Tantia Constructions Limited
Reports on the Audit of Standalone Ind AS Financial StatementsQualified Opinion
We have audited the accompanying financial statements of TantiaConstructions Limited ( the Company) which comprise the Balance sheet as at 31st March2021 the statement of Profit and Loss including other comprehensive income) thestatement of change in Equity and the statement of Cash Flows for the year then ended andNotes to the financial statement including a summary of the significant accountingpolicies other explanatory information (hereinafter referred to as "the financialstatements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Ind AS financial statements except forthe effects of the matter described in the Basis for Qualified Opinion of our report theaforesaid financial statements give the information required by the Act in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31st March 2021its profit including other comprehensive income its cash flows and the change in equityfor the year ended on that date .
Basis for Qualified Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that audit evidence we had obtainedexcept with regard to matter set out below in paragraph (a) to (c) is sufficient andappropriate to provide a basis for our qualified opinion.
(a) Amount receivables and payables including certain balances undercash & cash equivalents trade receivables/ payables loans other financial assetsother assets/ liabilities are subject to balance confirmations and reconciliationsthereof if any required.
(b) Non-ascertainment and provision for slow/non/obsolete inventory andas such consequent impact thereof on the financial statement of the company if anycannot be commented upon by us.
(c) Non-ascertainment and provision for Investment in non-moving Jointventures aggregating to Rs.277 lakhs. As such consequent impact thereof on the financialstatement of the company if any cannot be commented upon by us.
Matter of Emphasis
a) There is delay in implementation of the Approved Resolution Plan forthe reasons mentioned in Note 55 of the financial statements. As per the Resolution Planapproved on 24th Feb 2020 and instructions given thereafter in this matter by theAdjudicating Authority the affairs of the Company including implementation of same aremanaged by the Monitoring Committee as a going concern basis.
b) Trade receivables and Loans and Advance - Current assets includesRs. 5670 lakhs and Rs.890 lakhs respectively lying outstanding for more than threeyears. As receivable mainly from government agencies subsidiary and associate company orpending under arbitration the same has been considered good and as such no provision hasbeen made there against by the Management.
c) Certain fixed deposits with banks aggregating Rs. 205.22 lakhswritten off last year were restored at Rs.250.01 lakhs which includes interest earned inearlier years based on communication received from the banks. The same has been includedin "Exceptional item" in profit and loss accounts. Further interest incomeaccrued against these deposits amounting to Rs.15.25 lakhs has been included under"Other Income".
d) Fixed deposit of Rs.1000 lakhs given as performance security to"Committee of Creditors" by Resolution Applicant as per the ApprovedResolution Plan treated as amount received by the Company from the Successful ResolutionApplicant and the same has been included in "Other banks balances" by creatingcorresponding liability to them and shown under "Other Current Liabilities".
Further interest income of Rs 39.50 lakhs accrued thereon accountedfor under other income and corresponding liability accounted as "other financialliabilities".
e) Rs 350 lakhs received from Resolution Applicant as per approvedresolution for payment to employees and other operational creditors. Pendingimplementation of Resolution Plan the same has been deposited with bank as shorttermdeposit and interest accrued thereon of Rs. 4.91 lakhs has been accounted for as interestincome.
f) Advance to suppliers includes Rs. 278.84 lakhs given to differentparties during the period of Corporate Insolvency Resolution Process is still due to berecovered or adjusted and same has been considered as good.
g) Land allotted to the Company from West Bengal Housing InfrastructureDevelopment Corporation Limited amounting to Rs.372 lakhs is under subjudice and pendingbefore the Hon'ble Calcutta High Court. The same has been under Fixed asset as Freeholdland.
h) Title deeds with respect to certain Lands hold by Company are notavailable.
i) Exceptional item includes Rs 1317(Net) Lakhs on account of assetsand liabilities written off/back during previous financial year the year has been restoredduring the current financial year.
