To the Members of
Ansal Properties & Infrastructure Limited
Report on the Audit of the Standalone Financial Statements
Statements Qualified Opinion
We have audited the accompanying standalone financial statements of Ansal Properties & Infrastructure Limited("the Company"), which comprise the balance sheet as at March 31 2023, the statement of profit and loss, including the statement of other comprehensive income, the cash flowstatement and the statement of changes in equity for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (herein after referred as "standalone financial statements").
In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion Paragraph, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023 , its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for Qualified Opinion
a. We draw attention to the accompanying Statement, the Company has borrowings from certain banks which have been classified as non-performing assets (NPA borrowings) and those from certain other banks/ asset reconstruction company (together referred to as the Lenders). The Company had entered into settlement agreements (Settlement Agreements) with some of these Lenders for the aforesaid loans. As described in the said note, the Company has delayed the payments in respect of the instalments due to these Lenders pursuant to the relevant loan agreements and Settlement Agreements. In respect of the afore mentioned NPA borrowings and delayed payments under the Settlement Agreements, the Company has not recognised interest for the period from 01st April 2022 to 31st March 2023 aggregating to Rs. 4,130.08 lakhs payable under the terms of the said agreements, as estimated by the management based on expected re-negotiation with the Lenders. Due to the non- availability of statement of Accounts from the Lenders, stated amount has been calculated on the basis of available document with the management.
We further report that, if the observations made by us in para (a) above been considered, the total comprehensive loss for the year would have been Rs. 42,271.78 lakhs (as against the reported figure of total comprehensive loss of Rs. 38,141.70. lakhs), other current financial liabilities would have been Rs. 38,444.18 lakhs (as against the reported figure of Rs. 34,314.10 lakhs)
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities 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 the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on standalone financial statements.
Emphasis of Matter
Without qualifying:
a. Ansal Properties and Infrastructure Limited ["APIL" or "Company"] was admitted into Corporate Insolvency Resolution Process ["CIRP"] vide Order dated 16.11.2022 passed by the Honble National Company Law Tribunal ["NCLT"], New Delhi Bench, Court-II in the matter of "Bibhuti Bhushan Biswas & Ors. Versus M/s Ansal Properties and Infrastructure Limited". Subsequently, a Company Appeal (AT) (Ins.) No. 41 of 2023 was filed before the Honble National Company Law Appellate Tribunal ["NCLAT"] against the admission order. The Honble NCLAT vide Order dated 13.01.2023 held that the CIRP under the Insolvency and Bankruptcy Code, 2016 ["IBC"] shall only be confined to the "Fernhill Project" situated at District Gurgaon. Shortly after the Order dated 13.01.2023 was passed, the IRP filed a Clarification Application dated the 17.01.2023 in relation to the Honble NCLAT Order dated 13.01.2023, which will now be heard on the 10th November, 2023 or other date as may be decided by NCLAT.
Further, the Corporate Insolvency Resolution Process ["CIRP"] has been initiated in respect of Project "Serene Residency Group Housing Project at Sector ETA II, Greater Noida" only vide Order dated 20.10.2023 passed by the Honble National Company Law Tribunal ["NCLT"], New Delhi Bench, Court-II in the matter of "Indian Bank Versus M/s Ansal Properties and Infrastructure Limited."
The process is underway as on date of report and consequently, effect in the financial statements will be given once the process is complete.
b. We draw attention to note 40 of the accompanying standalone financial statements for the year ended March 31, 2023 which describes that the Company had claimed a cumulative exemption of Rs. 3,408 lakh up to the period ended March 31, 2011, under section 80 IA (4)(iii) of the Income Tax Act, 1961 being tax profits arising out of sale of Industrial Park units, pending the notification of the same by Central Board of Direct Taxes (Competent Authority). The Competent Authority rejected the initial application against which the Company has filed review petition. Since, the Review Petition of the company has been pending for long time, the company has filed Writ Petition before the Honble Delhi High Court. The same has been admitted by the Honble Delhi High Court and notice issued to the department. Next date of hearing is 31st January, 2024.
