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Sobha Ltd.

BSE: 532784 Sector: Infrastructure
NSE: SOBHA ISIN Code: INE671H01015
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VOLUME 31826
52-Week high 900.00
52-Week low 240.00
P/E 104.45
Mkt Cap.(Rs cr) 7,391
Buy Price 0.00
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Sell Price 0.00
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OPEN 783.00
CLOSE 774.25
VOLUME 31826
52-Week high 900.00
52-Week low 240.00
P/E 104.45
Mkt Cap.(Rs cr) 7,391
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sobha Ltd. (SOBHA) - Auditors Report

Company auditors report

To the Members of Sobha Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Sobha Limited("the Company") which comprise the standalone balance sheet as at 31 March2021 the standalone statement of profit and loss (including other comprehensive income)standalone statement of changes in equity and standalone statement of cash flows for theyear then ended and notes to the standalone financial statements including a summary ofthe significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2021and profit and other comprehensive income changes in equity and its cash flows for theyear ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on thestandalone 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 year. 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.

A. Inquiry from regulator - refer note 39 to the standalone financialstatements

Key Audit Matter How the matter was addressed in our audit
Assessment of certain transactions entered into by the Company and recoverability of balances on which regulatory enquiries are ongoing
During the current and previous years the Company has received enquiries from Securities and Exchange Board of India (SEBI) about certain transactions entered into by the Company in earlier years. Further in the current year the Company has also received Summons from SEBI under section 11(2) and 11C(2) 11C(3) of the SEBI Act 1992 for production of documents and responses in respect of the aforesaid transactions. Our audit procedures on the transactions included the following:
The enquiries and consequently the Summons are directed to ascertain if there has been any undue favour towards any individual in these specific business transactions carried out by the Company. • Inquired with senior personnel of the Company to understand the commercial rationale and status of aged receivables and other asset balances outstanding from these transactions;
These transactions represent aged receivables and other asset balances recoverable from the counter parties and SEBI has sought responses and evidences for the efforts taken by the Company to recover these amounts. • Verified the correspondence with the various parties to recover the outstanding balance;
The Company has consistently responded to SEBI on these transactions and efforts taken by them to recover the outstanding dues and maintains their position that there is no undue favour to any party. The matter has not yet been concluded by SEBI. • Verified the documentation entered into (including subsequent to the balance sheet date) with the parties relating to the various projects and recoverability of the dues;
Subsequent to the balance sheet date the Company and the other parties to the transactions have agreed to a manner of settlement of the dues. • Read the Company's communication to SEBI to ensure consistency with the explanations and documentation / correspondences provided to us;
Considering the significance of the matter which involves uncertainty of outcome due to ongoing enquiries from SEBI and significant judgements and estimates by the Company on the realizability of these balances this is considered as a key audit matter. • Evaluated and challenged the Company's assessment of recoverability of the balances outstanding as at the balance sheet date and the business rationale for these transactions and the timing and manner of settlement including considering the developments subsequent to the balance sheet date;
• Evaluated the legal opinion obtained by the Company on the enforceability of the documentation with the other parties for recovery of dues;
• Communicated and discussed periodic updates on these transactions to those charged with governance including the recoverability and business rationale aspects for these transactions;
• Read the minutes of the meetings of the management discussions with the Board of Directors and those charged with governance on this matter; and
• Considered the adequacy of the disclosures in the standalone financial statements.

B. Revenue recognition - refer note 2.2(a)(ii)(a) to the standalonefinancial statements

Key Audit Matter How the matter was addressed in our audit
Measurement of revenue recorded from sale of residential units Our audit procedures on revenue recognition on sale of residential units included the following:
Revenues from sale of residential units represents the largest portion of the total revenues of the Company. ? Evaluation of the Company's accounting policies for revenue recognition on sale of residential units are in line with the applicable accounting standards and their application to customer contracts including consistent application;
Revenue is recognised upon transfer of control of residential units to customers for an amount which reflects the consideration the Company expects to receive in exchange for those units. The point of revenue recognition is normally based on the terms as included in the intimation for the handover of unit to the customer on completion of the project post which the contract becomes non-cancellable by the parties. The Company records revenue at a point in time upon transfer of control of residential units to the customers. • Identifying and testing operating effectiveness of key controls around approvals of contracts milestone billing intimation of handover letters and controls over collection from customers;
Considering the volume of the Company's projects spread across different regions within the country and the competitive business environment there is a risk of revenue being recorded in an incorrect period (for example through premature revenue recognition i.e. recording revenue prior to handover of unit to the customers or improperly shifting revenues to a later period) in order to present consistent financial results. Since revenue recognition has direct impact on the Company's profitability there is a possibility of the Company being biased hence this is considered as a key audit matter. • For samples selected verifying the underlying documents – handover letter sale agreement signed by the customer handover intimation mail sent to the customer and the collections against the units sold;
• Cut-off procedures for recording of revenue in the relevant reporting period;
• Site visits during the year for selected projects to understand the scope nature status and progress of the projects; and
• Considering the adequacy of the disclosures in note 2.2(a)(ii)(a) to the standalone financial statements in respect of recognising revenue on sale of residential units.