j) Tantia Infrastructure Private Limited (hereinafter referred to as"TIPL") subsidiary company has in turn made substantial investments ininter-alia in another subsidiary company Tantia Raxaultollway Private Limited(hereinafter referred to as "TRPL"). TRPL being an SPV entity is currentlynon-operational and the project is currently under arbitration. Owing to the same statusof the operations at the subsidiaries and the stated pending arbitration advance againstmaterial amounting to Rs.4475 lakhs and Advance against Contract amounting to Rs.2031.47lakhs payable to TRPL by the Company has been retained; and Measurement and recognitionof preference share of Rs.17882 lakhs(at fair value after netting of provision fordiminution in value of Rs. 13271 lakhs) in TIPL has been done and as such no furtherprovision has been made by the management.
Our opinion is not qualified in respect of the above paragraph (a) to(j ).
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Ind AS financialstatements of the current period. These matters were addressed in the context of our auditof the Standalone Ind AS financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters.
We have determined the matter described below to be key audit mattersto be communicated in our report
|Sr. No. Key Audit Matter ||How our audit addresses the key audit matters |
|1 Implementation of Approved Resolution Plan (RP) ||We have performed the following procedures: |
|Refer Note 55 to the standalone Ind AS financial statements for the details regarding CIR process and the roadmap of revival of the company in terms of approved Resolution plan. ||- Reviewed 'management's process for review and implementation of RP |
|Pursuant to Clause 22.1 of the Approved Resolution Plan a Monitoring Committee (MC) as specified in the plan has been constituted on the effective date by virtue of the order of the Hon'ble NCLT approving the Resolution Plan. ||- Reviewed the provisions of RP to understand the requirements of the said plan and evaluated the possible impact of same |
|Certain anomalies with respect to regulatory procedures etc. have been observed which delayed the transfer of existing equity shares of promotors to the Resolution Applicant (RA). ||- Conducted discussion with the company personnel to determine reason of delay in the implementation of RP |
|Accounting effects of the RP is significant as such delay in implementation of RP is considered by us to be a matter of most significance due to its importance to intended users understanding of the Financial Statements as a whole and materially thereof. ||- Review of minutes of monitoring committee and other related documents |
| ||- Discussed the steps taken by MC to ensure completion of transfer of share and implementation of RP. |
Information Other than the Financial Statements and Auditor's ReportThereon
The Company's Management is responsible for the preparation of theother information. The other information comprises the Corporate Information ManagementDiscussion and analysis and Director Report including Annexure to Director ReportCorporate Governance and Shareholder's information but does not include Standalone Ind ASfinancial statements and our auditor's report thereon.
Our opinion on the Standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the Standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information; we are required to report that fact. Wehave nothing to report in this regard.
Responsibilities of Management and those in charges with Governance forthe Standalone Ind AS Financial Statements
The Company 's Management is responsible for the matters stated insection 134(5) of the Companies Act 2013 with respect to the preparation of theseStandalone Ind As financial statements that give a true and fair view of the financialposition financial performance including comprehensive income change in equity and cashflows of the Company in accordance with the other accounting principles generally acceptedin India including India Accounting Standard(Ind AS). This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding 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 control 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 .
In preparing the 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.
The Management are responsible for overseeing the Company's financialreporting process.
The Hon'ble National Company Law Tribunal Kolkata (NCLT) on 24thFebruary 2020 approved the Resolution Plan (hereinafter referred to as the ApprovedResolution Plan) submitted for the Company by the successful Resolution Applicant (RA) .In terms of approved Resolution Plan a Monitoring Committee is constituted to manage theaffaires of the Company as a going concern and supervise the implementation of theApproved Resolution Plan.