c. We draw attention to note 60 of the accompanying standalone financial statements, wherein the company has filed petition before the Honble National Company Law Tribunal, North Delhi Bench for relief in the scheme of repayment of public deposits (as on 31.03.2023 total outstanding principal is of Rs. 8,358.14 lakhs) sanctioned by Company Law Board. The Honble National Company Law Tribunal has been pleased to issue notice to all deposit holders. The next date of hearing is 09.11.2023.
d. We draw attention to note 47 of the accompanying standalone financial statements, wherein IIRF India IRF India Realty Limited - II fund "Foreign Investor" and IL&FS Trust Company Limited (acting as Trustee of IFIN Realty Trust) through its manager IL&FS Investment Managers Limited "Indian Investor" had invested an amount of Rs. 7,934 Lakh in Equity Shares and Compulsorily Convertible Preference Shares (CCPS) of Ansal Townships Infrastructure Limited, a subsidiary of the Company. The Company has purchased part of the investment i.e. 40.66% and remaining part is still pending. The investor has invoked Arbitration clause, Further ATIL is settling the Investor by buying the full investment.
e. We draw attention to note 46 of the accompanying standalone financial statements for the year ended March 31,2023 , as per prescribed norms issued by Reserve Bank of India (RBI) and the exercise of powers conferred on the Bank under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), the lender banks have issued notices the details of which are as follows:
i) The Company has availed a loan of Rs. 15,000 lakhs and now the outstanding principal is Rs.10,360 lakhs from Allahabad bank (now merged with Indian bank), for project Sushant Serene Residency, Sector ETA - II, Greater Noida. The loan account is classified as NPA. The Company has submitted One Time Settlement ["OTS"] proposal to the Bank and has paid an upfront deposit against the proposed OTS to Bank. The bank has returned OTS proposal and advised the Company to submit an improved proposal. Indian Bank also has filed a recovery suit & insolvency application under section 7 of IBC Act 2016, against the Company in DRT New Delhi & NCLT New Delhi. Further, the Corporate Insolvency Resolution Process ["CIRP"] has been initiated in respect of Project "Serene Residency Group Housing Project at Sector ETA II, Greater Noida" only vide Order dated 20.10.2023 passed by the Honble National Company Law Tribunal ["NCLT"], New Delhi Bench, Court-II in the matter of "Indian Bank Versus M/s Ansal Properties and Infrastructure Limited."
ii) The Company had availed Working Capital Fund Based Limits of Rs. 3,100 Lakhs and Bank Guaranty facility from Jammu & Kashmir Bank Limited, New Delhi. The fund-based account has been classified as NPA. During the month of September 2023, Jammu & Kashmir Bank approved OTS offer submitted by the Company for full repayment of banks approved OTS amounts by 15th December 2023. The Jammu & Kashmir Bank has also filed a recovery suit against the Company in DRT, New Delhi. The next hearing before DRT is 29.11.2023.
iii) In respect of Financial Facilities availed from IL&FS Financial Services (IFIN), an OTS to pay Rs. 10,966 lakhs as full & final settlement was executed between the Company and IFIN and approval from their competent authorities received vide their order dated 14.10.2022. The Company has paid Rs 500 Lakhs as per the terms of approval on 20.10.2022. Due to the initiation of CIRP since 16th November 2022 and imposition of moratorium period on the operation of the Company, payments of balance amounts could not be made.