C. Revenue recognition - refer note 3(b)(i) to the standalone financialstatements

Key Audit Matter How the matter was addressed in our audit
Measurement of revenue on contractual construction projects recorded over time which is dependent on the estimates of the costs to complete Our audit procedures on revenue recognition on contractual construction projects included the following:
Revenue recognition from contractual projects represents a significant portion of the total revenues of the Company. • Evaluation of Company's accounting policies for revenue recognition on contractual projects are in line with the applicable accounting standards and their application to customer contracts including consistent application;
Revenue recognition from contractual projects involves significant estimates primarily pertaining to measurement of costs to complete the projects. • Identifying and testing operating effectiveness of key controls around budgeting of project cost approval of purchase orders recording of actual cost raising of invoices and estimating the cost to complete the project;
Revenue from projects is recorded based on Company's assessment of the work completed costs incurred and accrued and the estimate of the balance costs to complete. • For samples selected during the year verifying the underlying documents – contracts with customers invoices raised and collections from the customers;
Due to inherent nature of the projects and significant judgment involved in the estimate of costs to complete there is risk of overstatement or understatement of revenue hence this is considered as a key audit matter. • Comparing the estimated costs to complete with the budgeted costs and analysis of the variances if any;
• Sighting approvals for budgeted costs with the rationale for the changes;
• Assessment of costs incurred on projects which is used by the Company to determine the percentage of completion;
• Considering the adequacy of the disclosures in note 3(b)(i) to the standalone financial statements in respect of judgements taken to recognise revenue for contractual projects; and
• Considering the adequacy of the disclosures in note 41 to the standalone financial statements in respect of revenue recognized cost incurred amount received/ retentions due from customers work in progress value of inventories and profit recognized till date.

D. Revenue recognition - refer note 2.2(a)(iii) to the standalonefinancial statements

Key Audit Matter How the matter was addressed in our audit
Measurement of revenue recorded from sale of manufactured products Our audit procedures on revenue recognition from sale of manufactured products included the following:
Revenue is recognised upon transfer of control of products manufactured by the Company to customers for an amount which reflects the consideration the Company expects to receive in exchange for those products. The point of revenue recognition is normally upon transfer of control to the customer on delivery of product. • Evaluation of Company's accounting policies for revenue recognition on sale of products manufactured are in line with the applicable accounting standards and their application to agreement with customers including consistent application;
Considering the competitive business environment there is a risk of revenue being overstated (for example through premature revenue recognition i.e. recording revenue prior to transfer of control to the customers) or understated (for example through improperly shifting revenues to a later period) in order to present consistent financial results. • Identifying and testing operating effectiveness of key controls around approvals of sale order received invoice raised intimation of delivery of product and controls over collection from customers;
Since revenue recognition has direct impact on the Company's profitability there is a possibility of the Company being biased hence this is considered as a key audit matter. • For samples selected verifying the underlying documents – sales order invoice raised good received note authorised by the customer and the collections;
• Cut-off procedures for recording of revenue in the relevant reporting period; and
• Considering the adequacy of the disclosures in note 2.2(a)(iii) to the standalone financial statements in respect of recognizing revenue on sale of manufactured products.

E. Inventories - refer note 3(b)(iii) to the standalone financialstatements

Key Audit Matter How the matter was addressed in our audit
Assessment of net realisable value (NRV) of inventories Our audit procedures to assess the net realisable value (NRV) of inventories included the following:
Inventories on construction of residential units comprising ongoing and completed projects initiated but unlaunched projects and land stock represents a significant portion of the Company's total assets. • Enquiry with the Company's personnel to understand the basis of computation and justification for the estimated recoverable amounts of the unsold units in both ongoing and completed projects ("the NRV assessment");
The Company recognises profit on the sale of each residential unit with reference to the overall profit margin depending upon the total cost incurred on the project. A project comprises multiple units the construction of which is carried out over a number of years. • Assessing the Company's valuation methodology for the key estimates data inputs and assumptions adopted in the valuation. This involved comparing the total cost per sqft with expected average selling prices such as recently transacted prices maintained by the Company. For projects which are not launched and / (or) there are no sales the total cost per sqft is compared to the selling prices of similar properties located in nearby vicinity of each project
The recognition of profit for sale of a unit is therefore dependent on the estimate of future selling prices and construction costs. Further estimation uncertainty and exposure to cyclicality exists within long- term projects. • While analyzing the expected average selling price we have performed a sensitivity analysis on the selling price and compared this to the budgeted cost;
Forecasts of future sales are dependent on market conditions which can be difficult to predict and be influenced by political and economic factors. Considering the significance of the amount of carrying value of inventories and the involvement of significant estimation and judgement in assessment of NRV this is considered as a key audit matter. • For our samples of land stock obtained the fair valuation reports and published guidance values for assessing the valuation methodology key estimates and assumptions adopted in the valuation; and
• Verifying the NRV assessment and comparing the estimated construction costs to complete each development with the Company's updated budgets.

