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Sobha Ltd.

BSE: 532784 Sector: Infrastructure
NSE: SOBHA ISIN Code: INE671H01015
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OPEN 448.50
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VOLUME 4570
52-Week high 495.30
52-Week low 117.90
P/E 41.51
Mkt Cap.(Rs cr) 4,169
Buy Price 439.00
Buy Qty 2.00
Sell Price 446.00
Sell Qty 500.00
OPEN 448.50
CLOSE 452.05
VOLUME 4570
52-Week high 495.30
52-Week low 117.90
P/E 41.51
Mkt Cap.(Rs cr) 4,169
Buy Price 439.00
Buy Qty 2.00
Sell Price 446.00
Sell Qty 500.00

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 ("theCompany") which comprise the standalone balance sheet as at 31 March 2020 thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 its profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current year.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

A. Revenue recognition - refer note 2.2 (a)(ii)(a) to the standalone financialstatements

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 included the following:
Revenues from sale of residential units represents the largest portion of the total revenues of the Company. 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 on handover of the 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 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;

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

in time upon transfer of control of residential units to the 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 overstated (for example through premature revenue recognition i.e. recording revenue prior to handover of unit to the customers) or understated (for example through 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. Evaluation of the design and implementation and testing the operating effectiveness of key controls around approvals of contracts milestone billing handover letters and controls over collection from customers;
For samples selected verifying the underlying documents – handover letter sale agreement signed by the customer and the collections;
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
Considered the adequacy of the disclosures in note 2.2(a)(ii)(a) to the standalone financial statements in respect of recognising revenue for residential units.

B. Revenue recognition - refer note 3(b)(i) to the standalone financial statements

Key Audit Matter How the matter was addressed in our audit
Measurement of revenue on contractual projects recorded over time which is dependent on the estimates of the costs to complete Our audit procedures on revenue recognition 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 related to measurement of costs to complete the projects. 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 the 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 costs to complete workings with the budgeted costs and analysis of the variances if any;
Sighting approvals for changes in budgeted costs with the rationale for the changes; and
Assessment of costs incurred on projects which is used by the Company to determine the percentage of completion.
Considered 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.

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

Key Audit Matter How the matter was addressed in our audit
Considered the adequacy of the disclosures in note 41 to the standalone financial statements in respect revenue recognised and cost incurred till date profit / loss recognised till date amount received as advance from customers work-in- progress value of inventories and amount of retentions due from customers.

C. Revenue recognition - refer note 2.2 (a)(iii) to the standalone financial statements

Key Audit Matter How the matter was addressed in our audit
Measurement of revenue recorded from sale of products Our audit procedures on revenue recognition 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;
Evaluation of the design and implementation and testing the operating effectiveness of key controls around approvals of sale order received invoice raised intimation of delivery of product and controls over collection from customers;
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. Since revenue recognition has direct impact on the Company's profitability there For samples selected verifying the underlying documents – sale order invoice raised good received note authorised by the customer and the collections; and
is a possibility of the Company being biased hence this is considered as a key audit matter. Cut-off procedures for recording of revenue in the relevant reporting period.

D. Inventories - refer note 3 (b)(iii) to the standalone financial statements

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 ("the NRV assessment");

C. Land advances (continued) - refer note 3(b)(iii) to the standalone financialstatements

Key Audit Matter How the matter was addressed in our audit
The Company recognises profit on the sale of each unit 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 year. 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. Assessing the Company's valuation methodology for the key estimates data inputs and assumptions adopted in the valuation. This involved comparing expected average selling prices with published data such as recently transacted prices for similar properties located in nearby vicinity of each project and the sales budget maintained by the Company;
Forecasts of future sales are dependent on market conditions which can be difficult to predict and be influenced by political and economic factors. While analyzing the expected average selling price we have performed a sensitivity analysis on the selling price and compared this to the budgeted cost;
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 obtained the fair valuation reports of such land parcels 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;

