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Sunteck Realty Ltd.

BSE: 512179 Sector: Infrastructure
NSE: SUNTECK ISIN Code: INE805D01034
BSE 12:59 | 16 Aug 475.65 1.30
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NSE 12:49 | 16 Aug 475.20
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OPEN 474.25
PREVIOUS CLOSE 474.35
VOLUME 17400
52-Week high 589.95
52-Week low 336.65
P/E 540.51
Mkt Cap.(Rs cr) 6,968
Buy Price 474.95
Buy Qty 87.00
Sell Price 475.65
Sell Qty 29.00
OPEN 474.25
CLOSE 474.35
VOLUME 17400
52-Week high 589.95
52-Week low 336.65
P/E 540.51
Mkt Cap.(Rs cr) 6,968
Buy Price 474.95
Buy Qty 87.00
Sell Price 475.65
Sell Qty 29.00

Sunteck Realty Ltd. (SUNTECK) - Auditors Report

Company auditors report

Tothe Members of Sunteck Realty Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

1. We have audited the accompanying standalone financial statements of Sunteck RealtyLimited (‘the Company') which comprise the Balance Sheet as at 31st March 2021 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.

2. 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 and fairview in conformity with the accounting principles generally accepted in India includingIndian Accounting Standards (‘Ind AS') specified under section 133 of the Act of thestate of affairs of the Company as at 31st March 2021 and its profit (including othercomprehensive income) its cash flows and the changes in equity for the year ended on thatdate.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (‘ICAI') togetherwith the ethical requirements that are relevant to our audit of the 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.

Emphasis of Matters

4. We draw attention to:

i. Note 57 to the accompanying standalone financial statements regarding uncertaintiesrelating to recoverability of ‘Other non-current financial assets' aggregatingRs.1402.73 lakhs as at 31st March 2021 from a partnership firm (‘firm') in whichthe Company was associated as a partner till 6th October 2020. On account of certaindisputes with the other partner of the firm the Company had initiated arbitrationproceedings against the other partner which was decided in favour of the Company on 4thMay 2018 but has been challenged by the other partner before the Bombay High Court.Further as described in the said note the financial statements of the firm are notavailable with the Company and therefore the Company's share of profit/(loss) for theperiod from 2015 till 6th October 2020 has not been accounted by the management forpreparation of the standalone financial statements however the management is of the viewthat the impact of such share of profit/(loss) would not be material to the accompanyingstandalone financial statements since there are no operations in the partnership firmduring the aforesaid period. Basis the favourable arbitration award and the legal opinionobtained the management believes that the aforesaid balances are fully recoverable andhence no provision for impairment is required to be recognised in respect of suchbalances as at 31st March 2021.

ii. Note 60 to the accompanying standalone financial statements which describes theuncertainties relating to the outbreak COVID-19 pandemic and management evaluation of itsimpact on the Company's operations and on the accompanying standalone financial statementsof the Company as at 31st March 2021 the extent of which is significantly dependent onfuture developments.

Our opinion is not modified in respect of the above matters.