F. Land Advances - refer note 3(b)(iii) to the standalone financialstatements

Key Audit Matter How the matter was addressed in our audit
Assessment of recoverability of land advances Our audit procedures to assess the recoverability of land advances included the following:
Land advances represents a significant portion of the Company's total assets. Land advance represents the amount paid towards procurement of land parcels to be used in the future for construction of residential projects. These advances are carried at cost less impairment losses. These land advances are converted into land stock as per the terms of the underlying contracts under which these land advances have been given. The carrying value of advances are tested for recoverability by the Company by comparing the valuation of land parcels in the same area for which land advances have been given. • Enquiry with the Company's personnel on the process of providing land advances and testing of key controls over such land advances paid during the year;
Due to quantum of carrying value of land advances to total assets of the Company and significant estimates and judgements involved in assessing recoverability of land advances this is considered as a key audit matter. • Enquiry with the Company's personnel also covered obtaining explanations on the long- standing land advances and understanding Company's plan for conversion of the land advances to land stock;
•For our samples verifying the underlying agreements or Memorandum of understanding in possession of the Company based on which land advances were given to assess the Company's rights over the land parcels in subject;
• For our samples obtaining the fair valuation reports of such land parcels for assessing the valuation methodology key estimates and assumptions adopted in the valuation; and
• For our samples verifying the published guidance values for the area in which these land parcels are situated.

Information Other than the Standalone Financial Statements andAuditors' Report Thereon

The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and ourauditors' report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

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 in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Management's and Board of Directors' Responsibility for theStandalone Financial Statements

The Company's Management and Board of Directors are responsiblefor the matters stated in section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs profit/loss and other comprehensive income changes in equity and cash flows

Auditor's Responsibilities of the Audio of the StandaloneFinancial Statements

of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring accuracyand completeness of the accounting records relevant to the preparation and presentationof the standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements the Management andBoard of Directors are responsible for assessing the Company's ability to continue asa going concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso. The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.As part of an audit in accordance with SAs we exercise professional judgment and maintainprofessional 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.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the standalone financialstatements made by the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the standalone financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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 auditors' 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 outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016("the Order") issued by the Central Government in terms of section 143 (11) ofthe Act we give in the "Annexure A" a statement on the matters specifiedin paragraphs 3 and 4 of the 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b. In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c. The standalone balance sheet the standalone statement of profit andloss (including other comprehensive income) the standalone statement of changes in equityand the standalone statement of cash flows dealt with by this Report are in agreement withthe books of account.

d. In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under section 133 of the Act.

e. On the basis of the written representations received from thedirectors as on 31 March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 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 withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31March 2021 on its financial position in its standalone financial statements - Refer Note39 to the standalone financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company; and

iv. The disclosures in the standalone financial statements regardingholdings as well as dealings in specified bank notes during the period from 8November 2016 to 30 December 2016 have not been made in these financial statementssince they do not pertain to the financial year ended 31 March 2021.

(C) With respect to the matter to be included in the Auditors'Report under section 197(16): In our opinion and according to the information andexplanations given to us the remuneration paid by the Company to its directors during thecurrent year is in accordance with the provisions of Section 197 of the Act. Theremuneration paid to any director is not in excess of the limit laid down under Section197 of the Act. The Ministry of Corporate Affairs has not prescribed other details underSection 197(16) which are required to be commented upon by us.

Annexure A to the Independent Auditors' Report on the standalonefinancial statements of Sobha Limited (‘the Company')

With reference to the Annexure A referred to in the IndependentAuditors' Report to the members of the Company on the standalone financial statementsfor the year ended 31 March 2021 we report the following: (i) (a) The Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) The Company has a regular programme of physical verification of itsfixed assets by which all fixed assets are verified in a phased manner over a period of 3years except scaffolding items. In our opinion this periodicity of physical verificationis reasonable having regard to the size of the Company and the nature of its assets.Pursuant to the programme certain fixed assets were physically verified during the yearand no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanationsgiven to us and on the basis of our examination of the records of the Company the titledeeds of immovable properties included in property plant and equipment are held in thename of the Company.