f. We draw attention to note 41 of the accompanying standalone financial statements for the year ended March 31, 2023 wherein during the quarter ended 30th September 2018, the Award in the matter of arbitration with Landmark group was pronounced. The Award contemplates joint and several liability of four companies of Ansal Group, including the Company, amounting to Rs. 5,578 lakhs along with interest amounting to Rs. 10,508 lakhs. The Petition filed by Ansal Group has been disposed of by Honble High Court vide order dt. 5th January 2022 with direction to deposit with the Registry of the Court an amount of Rs, 20,000 Lakhs approx. (Rs. 3,099.91 Lakhs earlier deposited with the Honble Court, released to Landmark Group through Order dated 08.08.2023). No provision has been made in the books of accounts for balance amounts. However, the Company has disclosed the same as Contingent Liability. Next course of action is still pending.
g. We draw attention to note 43 of the accompanying standalone financial statements for the year ended March 31,2023, in relation to UP RERA projects (1) UPRERAPRJ4754 (2) UPRERAPRJ3331 (3) UPRERAPRJ9594(4) UPRERAPRJ7090 (5) UPRERAPRJ7122, located at Lucknow, has been deregistered by UPRERA. And the Company has filed an appeal with RERA Appellate Tribunal on various grounds. Next hearing before Appellate Tribunal is awaited due to vacation of Court. (6) In respect of project bearing RERA No UPRERAPRJ10009 - completion has been applied to Lucknow Development Authority and information has been given to RERA authorities. (7) UPRERAPRJ10150 - as per direction of RERA Authority, the project audit has been completed by the M/s. Asija Associates and report has been submitted to RERA.
h. We draw attention to note no 42 of the standalone financial statements wherein the Company has purchased properties aggregating to Rs. 16,078 lakh from one of its subsidiary (holding 70.57% equity shares) Ansal Townships Infrastructure Limited (ATIL) in the financial year 2011 -12. The Company has not paid Rs. 14,374 lakh out of the above consideration to ATIL till date. ATIL is demanding interest on delayed payment of the outstanding amount @18% per annum. However, the Company has denied such demand on the basis that there is no such clause in the agreement entered into with ATIL and has not provided for any interest on the outstanding amount in its books of account. In view of the above, we are unable to ascertain the possible impact it may have on the profit and financial position of the Company and hence not commented upon.
i. We draw attention to note no 42 of the standalone financial statements wherein ATIL has not made provision for interest receivable on advance of Rs. 1,140 lakh given to the Company. One of the minority investors, shareholder of the ATIL, "IIRF India Realty Ltd" has objected to granting interest free advance and has demanded that the ATIL recover interest @ 18% per annum on the amount so advanced. In view of the above, we are unable to ascertain the possible impact it may have on the profit and financial position of the Company and hence not commented upon.
j. We draw attention to note no 44 to the standalone financial statements, Velford Ventures Ltd and New Dimensions Holdings Limited as equity investors along with Grainwell Ventures Ltd and Clear Horizon Investment PTE Ltd as debenture investors ("investors") which have invested in Ansal Phalak Infrastructure Pvt. Ltd. (APIPL) (Now known as New Look Builders & Developers Private Limited) had referred the matter to an Arbitrator on their dispute with APIL. In the meanwhile, both the parties, (i.e., the company and the Investors) had entered into master settlement agreement, which was jointly submitted to the arbitrator. Based on the master settlement agreement filed with the arbitrator, interim arbitration award was pronounced. A second addendum of master settlement has been executed and as per agreement, a final settlement amount of Rs 168.70 crores shall be payable along with interest @1.5% pm from 1st August 2022. The company is in the process to execute the terms of the agreement and no further liability is expected in books of account. However, any adjustment in books will be made at the time of final completion of terms of agreement.