Key Audit Matters

5. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

6. We have determined the matters described below to be the key audit matters to becommunicated in our report.

Key audit matters How our audit addressed the key audit matters
(i) Revenue recognition for real estate development contracts Our audit procedures on revenue recognised from real estate development contracts included but were not limited to the following:
The accounting policies relating to revenue recognition is set out in Note 2(d) to the standalone financial statements. • Evaluated the appropriateness of the Company's accounting policy for revenue recognition from real estate development contracts in accordance with Ind AS 115;
As per the principles of Ind AS 115 -'Revenue from Contracts with Customers' (Ind AS 115) revenue from sale of residential/ commercial properties is recognized when the performance obligations are essentially complete and it is probable that the economic benefits will flow to the Company. • Obtained an understanding of the systems processes and controls implemented by the management for recording and calculating revenue;
Revenue from real-estate contracts for some projects is recognised over a period of time (using percentage of completion method) if the necessary conditions/ obligations as mentioned in the Ind AS 115 are satisfied in all other cases revenue is recognized at the point in time when the control over the property has been transferred to the buyer. Significant level of judgement is required in identifying contract obligations and whether these obligations are satisfied over a period of time or at the point in time. Further for determining revenue using percentage of completion method budgeted project cost is a critical estimate which is subject to inherent uncertainty as it requires ascertainment of progress of the project cost incurred till date and balance cost to be incurred to complete the project. • Assessed the design and implementation of key controls over the recognition of contact revenue completeness and accuracy of cost and revenue reports generated from the system and tested the operating effectiveness of these controls;
Considering the significance of management judgement involved as mentioned above and the materiality of amounts involved revenue recognition was identified as a key audit matter for the current year audit. • On a sample basis inspected the underlying customer contracts to understand the contractual terms whereby ownership rights will be transfer to the unitholders and assessed appropriateness of management's evaluation of determining revenue recognition from sale of real estate property at a point in time or over time in accordance with the requirements under Ind AS 115;
• Reviewed the management's budgeting system and process of calculating the cost to be incurred for completing the remaining performance obligations which has been reviewed periodically and approved by appropriate levels of management;
• Compared the aggregate project cost (including costs incurred) with costs of similar projects;
• Verified the possession letters issued on sample basis along with the proof of deliveries;
• Verified of the collection from customers for the units sold from the statement of accounts on a sample basis to ensure receipt of substantial sales consideration;
• Performed a retrospective review of costs incurred with budgeted costs to identify significant variations and verify whether those variations have been considered in estimating the remaining costs to complete the project;
• Tested revenue recognition for cut-off transactions on sample basis to assess whether the timing of revenue recognition is appropriate; and
• Assessed the adequacy of disclosures included in financial statements as specified in Ind AS 115.
(ii) Carrying values of inventories Our audit procedure included but was not limited to the following procedures:
The accounting policies for Inventories are set out in Note 2(j) to the standalone financial statements. • Obtained an understanding of the management process for identification of possible impairment indicators and process performed by the management for impairment testing and the management process of determining the Net Realisable Value (NRV);
Inventory of the Company comprise of completed real estate units and construction work in progress of ongoing projects. Inventory is valued at cost and net realisable value (NRV) whichever is less. • Enquired of the management and inspected the internal controls related to inventory valuation along with the process followed to recover/adjust these and assessed whether impairment is required;
NRV is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale and estimated costs of completion (in case of construction work-in- progress). The inventory of finished goods and construction work-in- progress is not written down below cost when completed flats/ under-construction flats /properties are expected to be sold at or above cost. • Tested the operating effectiveness of controls for the review of estimates involved for the expected cost of completion of projects including construction cost incurred construction budgets and net realisable value. We carried out a combination of procedures involving enquiry and observation and inspection of evidence in respect of operation of these controls;
The cost includes direct and indirect expenditure relating or incidental to construction activity. Various estimates such as prevailing market conditions stage of completion of the projects future selling price selling costs and cost to complete projects are necessary to derive NRV. Refer Note 12 in respect of construction work-in-progress of ' 25873.87 lakhs and completed units of ' 2037.19 lakhs to the standalone financial statements. • Where the management involved specialists to perform valuations evaluated the objectivity and independence of those specialists;
Considering the significance of management judgement involved as mentioned above and the materiality of amounts involved impairment of was identified as a key audit matter for the current year audit. • Compared NRV with recent sales or estimated selling price and also checked the general selling costs;
• Compared the estimated construction costs to complete each project with the Company's updated budgets. Recomputing the NRV on a sample basis to test inventory units are held at the lower of cost and NRV; and
• Assessed the appropriateness and adequacy of the disclosures made by the management for the impairment losses recognized in accordance with applicable accounting standards.
(iii) Recoverability of carrying value of investment in/ loan to subsidiaries and joint ventures Our audit procedure included but was not limited to the following procedures:
