these adequately presented in the financial statements. |
|C. Valuation of investments and impairment thereof ||Our key procedures included the following: |
|1. Non-Current Investments in Unquoted equity instruments. ||Non ascertainment of fair value by management prompted qualificatory reference to the effect in our report. |
|II. Margin & Other Deposit with Bank. ||Verified with reference to banks' confirmation and computation of interest accrued thereon. |
|1). Evaluation of uncertain indirect tax provisions ||Principal Audit procedures |
|The Company has material indirect tax provisions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. || |
|Refer Note No.30(b) ||Obtained details of completed indirect tax assessments and demands for the year ended March 31. 2019 in uploaded context from management. We involved our internal experts to challenge the management's underlying 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 2018 to evaluate whether any change was required to management's position on these uncertainties. |
Information Other than the Financial Statements and Auditor's 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 auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse 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 report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to preparation of these financial statements that give atrue and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the companies in accordance with the Ind ASand other accounting principles generally accepted in India. The respective Board ofDirectors of the companies are also responsible for maintenance of the adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of thecompanies and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies: making judgments and estimates that arcreasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error..
In preparing the financial statements the Board of Directors of the company isresponsible for assessing the company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
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.
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.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act. we are also responsible for expressing our opinion on whether theCompany which has companies incorporated in India has adequate internal financialcontrols system in place 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 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 financial statements or. if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the company to ceaseto continue as a 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.
Obtain sufficient appropriate audit evidence regarding the financial informationof the entities or business activities within the company to express an opinion on thefinancial statements. We are responsible for the direction supervision and performance ofthe audit of the financial statements of such entities included in the financialstatements.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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
I. As required by Section 143(3) of the Act. based on our audit 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 of the aforesaidfinancial statements.
b) In our opinion proper books of account as required by law relating to preparationof the aforesaid financial statements have been kept so far as it appears from ourexamination of those books.
c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the relevant books of account maintained for the purpose ofpreparation of the financial statements.
d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act. read with Rule 7 of the Companies (Accounts) Rules. 2014.
e) On the basis of written representations received from the directors as on March 31.2010 taken on record by the Board of Directors none of the directors is disqualified ason March 31. 2019 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in "Annexure I". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in Auditor's Report in accordancewith the requirements of Section 197( 16) of the Act. we hereby report that in our opinionand to the best of our information and according to explanations given to us. noremuneration has been paid by the company to its directors during the year attractingprovisions 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. as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The financial statements disclose impact of pending litigations on the financialposition of the company in note no.30(b) of financial statements.
ii. The company has not entered into derivative contracts. The compans has entered intolong term contract in respect of which no material loss is foreseeable except forforfeiture of development rights appearing at Rs.556 lacs in the books of the company.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act. we give in"Annexure 2" a statement on the matters specified in paragraphs 3 and 4of the Order.
|Place : Kolkata ||For BASU CHANCHANI & DEB |
|Date: May 28 2019 ||CHARTERED ACCOUNTANTS |
| ||R.No. 304049E |
| ||BISWANATH CHATTOPADHYAY |
| ||Partner |
| ||(M. No. 051800) |
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") referred to in Para V (2) (f) of ourreport of even date.
We have audited the internal financial controls over financial reporting of ShelterInfra Projects Limited ("the Company") as of 31st March 2019 in conjunction withour audit of INI) AS financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the "Guidance Note on Audit of Internal Financial Controls over FinancialReporting" issued by the Institute of Chartered Accountants of India.
These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act. 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting 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 ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch 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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk.
The procedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of IND AS financial statements whether due to fraud orerror.
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 IND AS financial statements for external purposes in accordance withgenerally accepted accounting principles.
A company's internal financial control over financial reporting includes those policiesand procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company:
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company : and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use. or disposition of the company's assets that could have amaterial 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019.based 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 Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
|Place : Kolkata ||For BASU CHANCHANI & DEB |
|Date: May 28 2019 ||CHARTERED ACCOUNTANTS |
| ||R.No. 304049E |
| ||BISWANATH CHATTOPADHYAY |
| ||Partner |
| ||(M. No. 051800) |
Matters included in the auditor's report: pursuant to Company's (Auditors Report) Orderissued by Central Government.
i) The company is maintaining records showing full particulars including quantitativedetails and situation of the fixed asset
The fixed assets have not been physically verified by the management during the yearand accordingly no material discrepancies between the book of records and physicalinventory have not identified.
The title deeds of immovable property are held in the name of the company.
ii) Physical verification of inventory has been conducted at reasonable intervals bythe management
A) The procedure of physical verification for inventory followed by the management isreasonable and adequate in relation to the size of the company and the nature of itsbusiness
B) The company is maintaining proper records of inventory and discrepancies noticed onphysical verification were not material have been properly dealt in the books of accounts.
iii) The company has not granted any loan secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the companies actduring the year.
iv) The Company has not raised any loan from Directors.
v) The company has not accepted any deposits from public. Accordingly paragraph 3(v)of the order is not applicable.
vi) The central government has not prescribed any provision for maintenance of costrecords of the aforementioned company and accordingly no such cost record has beenmaintained.
viia) The company is generally regular in depositing undisputed statutory duesincluding provident fund employees state insurance income tax sales tax wealth taxservice tax duty of customs duty of excise value added tax cess and any otherstatutory dues to the extent applicable to it with the appropriate authorities and thereis no arrear of outstanding statutory dues as at the last date of financial year for aperiod of more than six months from the date they became payable.
viib) Details of the dues not paid on account of disputes pending at different forum isgiven below:
|Statute ||Nature of Dues ||Amount ||Asst Year ||Forum where dispute is pending to which the amount relates |
|Income Tax Act ||Income Tax and Interest ||1037.89 ||2012-13 ||ITAT Kolkata |
|Income Tax Act ||Income Tax and Interest ||64.37 ||2013-14 ||CIT Appeal Kolkata |
|Income Tax Act ||Income Tax and Interest ||275.15 ||2013-14 ||CIT Appeal Kolkata |
|GST ||Service Tax & Penalties ||346.36 ||2011-16 ||Commissioner of Appeal GST & Central Excise |
The following long pending amount not yet been paid.
|SI.No Particulars ||Amount (Rs in Lacs) |
|1. Income Tax on Dividend ||8.95 |
|2. Fringe Benefit Tax ||0.28 |
|3. Municipal Tax ||98.41 |
|Total ||107.64 |
viii) The company has not defaulted in repayment of dues to financial institution &banks. Company has no debenture holder or financial institutional borrowings during theyear.
ix) The Company has not raised money by way of initial public offer or further publicoffer or by way of term loan.
x) No fraud has been noticed or reported on by the company during the year.
xi) No managerial remuneration paid by the company during the year in terms of section197 of the Companies Act 2013.
xii) The company is not a Nidhi Company.
xiii) There has been no non compliance with relevant provisions of Companies Act inrespect of transaction with related parties.
xiv) The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year.
xv) The company has not entered into any non cash transactions with directors orpersons connected with him.
xvi) The company is not required to be registered under section 45 IA of the ReserveBank of India Act 1934.
| ||For BASU CHANCHANI & DEB |
| ||CHARTERED ACCOUNTANTS |
|Place: Kolkata ||R. NO.-304049E |
|Date: May 28 2019 ||BISWANATH CHATTOPADHYAY |
| ||Partner |
| ||(M. No.-051800) |