Our opinion is not modified in respect of the above matters.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance inour audit of the standalone financial statements for the financial year ended March 31, 2023. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Foreach matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors Responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.
| Key audit matters | How our audit addressed the key audit matters |
| Assessment of net realisable value (NRV) of inventories | |
| The Companys inventory comprises of ongoing and completed real estate projects, unlaunched projects and development rights. As at March 31, 2023, the carrying values of inventories amounts to Rs. 2,79,563.97 Lakh. | Our audit procedures/ testing included, among others: • We read and evaluated the accounting policies and disclosures made in the financial statements with respect to inventories; |
| The inventories are carried at the lower of the cost and net realizable value (NRV). The determination of the NRV involves estimates based on prevailing market conditions, current prices and expected date of commencement and completion of the project, the estimated future selling price, cost to complete projects and selling costs. | • Evaluating the managements valuation methodology and assessing the key estimates, data inputs and assumptions adopted in the valuations, which included comparing expected future average selling prices with available market data such as recently transacted prices for similar properties located in the nearby vicinity of each property development project and the sales budget plans maintained by the Company; |
| Considering significance of the amount of carrying value of inventories in the financial statements and the involvement of significant estimation and judgement in such assessment of NRV, the same has been considered as key audit matter. | • Verifying the NRV assessment and comparing the estimated construction costs to complete each development with the Companys updated budgets. |
| The Company has significant investments in its joint ventures and associates. As at 31 March 2023, the carrying values of Groups investment in its subsidiaries and joint venture entities amounts to Rs. 49,086.81 lakh. | • We have tested the NRV of the inventories to its carrying value in books on sample basis. |
| Management reviews regularly whether there are any indicators of impairment of the investments by reference to the requirements under Ind AS 36 "Impairment of Assets". | Our procedures in assessing the managements judgement for the impairment assessment included, among others, the following: |
| For investments where impairment indicators exist, significant judgments are required to determine the key assumptions used in the discounted cash flow models, such as revenue growth, unit price and discount rates. | • We assessed the Groups valuation methodology applied in determining the recoverable amount of the investments; |
| Considering, the impairment assessment involves significant assumptions and judgement, the same has been considered as key audit matter. | • We obtained and read the valuation report used by the management for determining the fair value (recoverable amount) of its investments; |
| • We considered the independence, competence and objectivity of the management specialist involved in determination of valuation; | |
| • We tested the fair value of the investment as mentioned in the valuation report to the carrying value in books; | |
| • Made inquiries with management to understand key drivers of the cash flow forecasts, discount rates, etc and assessed the reasonableness thereof; | |
| • Involved experts to review the assumptions used by the management specialists. We reviewed the disclosures made in the financial statements regarding such investments. |
| Key audit matters | How our audit addressed the key audit matters |
| Assessment of the going concern of the Company | |
| The accumulated losses as on March 31, 2023 is Rs.1,53,029.65 lakh (major part of accumulated losses was due to the Company adopting Ind AS - 115 "Revenue from Contracts with Customers" with effect from 01.04.2018 resulting in reversal of earlier profits Rs. 1,17,518.87 lakh in retained earnings as at 01.04.2018). As a result, accumulated losses exceed the share capital and free reserves of the Company. Due to recession in the industry, the Company continues to face liquidity issues due to multiple repayment and statutory obligations. These events or conditions indicate that there are conditions existing that may have some impact on the Companys ability to continue as a going concern. | Our audit procedures to assess the going concern of the Company in view of the liquidity issues being faced by the Company included the following: |
| In view of management facing liquidity issues the management has taken various initiatives to revive their liquidity position and in view of its confidence in | • Inquire of management as to its knowledge of events or conditions and related business risks beyond the period of assessment used by management that may cast doubt on the entitys ability to meet its financial commitments continue as a going concern. |
| achieving these initiatives the accounts have been prepared on the same accounting assumptions. | • Analysis and discussion of cash flow, profit, and other relevant forecasts with management. |
| • Reading of minutes of the meetings of shareholders, board of directors, and other important committees for reference to financing difficulties. | |
| • Obtaining written representation from management concerning plans for future action whose outcome is expected to mitigate the situation. |
Information other than the standalone financial statements and Auditors Report thereon
The Companys Management is responsible for the other information. The other information comprises the information included in the Annual Report but does not include the standalone financial statements and our auditors report thereon. The Annual report is expected to be made available to us after the date of this Auditors Report.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Standalone Ind AS Financial Statements
In the absence of Board of Directors due to admission of Corporate Insolvency Resolution Process of the Company under Insolvency and Bankruptcy Code, 2016 (the Code) vide Order dated 16.11.2022 passed by the Honble National Company Law Tribunal ["NCLT"], New Delhi Bench, Court-II. The Companys Management is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentationof the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Management is also responsible for overseeing the Companys financial reporting process.