The accounting policies for carrying value of investment in subsidiaries and joint ventures are set out in Note 2(aa) to the standalone financial statements. • Obtained an understanding of the management process for identification of impairment indicators for assessing the recoverability of the carrying value of investment in/ loan to subsidiaries and joint ventures;
The Company's investment portfolio represents a significant portion of the Company's total assets which primarily consists of investments in equity instruments of subsidiaries and joint ventures • Assessed the appropriateness of the relevant accounting policies of the Company including those relating to recognition and measurement of investments by comparing with the applicable accounting standards;
The aforesaid investments are valued at cost less accumulated impairment losses if any. The investments are assessed for impairment at each reporting date. • Evaluated the design and implementation and tested the operating effectiveness of controls over the Company's process of impairment assessment and approval of forecasts;
The Company's non-current investments include investments in Sunteck Lifestyle International Private Limited (SLIPL) a subsidiary of ' 25796.90 lakhs. SLIPL which had further acquired 50% share in joint venture (JV) company GGICO Sunteck Limited (GGICO) through its wholly owned subsidiary Sunteck Lifestyle Limited (SLL) for development of real-estate project in Dubai. Further the Company's other noncurrent financial assets include receivables from SLL aggregating ' 751.74 lakhs. SLL has incurred losses and net-worth has been partially eroded. Development of the project by GGICO has been delayed on account of certain disputes with the other JV partner and SLL has initiated arbitration in previous period against the other partner which is currently pending before London Court of International Arbitration (LCIA). Further during the current year 31st March 2021 the other JV partner has also initiated the arbitration proceedings before LCIA against the Company and SLL which has been admitted by LCIA as further explained in the Note 61. • Assessed the valuation methods used financial position of the subsidiaries joint ventures and an associate to identify excess of their net assets over their carrying amount of investment by the Company and assessing profit history of those subsidiaries and joint ventures;
The assessment of recoverable amount of the Company's investment from subsidiaries and joint ventures is considered as significant risk area in view of the materiality of the amounts involved judgements involved in determining of impairment/ recoverability of the carrying value of the investment from subsidiaries and joint ventures which includes assessment of conditions and financial indicators of the investee such as current projects expected sales future business plan upcoming projects and the recoverability of certain investments. • For the investments where the carrying amount exceeded the net asset value understanding from the Company regarding the basis and assumptions used for the projected profitability;
We focused on this area as a key audit matter due to significant risk and judgement involved in forecasting future cash flows and the selection of assumptions. • Verified the inputs used in the projected profitability;
Considering this matter is fundamental to the understanding of the user of standalone financial statement we draw attention to Note 61 of the standalone financial statements regarding the Company's non-current investment in a subsidiary company Sunteck Lifestyle International Private Limited. • Tested the assumptions and understanding the forecasted cash flows of subsidiaries and joint ventures based on our knowledge of the Company and the markets in which they operate;
• Assessed the comparability of the forecasts with historical information;
• Analysed the possible indications of impairment and understanding Company's assessment of those indications;
• Read and evaluated the litigation related documents and obtained an understanding of the current status of the disputed case; and
• Assessed the appropriateness of the Company's description of the accounting policy and disclosures in respect of the investment in subsidiaries and joint ventures (including interest accrued) and whether these are adequately presented in the standalone financial statements.
(iv) Restatement in accordance with Ind AS 8 Accounting Policies Changes in Accounting Estimates and Errors Our audit procedure included but was not limited to the following procedures:
The accounting policies for restatement of financial statements are set out in Note 2(cc) to the standalone financial statements. • Obtained an understanding of the management process for identification of restatement adjustments to be made in the standalone financial statements;
During the current year the Company has reassessed the method of revenue recognition for various contracts entered by the Company which includes applying completed contract method instead of percentage of completion method principal versus agent consideration accounting for joint development arrangement classification of unbilled revenue (contract asset) as specified in Ind-AS 115. • Evaluated the design and implementation and tested the operating effectiveness of controls over the Company's process of relevant controls;
The Company has further made various other restatements relating to capitalization of borrowing costs classification of borrowings/certain investments assessment of matters under litigations which has been explained in Note 54 of the standalone financial statements. The aforesaid restatements required detailed assessment of all ongoing contacts entered into by the Company and required significant judgements to be made on part of the management. Considering the quantum of amounts involved the audit efforts required to audit such restatements and in-depth frequent interactions with the management involved restatement is identified as a key audit matter for the current year audit. • Understood from the management the rationale in view of the applicable accounting standards for all the restatements carried out in the financial statements;
Considering this matter is fundamental to the understanding of the user of standalone financial statement we draw attention to Note 54 of the standalone financial statements regarding the restatement of comparative financial information on account of various adjustments reclassifications and corrections of errors. • Obtained the joint development agreements / contracts with landowners and assessed its terms to evaluate the applicability of principal versus agent consideration;
• Read and assessed the litigation related documents and understanding the current status of the disputed case; and
• Ensured that all restatement adjustments have been dealt with and disclosed in the financial statement in accordance with Ind AS 8 Accounting Policies Changes in Accounting Estimates and Errors as well as the respective accounting standards where relevant.