Auditor Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether theStandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of theStandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Companies Act 2013 we are also responsiblefor expressing our opinion on whether the company has adequate internal financial controlswith reference to financial statements in place and the operating effectiveness of suchcontrols.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of theStandalone Ind AS financial statements including the disclosures and whether theStandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Standalone Ind ASfinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the Standalone Ind AS financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the Standalone Ind ASfinancial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significant in the audit of the Standalone IndAS financial statements for the financial year ended on 31st March 2021 and are thereforethe key audit matters. We describe these matters in our auditor's report unless law orregulator precludes public disclosure about the matter or when in extreme rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicbenefits 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 sub-section(11) of section 143 of the Act we give in the Annexure "A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act based on our audit wereport that :
a. We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b. Except for the effects of the matter described in the Basis forQualified Opinion paragraph above In our opinion proper books of account as required bylaw have been kept by the Company so far as it appears from our examination of thosebooks.
c. The Balance Sheet the Statement of Profit and Loss including thestatement of other Comprehensive Income Statement of Change in Equity and the Statementof Cash Flow dealt with by this Report are in agreement with the books of account.
d. Except for the effects of the matter described in the Basis forQualified Opinion paragraph above In our opinion the aforesaid Standalone Ind ASfinancial statements comply with the Accounting Standards specified under Section 133 ofthe Act read with Rule 7 of the Companies (Accounts) Rules 2014.
e. The power of Board of Director of Company were suspended. Onformation of a Monitoring Committee (MC) as per the Approved Resolution Plan forimplementation of Resolution Plan and manage the affairs of the Company. MonitoringCommittee (MC) is comprises of Erstwhile Resolution Professional three members from theFinancial Creditors and three members from Successful Resolution.
f. With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report " In Annexure B" to this report.
g. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigation on itsfinancial position in its Standalone Ind AS financial statement.
ii. The Company did not have any long term contracts includingderivative contracts for which there were any materials foreseeable losses.
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.
"Annexure A" to the Independent Auditors' Report
Report on Other Legal and Regulatory Requirements
Statement referred to in paragraph 1 under the heading 'Report on OtherLegal & Regulatory Requirement' of our report of even date to the members of TantiaConstructions Limited on Standalone Ind AS financial statements of the Company for theperiod ended 31st March 2021:
1) (a) Fixed Assets register showing full particulars includingquantitative details and situation of its fixes assets.
(b) The Company has regular programme of physical verification of itsFixed Assets by which same is verified on rotational basis over a period of 3 years whichin our opinion is reasonable having regard to the size of the company and nature of itsassets. During the current financial year the process of verification was not made hencereconciliation with physical balance could not be made .
(c) Title deeds of certain immovable properties are not available forverification .
2) The inventories have not been physically verified during the year bythe management at reasonable intervals in absence of the same excess or shortage if anycould not be determined and given effects in the accounts.
3) The Company has not granted any loans secured or unsecured tocompanies firms LLP or other parties covered parties covered in the Register maintainedunder section 189 of the Act. Accordingly the provisions of clause 3 (a) to (C) of theOrder are not applicable to the Company.
4) In our opinion and according to the information and explanationgiven to us the Company has complied with the provision of section 185 and 186 ofthe Act in respect of loans and investments made providing guarantees and securitiesprovided by it.
5) According to the information and explanation provided to us theCompany has not accepted any deposits from the public within the meaning of Section73 to 76 of the Act and Rules framed there under to the extent notified. Accordingly theprovisions of clause 3(v) of the order are not applicable to the company.
6) We have reviewed the books of accounts maintained by the Companypursuant to the Rule made by the Central Government for maintenance of cost records undersection 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed accounts and records have been maintained. We have not made a detailedexamination of the records with a view to determine whether they are accurate or complete.
7) (a) According to information and explanations given to us and on thebasis of our examination of the books of account and records of the Companyamount deducted/accrued in the books in respect of undisputed statutory dues includingProvident Fund Employee State Insurance Income Tax Goods and Service Tax Duty ofCustoms Cess and any other statutory dues have generally not been regularly depositedduring the year by the company with the appropriate authorities.
(b) As mentioned in note 39 to the Standalone Ind AS financialstatements as per approved Resolution Plan which interalia resulted in extinguishment ofall contingent liabilities and commitments claims and obligation which pertains to theperiod on or before the effective date (13th March 2019) pursuant to the implementationof the Resolution Plan. There are no due of Income Tax Sales tax Service Tax duty ofcustom duty of Excise value added tax and good and service tax which not been depositedon account of dispute.