E. Land Advances - refer note 3 (b)(iii) to the standalone financial statements

Key Audit Matter How the matter was addressed in our audit
Assessment of recoverability of land advances
Land advance represents a significant portion of the Company's total assets. Our audit procedures to assess the recoverability of land advances included the following:
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 will be converted into land parcels 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 test of key controls over such land advances paid during the year;
Considering the quantum of the amount 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 has been considered as a key audit matter Enquiry with the Company's personnel also covered obtaining reasons on the long-standing land advances and understanding Company's plan for conversion of the land advances to land stock;
For our samples verified 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 obtained 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 verified the published guidelines values for the area in which these land parcels are situated

F. Investment in subsidiaries - refer note 2.2(h) to the standalone financialstatements

Key Audit Matter How the matter was addressed in our audit
Assessment of impairment of investment in subsidiaries Our audit procedures to assess recoverability included the following:
The carrying amount of the investments in subsidiaries held at cost less impairment represents a significant portion of the Company's total assets. The Company has investments in subsidiaries and a joint venture. These investments are carried at cost less any diminution in value of such investments. Comparing the carrying amount of investments in the Company's books with the net asset balance in the relevant audited / unaudited balance sheet of subsidiaries' and joint venture. This is to identify if their net assets (being an approximation of their minimum recoverable amount) were in excess of their carrying amount;
The investments are analyzed for impairment at each reporting date by comparing the carrying value of investments in the Company's books with the net assets of the relevant subsidiaries' and joint venture's balance sheet. Further the Company assesses the projected cash flows of the real estate projects in these underlying entities. This involve significant estimates and judgment due to the inherent uncertainty involved in forecasting future cash flows. There is significant judgment in estimating the timing of the cash flows and the relevant discount rate. For the investments where the carrying amount exceeded the Company's share in net asset value we compared the carrying amount of the investment with the projected cash flows and profitability. This is based on approved business plans of the subsidiaries and joint venture; and
Considering the impairment assessment involves significant assumptions and judgement this is considered as a key audit matter. Considering the adequacy of disclosures in respect of the investment in subsidiaries and joint venture.

G. Inquiry from regulator - refer note 39 to the standalone financial statements

Key Audit Matter How the matter was addressed in our audit
Assessment of certain transactions entered into by the Company on which queries have been received from SEBI Our audit procedures on the transactions include the following:
During the current and previous year the Company has received enquiries from Securities and Exchange Board of India (SEBI) about certain transactions entered into by the Company in earlier years. Inquired with the senior management of the Company to understand the nature of the transactions in question business rationale of entering into these transactions status of the recoverability of outstanding receivables and accuracy of recording of any payables recorded as at the balance date;
Based on the responses provided by the Company SEBI has continued to follow up and sought substantiation of Company's responses with reference to the contracts documents correspondences etc. from the Company under the provisions of Section 11 of the SEBI Act 1992. Tested the underlying documents i.e. contracts entered into with customers and landowner's correspondence with the customers to recover the outstanding balance and customer confirmations available with the Company on these transactions;
The enquiries are directed to ascertain if there has been undue favour towards any individual in these specific business transactions carried out by the Company. Evaluated and challenged the Company's assessment of recoverability of the balances outstanding as at the balance sheet date;
Further the Company has aged receivables and other asset balances outstanding from these transactions and SEBI has sought responses on efforts taken by the Company to recover these amounts due. Obtained independent confirmation from the third parties on some of these transactions; Based on our understanding from the discussions with the management communicated updates on these transactions periodically to those charged with governance;
Considering the significance of the matter i.e. enquiries from SEBI and involvement of significant judgements and estimates by the Company on the realizability of these balances this has been considered as a key audit matter. Obtained management note on the business rationale for these transactions; and
Considered the adequacy of the disclosure in the standalone financial statements.

Information Other than the Standalone Financial Statements and Auditors' Report thereon

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon. The annual report is expected to be made available to us after the date of thisauditor's report 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 statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

When we read the annual report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.

Management's and Board of Directors' Responsibility for the Standalone FinancialStatements

The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Management and Board of Directorsare responsible 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone 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 standalone 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 control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures in the standalone financial statements madeby the Management and Board of Directors.