Information other than the Financial Statements and Auditor's Report thereon

7. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe standalone financial statements and our auditor's report thereon. The Annual Report isexpected to be made available to us after the date of this auditor's report.

Our opinion on the standalone financial statements does not cover the other informationand we will 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.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

8. The accompanying standalone financial statements have been approved by the Company'sBoard of Directors. The Company's Board of Directors is 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 financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including the IndAS specified under section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

9. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

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

Auditor's Responsibilities for the Audit of the Financial Statements

11. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing 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 financial statements.

12. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional 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 made by management;

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern; and

Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation; 13. We communicatewith those charged with governance regarding among other matters the planned scope andtiming of the audit and significant audit findings including any significant deficienciesin internal control that we identify during our audit.

14. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror 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.

Other Matter

16. The standalone financial statements of the Company for the years ended 31st March2020 and 31st March 2019 were audited by the predecessor auditor M/s Lodha and Co.Chartered Accountants who have expressed an unmodified opinion on those standalonefinancial statements vide their audit reports dated 28th July 2020 and 2nd May2019 respectively.

Report on Other Legal and Regulatory Requirements

17. As required by section 197(16) of the Act based on our audit we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with Schedule V to the Act.

18. As required by the Companies (Auditor's Report) Order 2016 (‘the Order')issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

19. Further to our comments in Annexure I as required by section 143(3) of the Actbased on our audit we report to the extent applicable that:

a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit of theaccompanying standalone financial statements;

b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c) the standalone financial statements dealt with by this report are in agreement withthe books of account;

d) in our opinion the aforesaid standalone financial statements comply with Ind ASspecified under section 133 of the Act;

e) the matters described in paragraphs 4(i) and 4(ii) under the Emphasis of Matterssection and paragraph 6(iii) under the Key Audit Matters section in our opinion may havean adverse effect on the functioning of the Company;

f) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31st March2021 from being appointed as a director in terms of section 164(2) of the Act;

g) we have also audited the internal financial controls with reference to financialstatements of the Company as on 31st March 2021 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date and our report dated29th June 2021 as per Annexure II expressed a modified opinion; and

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 Company as detailed in Notes 40(i) 40(ii) 40(iii) 57 and 61 to thestandalone financial statements has disclosed the impact of pending litigations on itsfinancial position as at 31st March 2021;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31st March 2021;

iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31stMarch 2021; and

iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8th November 2016 to 30th December 2016which are not relevant to these standalone financial statements. Hence reporting underthis clause is not applicable.

Annexure I to the Independent Auditor's Report of even date to the members ofSunteck Realty Limited on the standalone financial statements for the year ended 31stMarch 2021.

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that: (i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.

(b) The property plant and equipment have been physically verified by the managementduring the year and no material discrepancies were noticed on such verification. In ouropinion the frequency of verification of the property plant and equipment is reasonablehaving regard to the size of the Company and the nature of its assets.

(c) The title deeds of all the immovable properties are held in the name of the Companyexcept for the following properties:

Nature of property Total Number of Cases Whether leasehold / freehold Gross block as on 31st March 2021 Net block as on 31st March 2021 Remarks
(Rs. in lakhs) (Rs. in lakhs)
Investment Property - Building 1 Freehold 188.36 179.57 Transferred as a result of amalgamation wherein the tittle deeds are in the name of the transferor. (Refer Note 56)
Investment Property – Building 1 Freehold 178.24 169.60
Investment Property – Building 1 Freehold 1456.22 1382.80 Constructed as per the Joint Development Agreement with the land owners which will be transferred in the name of the Company after formation of condominium.
Property plant and equipment 1 Freehold land and building 1663.84 1477.00

(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies between physicalinventory and book records were noticed on physical verification.

(iii) The Company has granted interest free/interest bearing unsecured loans tocompanies firms and limited liability partnerships (LLPs) covered in the registermaintained under Section 189 of the Act; and with respect to the same: (a) in our opinionthe terms and conditions of grant of such loans are not prima facie prejudicial to theCompany's interest.

(b) the schedule of repayment of principal has been stipulated wherein the principalamounts are repayable on demand and since the repayment of such loans has not beendemanded in our opinion repayment of the principal amount is regular. Further theschedule of payment of the interest has not been stipulated and hence we are unable tocomment as to whether receipts of the interest are regular.

(c) there is no overdue principal amount in respect of loans granted to such companiesfirms and LLPs. Further in the absence of stipulated schedule of payment of interest weare unable to comment as to whether there is any amount which is overdue for more than 90days and whether reasonable steps have been taken by the Company for recovery of theinterest.

(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 to the extent applicable in respect of loan investments guarantees and security.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections_73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund goods and service taxemployees' state insurance income-tax sales-tax service tax duty of customs duty ofexcise value added tax cess and other material statutory dues as applicable havegenerally been regularly deposited to the appropriate authorities though there has been aslight delay in a few cases. Further no undisputed amounts payable in respect thereofwere outstanding at the year-end for a period of more than six months from the date theybecame payable.