Auditors Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurancebut is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditionsmay cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the standalone financial statements,including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the financial year ended March 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2020 ("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 1", a statement on the matters specified in paragraphs 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, except for the possible effect of the matter described in the Basis for Qualified Opinion Paragraph above all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion, except for the possible effect of the matter described in the Basis for Qualified Opinion Paragraph above proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The balance sheet, the statement of profit and loss including other comprehensive income, the cash flow statement and statement of changes in equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, except for the possible effect of the matter described in the Basis for Qualified Opinion Paragraph above the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) The matter described in the Basis of Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;
(f) On the basis of the written representations received from the management of the Company as on March 31, 2023 taken on record by the Company, none of the directors is disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act;
(g) With respect to the adequacy of the internal financial controls over financial reporting of the company with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(h) In our opinion, the managerial remuneration for the year ended March 31, 2023 has been paid / provided by the Company to its directors in accordance with the provisions of Section 197 read with Schedule V to the Act;
(i) With respect to the other matters to be included in the Auditors Report in accordance withRule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has, except for the possible effect of the matter described in the Basis for Qualified Opinion Paragraph above, disclosed the impact of pending litigations on its financial position in its standalone financial statements - refer note 38 to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There is no amount which is, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. a) The management has represented that, to the best of its knowledge and belief, no funds have
been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Company or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
b) The management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Holding Company or its subsidiary companies incorporated in India shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Funding Parties or provide any guarantee, security or the like from or on behalf of the Ultimate Beneficiaries.
c) Based on such audit procedures that the auditor has considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under sub-clause (i) and (ii) contain any material misstatement.
v. No dividend has been declared or paid during the year by the company.
Annexure 1 to the Independent Auditors Report to the Members of Ansal Properties & Infrastructure Limited dated March 27, 2024.
Report on the matters specified in paragraph 3 of the Companies (Auditors Report) Order, 2020 ("the Order) issued by the Central Government of India in terms of section 143(11) of the Companies Act, 2013 ("the Act") as referred to in paragraph 1 of ‘Report on Other Legal and Regulatory Requirements section.
In terms of the information and explanations sought by us and given by the Company and the books of account and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:
i. (a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.
(B) The Company has not capitalized any intangible assets in the books of the Company and accordingly, the requirement to report on clause 3(i)(a)(B) of the Order is not applicable to the Company.
(b) The Company has a phased program of physical verification of its Property, Plant and Equipment which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. All the assets identified during the year for verification have been physically verified by the management and no material discrepancies were identified on such verification.
(c) The title deeds of all the immovable property are held in the name of the Company.
(d) The Company has not revalued its property, plant and equipment during the year ended March 31, 2023.
(e) There are no proceedings initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
ii. (a) The Company does not hold inventory of stores, spares parts and raw material. Inventory comprise of only land and project in progress. According to the information and explanations given to us, and also keeping in the view the nature of operations of the Company, inventory of project in progress cannot be physically verified. Accordingly, the requirement to report on clause 3(ii)(a) of the Order is not applicable to the Company. The inventory has been physically verified by the management during the year except for inventories lying with third parties. In our opinion, the frequency of verification by the management is reasonable and the coverage and procedure for such verification is appropriate. Inventories lying with third parties have been confirmed by them as at March 31, 2023 and discrepancies were not noticed in respect of such confirmations.