Conclude on the appropriateness of the Management and Board of Directors use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. (A) As required by Section 143(3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books. c) The standalone balance sheet the standalone statement ofprofit and loss (including other comprehensive income) the standalone statement ofchanges in equity and the standalone statement of cash flows dealt with by this Report arein agreement with the books of account. d) In our opinion the aforesaid standalonefinancial statements comply with the Ind AS specified under section 133 of the Act. e) Onthe basis of the written representations received from the directors as on 27 June 2020taken on record by the Board of Directors none of the directors is disqualified as on 31March 2020 from being appointed as a director in terms of Section 164(2) of the Act. f)With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations as at 31 March 2020 on itsfinancial position in its standalone financial statements - Refer Note 39 and 40 to thestandalone financial statements; ii. The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses; iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company; and iv. The disclosures in thestandalone financial statements regarding holdings as well as dealings in specified banknotes during the period from 8 November 2016 to 30 December 2016 have not been made inthese financial statements since they do not pertain to the financial year ended 31 March2020. (C) With respect to the matter to be included in the Auditors' Report under section197(16): In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

Annexure A to the Independent Auditors' Report on the standalone financial statementsof Sobha Limited (‘the Company')

With reference to the Annexure A referred to in the Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended 31 March2020 we report the following: (i) (a) The Company has maintained proper records showingfull particulars including quantitative details and situation of property plant andequipment and investment property under construction.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of 3 years exceptscaffolding items. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets. Pursuant to theprogramme certain fixed assets were physically verified during the year. No materialdiscrepancies were noticed on such verification.

(c) In our opinion and 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 included in property plant and equipment are held in the name of the Company.

(ii) The Company's inventory includes construction work-in-progress. The requirementsunder paragraph 3(ii) of the Order are not applicable for construction work-in-progress.The other inventory comprising of raw material and finished goods has been physicallyverified by the management during the year. In our opinion the frequency of suchverification is reasonable. The discrepancies noticed on verification between physicalstock and the book records were not material.

(iii) The Company has granted unsecured loans to two companies covered in the registermaintained under Section 189 of the Companies Act 2013 (‘the Act'). According to theinformation and explanations given to us the Company has not granted any loans securedor unsecured to firms limited liability partnerships or other parties covered in theregister maintained under Section 189 of the Companies Act 2013 ("the Act").

(a) According to the information and explanations given to us and based on the auditprocedures conducted by us we are of the opinion that the rate of interest and otherterms and conditions of unsecured loans granted by the Company to companies covered in theregister required to be maintained under Section 189 of the Act are not prima facieprejudicial to the interest of the Company.

(b) According to the information and explanations given to us and based on the auditprocedures conducted by us the unsecured loans granted to the companies and the interestthereon are repayable on demand or repayable as per contractual terms of the respectiveagreements. The borrowers have been regular in payment of principal and interest asdemanded or as per contractual terms as applicable.

(c) There are no overdue amounts of more than 90 days in respect of the unsecured loansgranted to companies and limited liability partnerships by the Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act with respectto investments made and guarantees given. Further there are no loans and security givenin respect of which provisions of Sections 185 and 186 of the Act are applicable.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning the directivesissued by the Reserve Bank of India provisions of Section 73 to 76 of the Act any otherrelevant provisions of the Act and the relevant rules framed thereunder.

Annexure A to the Independent Auditors' Report on the standalone financial statements(continued)

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules prescribed by the Central Government for maintenance of cost records underSection 148(1) of the Act in respect of the construction industry and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained.However we have not made a detailed examination of the records.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees stateinsurance income-tax goods and service tax duty of customs cess and any other materialstatutory dues have generally been regularly deposited with the appropriate authorities.As explained to us the Company did not have any dues on account of sales-taxservice-tax duty of excise and value added tax during the year. According to theinformation and explanations given to us no undisputed amounts payable in respect ofprovident fund employees state insurance income-tax goods and service tax duty ofcustoms cess and any other material statutory dues were in arrears as at 31 March 2020for a period of more than six months from the date they became payable. As explained tous the Company did not have any dues on account of sales-tax service-tax duty of exciseand value added tax during the year.