(ii) The Company's inventory includes constructionwork-in-progress. The requirements under paragraph 3(ii) of the Order are not applicablefor construction work-in-progress. The other inventory comprising of raw material andfinished goods has been physically verified by the management during the year. In ouropinion the frequency of such verification is reasonable. The discrepancies noticed onverification between physical stock and the book records were not material and notadjusted in the books of accounts;

(iii) The Company has granted unsecured loans to three companiescovered in the register maintained under Section 189 of the Companies Act 2013 (‘theAct'). According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to firms limited liability partnerships or otherparties covered in the register maintained under Section 189 of the Companies Act 2013("the Act").

(a) According to the information and explanations given to us and basedon the audit procedures conducted by us we are of the opinion that the rate of interestand other terms and conditions of unsecured loans granted by the Company to companiescovered in the register required to be maintained under Section 189 of the Act are notprima facie prejudicial to the interest of the Company.

(b) According to the information and explanations given to us and basedon the audit procedures conducted by us the unsecured loans granted to the companies andthe interest thereon are repayable on demand or repayable as per contractual terms of therespective agreements. The borrowers have been regular in payment of principal andinterest as demanded or as per contractual terms as applicable.

(c) There are no overdue amounts of more than 90 days in respect of theunsecured loans granted to companies by the Company.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Sections 185 and 186 of theAct with respect to loans given investments made and guarantees given. Further thereare no security given in respect of which provisions of Sections 185 and 186 of the Actare applicable.

(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from the public within the meaningthe directives issued by the Reserve Bank of India provisions of Section 73 to 76 of theAct any other relevant provisions of the Act and the relevant rules framed thereunder.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules prescribed by the Central Government for maintenance of costrecords under Section 148(1) of the Act in respect of the construction industry and are ofthe opinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the records.

(vii) a) According to the information and explanations given to us andon the basis of our examination of the records of the Company amounts deducted / accruedin the books of account in respect of undisputed statutory dues including provident fundemployees state insurance income-tax goods and service tax duty of customs cess andany other material statutory dues have generally been regularly deposited with theappropriate authorities though there has been a slight delay in a few cases. As explainedto us the Company did not have any dues on account of sales-tax service-tax duty ofexcise and value added tax during the year.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees state insuranceincome-tax goods and service tax duty of customs cess and any other material statutorydues were in arrears as at 31 March 2021 for a period of more than six months from thedate they became payable. As explained to us the Company did not have any dues on accountof sales-tax service-tax duty of excise and value added tax during the year.

(b) According to the information and explanations given to us thereare no dues of income-tax or duty of customs or sales tax or service-tax or duty of exciseor value added tax which have not been deposited by the Company on account of disputesexcept for the following:

Nature of statue Nature of dues Amount ( Rs. in million) * Period to which amount relates Forum where dispute is pending
Andhra Pradesh Sales Tax Act Basis of charge of sales tax 2.05 2002-05 High Court of Andhra Pradesh
Karnataka Sales Tax Act Basis of charge of sales tax 127.27 2007-08 High Court of Karnataka
Karnataka Sales Tax Act Basis of charge of sales tax 25.60 2008-09 High Court of Karnataka
Karnataka Sales Tax Act Basis of charge of sales tax 27.62 2009-10 High Court of Karnataka
Karnataka Sales Tax Act Basis of charge of sales tax 67.71 2010-11 High Court of Karnataka
Karnataka Sales Tax Act Basis of charge of sales tax 43.97 2011-12 High Court of Karnataka
Karnataka Sales Tax Act Basis of charge of sales tax 64.63 2013-14 High Court of Karnataka
Karnataka Sales Tax Act Basis of charge of sales tax 43.52 2014-15 High Court of Karnataka
Karnataka Sales Tax Act Basis of charge of sales tax 11.71 2012-13 High Court of Karnataka
Karnataka Sales Tax Act Basis of charge of sales tax 7.19 2016-17 High Court of Karnataka
Kerala Sales Tax Act Basis of charge of sales tax 28.57 2013-14 District Commissioner - (Appeals)
Kerala Sales Tax Act Basis of charge of sales tax 20.97 2012-13 Thiruvananthapuram District Commissioner - (Appeals)
Kerala Sales Tax Act Basis of charge of sales tax 192.02 2014-15 Thiruvananthapuram District Commissioner - (Appeals)
Haryana Sales Tax Act Basis of charge of sales tax 1.28 2011-12 Thiruvananthapuram Commissioner Appeal
Haryana Sales Tax Act Basis of charge of sales tax 43.25 2015-16 Gurgaon Commissioner Appeal Gurgaon
Haryana VAT Act Basis of charge of sales tax 2.36 2017-18 Excise and Taxation Commissioner
Maharashtra Value Added Tax Act Basis of charge of sales tax 5.87 2008-09 Joint Commissioner of Sales Tax appeal Pune
Maharashtra Value Added Tax Act Basis of charge of sales tax 6.22 2010-11 Joint Commissioner of Sales Tax appeal Pune
Maharashtra Value Added Tax Act Basis of charge of sales tax 1.43 2010-11 Joint Commissioner of Sales Tax appeal Pune
Maharashtra Value Added Tax Act Basis of charge of sales tax 0.34 2008-09 Joint Commissioner of Sales Tax appeal Pune
Maharashtra Value Added Tax Act Basis of charge of sales tax 0.38 2011-12 Commissioner of Central Tax Pune
Maharashtra Value Added Tax Act Basis of charge of sales tax 0.85 2011-12 Commissioner of Central Tax Pune
Maharashtra Value Added Tax Act Basis of charge of sales tax 0.51 2014-15 Commissioner of Central Tax Pune
Maharashtra Value Added Tax Act Basis of charge of sales tax 0.93 2016-17 Commissioner of Central Tax Pune
Kolkata Value Added Tax Act Basis of charge of sales tax 1 2009-10 West Bengal Commercial Taxes appellate Kolkata
Finance Act 1994 (service tax provisions) Service tax demand 343.09 2006-12 Central Excise and Service Tax Appellate Tribunal Bangalore
Finance Act 1994 (service tax provisions) Service tax demand 91.47 2008-16 Commissioner of Central Tax GST Commissioner Bangalore
Excise duty Excise duty demand 6.00 2013-15 Central Excise and Service Tax Appellate Tribunal Bangalore
Customs Act 1962 Differential tax treatment 1.27 2010-11 Central Excise and Service Tax Appellate Tribunal Bangalore
Income tax Act Disallowance 153.21 2005-08 Assistant Commissioner of Income tax Bangalore
Income tax Act Disallowance 23.07 2007-15 Income Tax Appellate Tribunal Bangalore

*Net of Rs. 337.15 million in total paid under protest

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans or borrowings tofinancial institutions and banks during the year. The Company did not have any outstandingloans or borrowings from government or dues to debenture holders during the year.

(ix) According to the information and explanations given to us andbased on examination of the records of the Company the term loans obtained during theyear were applied for the purpose for which they were obtained. The Company has not raisedany money by way of initial public offer or further public offer (including debtinstruments) during the year.

(x) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the management.

(xi) According to the information and explanations given to us andbased on examination of the records of the Company the Company has paid managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us in ouropinion the Company is not a Nidhi Company as prescribed under Section 406 of the Act.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable anddetails of all transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.

(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not madepreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not enterednon-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanation given to us and inour opinion the Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934.

Annexure B to the Independent Auditors' report on the standalonefinancial statements of Sobha Limited (‘the Company') for the year ended 31March 2021

Report on the Internal Financial Controls with reference to theaforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143of the Companies Act 2013 (Referred to in paragraph (A) (f) under ‘Report on OtherLegal and Regulatory Requirements' section of our resport of even date)

Opinion

We have audited the internal financial controls with reference tostandalone financial statements of Sobha Limited ("the Company") as of 31 March2021 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls were operating effectively as at 31 March 2021 based on theinternal financial controls with reference to standalone financial statements 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 (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to standalone financial statements criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note and the Standards onAuditing prescribed under section 143(10) of the Act to the extent applicable to anaudit of internal financial controls with reference to standalone financial statements.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to standalone financial statements were established andmaintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to standalone financialstatements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements included obtaining anunderstanding of such internal financial controls assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatementof the standalone financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to standalone financial statements.

Meaning of Internal Financial controls with Reference to StandaloneFinancial Statements

A company's internal financial controls with reference tostandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of standalonefinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial controls with reference tostandalone financial statements include 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 standalone financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of thecompany are being made only in accordance with authorisations of management and directorsof the company; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial controls with Reference toStandalone Financial Statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

for B S R & Co. LLP
Chartered Accountants
ICAI Firm registration number: 101248W/W-100022
Amrit Bhansali
Partner
Membership number: 065155
UDIN: 21065155AAAADI7042
Place: Bengaluru
Date: 22 June 2021

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