(b) As disclosed in note 23 to the financial statements, the outstanding balance of working capital limits is Rs. 1,769.28 lakhs as at 31st March, 2023 against the security of current assets of the Company. This loan has been declared as NPA by bank and OTS for the same has been submitted by the company for the settlement. Based on the records examined by us in the normal course of audit of the financial statements, no quarterly returns/statements has been filed by the Company during the year with such banks.
iii. (a) During the year, the Company has made investment, provided advances for purchase of land and stood guarantee to the companies, firms, Limited Liability Partnerships or any other parties.
The details of aggregate amount during the year, and balance outstanding at the balance sheet date is as follows:
(Rs. In lakhs)
| Particulars | Aggregate amount provided during the year | |||
| Loans & advances | Investment | Security | Guarantee | |
| Subsidiaries | 4,926.56 | -- | -- | -- |
| Joint Ventures | -- | -- | -- | -- |
| Associates | 2.49 | -- | -- | -- |
| Others | -- | -- | -- | -- |
| Balance outstanding as at the balance sheet date | ||||
| Advances for purchase of Land | Investment | Security | Guarantee | |
| Subsidiaries | 62,761.79 | 46,477.27 | -- | 28,228.42 |
| Joint Ventures | 1,204.41 | 2,609.54 | -- | -- |
| Associates | 264.66 | 40.00 | -- | 9,952.08 |
| Others | -- | -- | -- | -- |
(b) In our opinion and according to the information and explanations given to us, the terms and conditions of the loans and advances, Investment and guarantee provided by the company are not prejudicial to the Companys interest.
(c) The Company has given advances re-payable on demand. We are informed that the Company has not demanded repayment of any such advance during the year. Hence there has been no default on the part of the party to whom the money has been lent.
(d) There is no amount of loan granted by the company, which is overdue for more than ninety days.
(e) There were no loans or advance in the nature of loan granted by the company, which has fallen due during the year. Accordingly, the requirement to report on clause 3(iii)(e) of the Order is not applicable to the Company.
(f) The Company has given advances against purchase of Land, either repayable on demand or without specifying any terms or period of repayment to companies, firms, limited liability partnerships or any other parties. Detail of the same is as under:
| Sl. No. | Aggregate amount of loan (Rs. In lakhs) | % of Total Loans |
| 1 | 64,230.86 | 100 |
iv. In our opinion and according to the information and explanations given to us, provisions of section 185 and 186 of the Act, to the extent applicable, in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company.
v. (a) The matter regarding repayment of Public Deposits and Interest thereon is pending before the Honble National Company Law Tribunal, North Delhi Bench on an application filed by the Company for appropriate extension or relief in the scheme of repayment already sanctioned by Honble Company Law Board {CLB}. However, as at March 31, 2023, amount of Rs. 8,358 lakh is due for payment. The Companys petition regarding revised schedule for repayment of deposits and interest thereon is pending before NCLT Next date of hearing is 09-11-2023.
vi. The Central Government has prescribed for maintenance of Cost Accounting records pursuant to the requirements of sub- section (1) of section 148 of the Act with regard to the activities of the Company. The Company is in the process of making and maintaining those records. We have not, however, made a detailed examination of the same.
vii. (a) According to the records of the Company examined by us and the information and explanations given to us, the Company is generally regular in depositing its undisputed statutory dues including Provident Fund, Employees State Insurance, Income tax, Sales tax, duty of custom, value added tax, cess, goods and service tax and other material statutory dues, wherever applicable, with the appropriate authorities during the year. There are no such undisputed statutory dues payable for a period of more than six months from the date they became payable as at March 31, 2023 .
