Independent Auditor's Report to the Members of Supreme Holdings & Hospitality(India) Limited
Report on the Audit of Standalone Financial Statements
We have audited the accompanying standalone financial statements of Supreme Holdings& Hospitality (India) Limited ('the Company') which comprise the Balance Sheet as at31 March 2021 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Statement of Cash Flow for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.
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 (the 'Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2021 and its profit total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit 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 period.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. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|S. No. Key Audit Matter ||How our audit addressed the key audit matter |
|Ind AS 115 - Revenue recognition for real estate development contracts ||Our audit procedures on revenue recognised from real estate development contracts included: |
|1 Revenue from real-estate contracts is recognised over a period of time (using percentage of completion method) if the necessary conditions as mentioned in the standard are satisfied otherwise recognised at the point in time. || Testing the controls over the completeness and accuracy of cost and revenue reports generated from the system. |
|Significant level of judgement is required to 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. This estimate has 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. Refer note no. 2 (i) and 22 to the standalone financial statements. || Obtaining an understanding of the systems processes and controls implemented by management for recording and calculating revenue. |
| || Selected samples of old and new contracts and tested that the revenue has been recognised in accordance with the accounting standard by evaluating the identification of performance obligation. |
| || 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. Performing 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. |
| || Assessing the adequacy of disclosures included in standalone financial statements as specified in Ind AS 115. |
|2 Inventory is valued at cost and net realisable value (NRV) whichever is less. The cost includes direct and indirect expenditure relating or incidental to construction activity. ||We assessed the Company's process for the valuation of inventories by: |
|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 notes 2 (d) and 9 to the standalone financial statements. || Evaluating the design and operative effectiveness of internal controls relating to valuation of inventories. |
| || Testing 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. |
| || Comparing the aggregate project cost (including costs incurred) with costs of similar projects. |
| || Comparing NRV with recent sales or estimated selling price and also checked the general selling costs. |
Information other than the Standalone Financial Statements and Auditor's Report thereon
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 auditors' report thereon.
Our opinion on the Standalone Financial Statements does not cover the other informationand 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 and in doing so consider whether such other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making
judgments 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 standalone financial statement that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility 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 in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive
to those risks and obtain audit evidence that is sufficient and appropriate to providea basis 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 todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of the misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the standalone financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the standalone financialstatements.
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 them all relationships andother matters that may reasonably be thought to bear on our independence and whereapplicable 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 auditor's 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 (Auditor's Report) Order
2016 ("the Order") issued by the Central Government of
India in terms of section 143(11) of the Act we give in
Annexure A a statement on the matters specified in the
paragraph 3 and 4 of the order;
2. As required by Section 143(3) of the Act we report that:
(a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(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 balance sheet the statement of profit and loss and the statement of cash flowsdealt with by this Report are in agreement with the books of account;
(d) in our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act read with relevant rule issued thereunder;
(e) on the basis of the written representations received from the directors as on 31March 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms of Section164 (2) of the Act;
(f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the
requirements of Section 197(16) of the Act as amended in our opinion and to the bestof our information and according to the explanations given to us the remunerationpaid/provided by the Company to its Directors during the year is in accordance with theprovisions of Section 197 of the Act.
(h) with respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
Annexure A to the Independent Auditors' Report
(Referred to in paragraph 1 under 'Report on Other Legal and
Regulatory Requirements' section of our report of even date)
1a The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
1b As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. No material discrepancieswere noticed on such physical verification.
1c The title deeds of immovable properties as disclosed in fixed assets to theStandalone Financial Statements are held in the name of the Company.
2 As explained to us the inventories were physically verified during the year by theManagement at reasonable intervals and no material discrepancies were noticed on physicalverification.
3 In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Act.
4 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 in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
5 The Company has not accepted deposits during the year and does not have any unclaimeddeposits as at 31 March 2021 and therefore the provisions of clause 3 (v) of the Orderare not applicable to the Company.
6 The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.
7a According to the information and explanations given to us and on the basis of ourexamination of the records of the Company undisputed statutory dues including ProfessionTax Income tax Customs Duty Goods and Service tax and other Material statutory dueshave been generally regularly deposited with the appropriate authorities.
According to the information and explanations given to us and on the basis of ourexamination of the records of the Company no undisputed amounts payable in respect ofIncome Tax Goods and Service Tax Duty of Customs Cess and Other Material Statutory Dueswere in arrears as at 31 March 2021 for a period of more than six months from the datethey became payable.
7b In our opinion and according to the information and explanations given to us thereare no statutory dues which have not been deposited on account of any dispute.
8 According to the information and explanations given to us the Company has notdefaulted in the repayment of loans or borrowings to financial institutions. The Companydid not have any outstanding loans or borrowings from banks or government and there are nodues to debenture holders during the year.
9 According to the information and explanations given to us the Company did not raiseany money by way of initial public offer or further public offer or Term loan during theyear hence clause (ix) of the Order are not applicable to the Company.
10 To the best of our knowledge and according to the information and explanations givento us no material fraud by the Company or no fraud on the Company by its officers oremployees has been noticed or reported during the course of our audit.
11 In our opinion and according to the information and explanations given to us andbased on examination of the records of the Company the Company has paid/providedmanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Companies Act 2013.
12 The Company is not a Nidhi Company and therefore the provisions of clause 3 (xii)of the Order are not applicable to the Company.
13 In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Act where applicable for alltransactions with the related parties and the details of related party transactions havebeen disclosed in the standalone financial statements as required by the applicableaccounting standards.
14 During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and therefore theprovisions of clause 3 (xiv) of the Order are not applicable to the Company.
15 In our opinion and according to the information and explanations given to us duringthe year the Company has not entered into any non-cash transactions with its Directors orpersons connected to its Directors and hence provisions of Section 192 of the Act are notapplicable.
16 The Company is not required to be registered under Section 45-IA of the Reserve Bankof India Act 1934.
Annexure B to the Independent Auditors' Report
(Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date) Report on the Internal FinancialControls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 (the Act')
We have audited the internal financial controls over financial reporting of SupremeHoldings & Hospitality (India) Limited ('the Company') as of 31 March 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended and as on that date. Management's Responsibility for Internal FinancialControls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (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 Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Standards on Auditing prescribed under Section 143(10) of the Act and theGuidance Note to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with the ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing 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 auditors' judgment 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 systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial 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 standalonefinancial statements. Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were commensurate with the nature of the business of the Companyand operating effectively as at 31 March 2021 based on "the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia".
| ||For Mittal Agarwal & Company Chartered Accountants |
| ||(Firm Registration No. 131025W) |
| ||Sd/- |
| ||Piyush Agarwal |
| ||Partner |
|Place: Pune ||Membership No. 135505 |
|Dated: 25/06/2021 ||UDIN: 21135505AAAADG3435 |