8) The National Company Law Tribunal (NCLT) has approved the terms ofthe Resolution Plan submitted by Resolution Applicant pursuant to which loans orborrowing owned by the Company as at the date have been partially extinguished by way ofwaiver. Accordingly the Company has not defaulted in repayment of loans or borrowing toany financial institute or a bank during the year.
There were no loans or borrowing payable to Government or debentureholders.
9) Based upon the audit procedures performed and the information andexplanations given by the management the company has not raised moneys by way of initialpublic offer or further public offer including debt instruments and term Loans.Accordingly the provisions of clause 3 (ix) of the Order are not applicable to theCompany and hence not commented upon.
10) Based upon the audit procedures performed and the information andexplanations given by the management we report that no fraud by the Company or on thecompany by its officers or employees has been noticed or reported during the year.
11) Based upon the audit procedures performed and the information andexplanations given by the management no managerial remuneration have been provided by theCompany hence this clause 3(ii) is not applicable to the company
12) In our opinion and according to information and explanation givento us the Company is not a Nidhi Company. Accordingly the provisions of clause 3(xii)of the Order are not applicable to the Company.
13) According to the information and explanation given to us and basedon our examination of the records of the Company transactions with the related partiesare in compliance with section 177 and 188 of the companies Act 2013 and the details ofsuch transaction have been disclosed in the financial statements as required by theapplicable accounting standards;
14) According to information and explanations given by the managementthe company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year under review. Accordingly theprovisions of clause 3 (xiv) of the Order are not applicable to the Company and hence notcommented upon.
15) According to information and explanations given to us and based onour examination of the records the company has not entered into any non-cash transactionswith directors or persons connected with him. Accordingly the provisions of clause 3 (xv)of the Order are not applicable to the Company and hence not commented upon.
16) According to information and explanations given to us the companyis not required to be registered under section 45 IA of the Reserve Bank of India Act1934 and accordingly the provisions of clause 3 (xvi) of the Order are not applicable tothe Company and hence not commented upon.
"Annexure B" to the Independent Auditors' Report
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of Tantia Constructions Limited ('the Company') as of 31st March 2021 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing to the extentapplicable to an audit of internal financial controls both issued by 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 control over financial reporting were established and maintained and if suchcontrol operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting 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 judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting 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 control overfinancial reporting includes those policies and procedures that:
1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorizations of management and directors of thecompany; and
3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the Company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internalfinancial control over financial reporting may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
According to the information and explanations given to us and based onour audit the following material weakness have been identified as at 31 March 2021:
The Company did not have appropriate internal controls for
- ascertainment and provision for slow/non/obsolete inventory andnon-moving joint ventures
- reconciliation of balances lying as receivables and payables withthird party balance confirmation and as such consequent impact thereof on financialstatements of the Company.
A ' material weakness' is a deficiency or a combination ofdeficiencies in internal financial control over financial reporting such that there isa reasonable possibility that a material misstatement of the company's annual or interimfinancial statements will not be prevented or detected on a timely basis.
In my our opinion the company has in all material respectsmaintained adequate internal financial controls over financial reporting as on 31 March2021 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in Guidance Noteon Audit of Internal Financial Controls Over Financial Reporting issued by ICAI and exceptfor the effects/possible effects of the material weakness/es described above on theachievement of the objectives of the control criteria the Company's internal financialcontrols over financial reporting were operating effectively as of March 31 2021.
We have considered the material weaknesses identified and reportedabove in determining the nature timing and extent of audit tests applied in our audit ofthe March 31 2021 standalone Ind AS financial statements of the Company and thesematerial weaknesses do affect our opinion on the financial statements of the Company.
|For J Jain and Company |
|Chartered Accountants |
|Firm Reg. No. 310064E |
|CA Sanjay Lodha |
|M.No 058266 |
|Date: May 4 2022 |
|Place: Kolkata |
|UDIN No.: |