(b) According to the information and explanations given to us and as per the books and records examined by us, details of dues of income tax, sales tax, value added tax, service tax, goods and service tax (GST), duty of customs, duty of excise which have not been deposited with the appropriate authorities on account of any dispute and the forum where the dispute is pending, are as under::
viii. According to the information and explanations given to us and as per the books and records examined by us, the Company has not surrendered or disclosed any transaction, previously unrecorded in the books of account, in the tax assessments under the Income Tax Act, 1961 as income during the year. Accordingly, the requirement to report on clause 3(viii) of the Order is not applicable to the Company.
ix. (a) The Company has delayed in repayment of dues including interest to banks and financial institutions. Such delays
existing as on the balance sheet date are given in Annexure attached with this report. The Company has not taken any loan from government.
(b) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(c) The term loans were applied for the purpose for which the loans were obtained hence the requirement to report on clause 3(ix)(c) of the Order is not applicable to the Company.
(d) No funds has been raised on short term basis, hence the requirement to report on clause 3(ix)(d) of the Order is not applicable to the Company.
(e) During the year the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.
Accordingly, the requirement to report on clause 3(ix)(e) of the Order is not applicable to the Company.
(f) The Company has not raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies. Accordingly, the requirement to report on Clause 3(ix)(f) of the Order is not applicable to the Company.
x. (a) The Company has not raised any money during the year by way of initial public offer / further public offer (including
debt instruments) hence, the requirement to report on clause 3(x)(a) of the Order is not applicable to the Company.
(b) The Company has not made any preferential allotment or private placement of shares /fully or partially or optionally convertible debentures during the year under audit and hence, the requirement to report on clause 3(x)(b) of the Order is not applicable to the Company.
xi. (a) No fraud by the Company or no fraud on the Company has been noticed or reported during the year.
(b) During the year, no report under sub-section (12) of section 143 of the Companies Act, 2013 has been filed by secretarial auditor or by us in Form ADT - 4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government.
(c) As represented to us by the management, there are no whistle blower complaints received by the Company during the year.
xii. The Company is not a Nidhi Company as per the provisions of the Companies Act, 2013. Therefore, the requirement to report on clause 3(xii)(a), (b) and (c) of the Order is not applicable to the Company.
xiii. Transactions with the related parties are in compliance with section 188 and section 177 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
xiv. (a) The Company does not have an internal audit system commensurate with the size and nature of its business.
(b) Due to absence of internal audit reports of the Company issued till the date of the audit report, for the period under
audit have not been considered by us.
xv. The Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in Section 192 of the Act hence the requirement to report on clause 3(xv) of the Order is not applicable to the Company.
xvi. (a) The provisions of section 45-IA of the Reserve Bank of India Act, 1934 (2 of 1934) are not applicable to the
Company. Accordingly, the requirement to report on clause (xvi)(a) of the Order is not applicable to the Company.
(b) The Company has not conducted any Non-Banking Financial or Housing Finance activities without obtained a valid Certificate of Registration (CoR) from the Reserve Bank of India as per the Reserve Bank of India Act, 1934.
(c) The Company is not a Core Investment Company as defined in the regulations made by Reserve Bank of India. Accordingly, the requirement to report on clause 3(xvi) of the Order is not applicable to the Company.
(d) There is no Core Investment Company as a part of the Group, hence, the requirement to report on clause 3(xvi) of the Order is not applicable to the Company.
xvii. The Company has incurred cash losses amounting to Rs. 39,522.8 lakhs in the current year and amounting to Rs.977.95 lakhs in the immediately preceding financial year respectively.
xviii. There has been no resignation of the statutory auditors during the year and accordingly requirement to report on Clause 3(xviii) of the Order is not applicable to the Company.
xix. On the basis of the financial ratios disclosed in note 73 to the financial statements, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.
xx. (a) The provision of second proviso to sub-section (5) of section 135 of Companies Act, 2013 is not applicable to the
Company. Accordingly, the requirement to report on clause (xx)(a) of the Order is not applicable to the Company.
(b) The provision of sub section (6) of section 135 of Companies Act, 2013 is not applicable to the Company. Accordingly, the requirement to report on clause (xx)(b) of the Order is not applicable to the Company.