(b) There are no dues in respect of goods and services tax sales-tax duty of customsduty of excise service tax and value added tax that have not been deposited with theappropriate authorities on account of any dispute. The dues outstanding in respect ofincome-tax on account of any dispute are as follows. Statement of disputed dues:

Name of the statute Nature of dues Amount (Rs. in lakhs) Amount paid under Protest (Rs. in lakhs) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income tax 6.29 - AY 2007-08
28.01 - AY 2008-09 Income Tax Appellate Tribunal
20.84 - AY 2009-10 (ITAT) (referred back to Assessing Officer for reassessment)
13.95 - AY 2011-12
10.67 - AY 2012-13
231.45 31.04 AY 2013-14 Commissioner of Income Tax (CIT) Appeals
8.36 - AY 2014-15 ITAT
50.70 - AY 2015-16 CIT Appeals
21.12 - AY 2016-17
16.32 - AY 2017-18
5.05 - AY 2018-19

(viii) The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution during the year. The Company has no loans or borrowings payable togovernment and did not have any outstanding debentures during the year.

(ix) The Company did not raise moneys by way of initial public offer/ further publicoffer (including debt instruments) during the year. In our opinion the Company hasapplied moneys raised by way of term loans for the purposes for which these were raised.

(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid by the Company in accordance with therequisite approvals mandated by the provisions of Section 197 of the Act read withSchedule V to the Act.

(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable Ind AS.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

Annexure II to the Independent Auditor's Report of even date to the members ofSunteck Realty Limited on the standalone financial statements for the year ended 31stMarch 2021.

Annexure II

Independent Auditor's Report on the internal financial controls with reference tostandalone financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 (‘the Act')

1. In conjunction with our audit of the standalone financial statements of SunteckRealty Limited (‘the Company') as at and for the year ended 31st March 2021 we haveaudited the internal financial controls with reference to financial statements of theCompany as at that date.

Responsibilities of Management and Those Charged with Governance for Internal FinancialControls

2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal financial controls with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (‘the Guidance Note') issued by the Institute ofChartered Accountants of India (‘ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of the Company's businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditor's Responsibility for the Audit of the Internal Financial Controls withReference to Financial Statements

3. 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 Standards on Auditing issued by the ICAI prescribed under Section143(10) of the Act to the extent applicable to an audit of internal financial controlswith reference to financial statements and the Guidance Note issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements were established and maintainedand if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements includes obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols with reference to financial statements.

Meaning of Internal Financial Controls with Reference to Financial Statements

6. 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 controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements

7. 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.

Qualified Opinion

8. According to the information and explanations given to us and based on our auditthe following material weaknesses have been identified in the Company's internal financialcontrols with reference to financial statements as at 31st March 2021 due to theidentification of matters resulting in material restatement of the accompanying standalonefinancial statements as stated in Note 54 to these standalone financial statements.Specifically controls were not operating effectively towards:

a) Recognition of revenue in accordance with ‘Ind AS 115 Revenue from contractswith customers' which led to material restatement in revenues and cost of construction.

b) Financial reporting process with respect to preparation review and approval offinancial statements for ensuring compliance with Schedule III to the Act which led to apotential material restatement in the classification and disclosure of investments.

c) Estimation of provisions and contingent liabilities with respect to outstandinglitigations in accordance with ‘Ind AS 37 Provisions Contingent Liabilities andContingent Assets'.

9. A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial controls with reference to financial statements such that there is areasonable possibility that a material misstatement of the Company's annual or interimfinancial statements will not be prevented or detected on a timely basis.

10. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to financial statements as at 31st March 2021 based onthe internal financial controls with reference to financial statements criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note issued by the ICAI and except for the effects/possible effects ofthe material weaknesses described above on the achievement of the objectives of thecontrol criteria the Company's internal financial controls with reference to financialstatements were operating effectively as at 31st March 2021.

11. We have considered the material weaknesses identified and reported above indetermining the nature timing and extent of audit tests applied in our audit of thestandalone financial statements of the Company as at and for the year ended 31st March2021 and the material weaknesses do not affect our opinion on the standalone financialstatements of the Company.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm's Registration No.: 001076N/N500013

Rakesh R. Agarwal

Partner

Membership No. 109632

UDIN: 21109632AAAAHB3500

Place: Mumbai

Date: 29th June 2021

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