(b) According to the information and explanations given to us there are no dues ofincome-tax or duty of customs or sales tax or service-tax or duty of excise or value addedtax which have not been deposited by the Company on account of disputes except for thefollowing:

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
Kerala Sales Tax Act Basis of charge of sales tax 26.06 2013-14 District Commissioner - (Appeals) Thiruvananthapuram
Kerala Sales Tax Act Basis of charge of sales tax 2.51 2010-11 District Commissioner - (Appeals) Thiruvananthapuram
Kerala Sales Tax Act Basis of charge of sales tax 20.97 2012-13 Sales Tax Appellate Tribunal Thiruvananthapuram
Haryana Sales Tax Act Basis of charge of sales tax 1.28 2011-12 Commissioner Appeal Gurugram
Haryana Sales Tax Act Basis of charge of sales tax 45.01 2015-16 Commissioner Appeal Gurugram
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 Basis of charge of Commissioner of Central
Value Added Tax Act sales tax 0.38 2011-12 Tax Pune
Maharashtra Value Added Tax Act Basis of charge of sales tax 0.51 2014-15 Sales Tax Appellate Tribunal Maharashtra
Maharashtra Value Added Tax Act Basis of charge of sales tax 0.85 2011-12 Sales Tax Appellate Tribunal Maharashtra
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 368.06 2006-13 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
Excise duty Excise duty demand 6.00 2013-15 Bangalore Central Excise and Service Tax Appellate Tribunal
Customs Act 1962 Differential tax treatment 1.27 2010-11 Bangalore Central Excise and Service Tax Appellate Tribunal
Income tax Act Disallowance 54.19 2006-07 Bangalore High Court of Karnataka
Income tax Act Disallowance 97.77 2007-08 High Court of Karnataka Income Tax Appellate
Income tax Act Disallowance 23.07 2006-14 Tribunal Bangalore

*Net of Rs 503.65 million in total paid under protest

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to financialinstitutions and banks and debenture holders during the year. The Company did not have anyoutstanding loans or borrowings from government during the year.

(ix) According to the information and explanations given to us and based on examinationof the records of the Company the term loans obtained during the year were applied forthe purpose for which they were obtained. The Company has not raised any money by way ofinitial public offer or further public offer (including debt instruments) during the year.

(x) According to the information and explanations given to us no fraud on the Companyby its officers and employees or fraud by the Company has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations given to us and based on examinationof the records of the Company the Company has paid managerial remuneration in accordancewith the requisite approvals mandated by the provisions of Section 197 read with ScheduleV to the Act.

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

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of alltransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made preferential allotmentor private placement of shares or fully or partly convertible debentures during the year.

Annexure A to the Independent Auditors' Report on the standalone financial statementsof Sobha Limited (‘the Company') (continued) (xv) According to the information andexplanations given to us and based on our examination of the records of the Company theCompany has not entered into non-cash transactions with directors or persons connectedwith him.

(xvi) According to the information and explanation given to us and in our opinion theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.

Annexure B to the Independent Auditors' Report on the standalone financial statementsof Sobha Limited (‘the Company') for the year ended 31 March 2020

Report on the Internal Financial Controls with reference to the aforesaid financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act") (Referred to in paragraph (A) (f) under ‘Report on Other Legaland Regulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to standalone financialstatements of Sobha Limited ("the Company") as of 31 March 2020 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at 31 March 2020 based on the internal financialcontrols with reference to financial statements 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 (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone 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 withreference to standalone financial statements.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.

A company's internal financial controls with reference to financial statements includethose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (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 authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

 

forB S R & Co. LLP

Chartered Accountants

ICAI Firm registration number: 101248W/W-100022

Amrit Bhansali

Partner

Membership number: 065155 UDIN: 20065155AAAADK3455 Bangalore 27 June 2020

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