Annexure of defaults as referred to in Para ix(a)
Defaults in repayments of dues to bank and financial institutions as on March 31, 2023 are as under:
Rs. in Lakh
| Period of delay | Total | ||||||
| Particulars | As at | 1 - 31 | 32 - 60 | 61 - 89 | 90-182 | Above 183 | |
| Days | Days | Days | Days | Days | |||
| Term loans from banks | |||||||
| Against principal Amount | |||||||
| Allahabad Bank | March 31,2023 | - | - | - | - | 10,360.27 | 10,360.27 |
March 31,2022 |
- | - | - | - | (10,360.27) | (10,360.27) |
|
| J&K Bank | March 31,2023 | - | - | - | - | 1502.81 | 1502.81 |
| Limited | March 31,2022 |
- | - | - | - | (3,105.81) |
(3,105.81) |
| Against Interest | |||||||
| Allahabad | March 31,2023 | - | - | - | - | 6912.76 | 6912.76 |
| Bank | March 31,2022 |
(125.48) | (101.73) |
(112.63) |
(300.51) |
(6272.41) |
(6,912.76) |
| J&K Bank | March 31,2023 | - | - |
- |
- |
1313.90 |
1313.90 |
| Limited | March 31,2022 |
(48.70) |
(43.46) |
(47.45) |
(136.92) |
(1037.37) |
(1313.90) |
| Term Loans from Financial Institutions | |||||||
| Against Principal Amount | |||||||
| IL&FS Financial | March 31,2023 | - | - | - | - | 10,465.57 | 10,465.57 |
| S e i vices Limited | March 31,2022 |
- | - | - | - | (10,965.57) |
(10,965.57) |
| Against Interest | |||||||
| IL&FS Financial Services Limited | March 31,2023 | - | - | - | - | 5733.10 | 5,733.10 |
March 31,2022 |
(147.21) | (162.98) | (162.98) | (478.43) | (4,717.24) |
(5,668.84) |
|
Annexure 2 to the Independent Auditors Report to the Members of Ansal Properties & Infrastructure Limited dated March 27, 2024
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act") as referred to in paragraph 2(g) of ‘Report on Other Legal and Regulatory Requirements section
We have audited the internal financial controls over financial reporting of Ansal Properties & Infrastructure Limited ("the Company") as of March 31, 2023 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal financial controls based on "the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India". These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit.
We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10)
of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.
Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that:
a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Qualified Opinion
According to the information and explanations given to us and based on our audit, the following material weakness has been identified in the operating effectiveness of the Companys internal financial controls over financial reporting with reference to these standalone financial statements during the current financial year:
The Companys internal financial control in respect of regular assessment of claims filed by the customers against the Company, regular compliance verification of the Real Estate (Regulation and Development) Act (RERA) of different States, Payment of statutory dues in timely manner such as TDS, GST, RERA dues etc. and the Information Technology General Controls in relation to this for the purpose of management information system (MIS) were not operating effectively and needs to be strengthened.
Hence, our opinion is qualified on adequacy of internal financial controls over financial reporting in respect of matters stated above.
A material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.
In our opinion, the Company has, in all material respects, maintained adequate internal financial controls over financial reporting with reference to these standalone financial statements as of March 31, 2023 , based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India, and except for the possible effects of the material weakness described above on the achievement of the objectives of the
control criteria, the Companys internal financial controls over financial reporting with reference to these standalone financial statements were operating effectively as of March 31, 2023 .
Explanatory paragraph
We also have audited, in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act, the standalone financial statements of the Company, which comprise the balance sheet as at March 31, 2023 , and the statement of profit and loss including other comprehensive income, cash flow statement & statement of changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory information. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the March 31,2023 standalone financial statements of the Company and this report does not affect our report dated March 27, 2024, which expressed a qualified opinion on those standalone financial statements.
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