housing development & infrastructure ltd share price Auditors report

The Members of Housing Development & Infrastructure Limited Report on the Audit of the Standalone Financial Statements

DISCLAIMER OF OPINION

We were engaged to audit the standalone financial statements of Housing Development & Infrastructure Limited (“the Company"), which comprise of the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information given in the notes to the financial statements.

We do not express an opinion on the accompanying standalone financial statements of the Company. Owing to the significance of matters described in the Basis for Disclaimer of Opinion section of our report, we have not been unable to obtain sufficient appropriate audit evidence to provide a basis tor an audit opinion on these standalone financial statements.

BASIS FOR DISCLAIMER OF OPINION

Following, amongst others, are some of the important reasons because of which we were not able to obtain sufficient and appropriate audit evidence:

1. Note from the Resolution Professional ("RP”)

We refer to Note No. 1.1 mentioning RPs inability to compile true and fair accounts due to reasons mentioned in the note.

2. Opening Balances as on April 01,2019

a. We refer to Note No.1.2 regarding the opening balances as on April 01, 2019 wherein the RP is unable to reconcile the opening balances as on April 01, 2019 with the audited financial statements of the previous year ended March 31, 2019. This is likely to have a continuing impact on the financial statements of the subsequent years.

b. As required by SA 510, ‘Initial Audit Engagements - Opening Balances”, the auditor is required to obtain sufficient appropriate audit evidence about whether:

? opening balances contain misstatements that materially affect the current periods financial statements; and appropriate accounting policies reflected in the opening balances have been consistently appiied in the current periods financial statements, or changes thereto are properly accounted for and adequately presented and disclosed in accordance with the applicable financial reporting framework.

In this regard, as stated in the above-mentioned note, due to lack of sufficient and appropriate evidence, we are unable to comment on the closing balances of the prior period ending on March 31,2019.

3. Non-Current Assets - Property, Plant & Equipment

a. We refer to Note No. 2 regarding the assessment of impairment of the Property, Plant and Equipment.

As per Para 9 of Ind AS 36,"An entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset."

In view of the uncertainty of resumption of the Companys operations, the management is required to make an assessment of impairment to the carrying vaiue of its assets. Pending resolution of Corporate Insolvency Resolution Process (“CIRP") at the year end, we have been informed that the Company has not been able to perform any assessment to determine any impairment to the carrying value of these assets. Consequently, we are unable to conclude if any impairment needs to be recognized to the carrying value of these assets and its consequential effects on the financial statements.

b. We further refer to Note No. 2 regarding the difference in opening balances of the fixed assets as per audited financial statements for year ended March 31, 2019 and books of accounts. Since no reconciliation or information is available, the same has been shown as adjustments in the said Note and therefore, we are unable to comment on the same

4. Investments in Property

a. We refer to Note No. 3 regarding investments made by the Company in immovable property amounting to INR 10,350.67 lakhs. We have not been provided with any details, ownership documents or any supporting information with respect to the said investments.

b. Further, Para 9 of Ind AS 36 states that, "An entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset."

However, for the financial year under audit, due to absence of sufficient information, the Company has not assessed any of the above investments for impairment.

c. The Company has not valued the said investments at Fair Value as per the requirements of the Indian Accounting Standards.

5. Non-Current Investments

a. We refer to Note No. 4 regarding investments made by the Company in subsidiaries and shares amounting to INR 48,936.24 lakhs. We have not been provided with any details, ownership documents or any supporting information with respect to the said investments.

b. Para 9 of Ind AS 36 states that, "An entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset." However, we refer to Note No. 3 stating that for the financial year under audit, due to absence of sufficient information, the Company has not assessed investments amounting to INR 48,936.24 lakhs for impairment.

c. We further refer to Note No. 4stating that the Company has not valued the said investments at Fair Value as per the requirements of the Indian Accounting Standards.

d. We further refer to Note No. 4 regarding the non-availability of audited financial statements of the subsidiaries and associates of the Company. Due to the absence of such statements, the Company has not been able to prepare the consolidated financial statements of the group for the financial year ending March 31, 2021, March 31, 2022 and March 31,2023.

6. Other Non-Current Financial Assets

We refer to Note No. 5 regarding guarantee obligation commission amounting to INR 777.08

lakhs. Details and documents relating to such commission were not provided to us for verification

and therefore we cannot comment on the same.

7. Inventories

a. RP has stated that physical verification of the inventory has been carried out at the time of taking charge of the Company and the discrepancies, to the extent ascertained, have been adjusted in the books by making appropriate provisions at the relevant year end. In absence of any further information said provision is continued for the year ended 31st March 2023

b. We refer to Note No. 6 regarding inventory wherein the RP has stated that physical verification of the inventory has been carried out at the time of taking charge of the Company. The quantitative records of inventory maintained by the Company did not match with its books of accounts and the discrepancies, to the extent ascertained, have been adjusted in the books by making appropriate provisions in earlier financial year.

c. The Company has made a provision of INR 8,33,933.26 lakhs towards work-in-progress in earlier financial year. However, due to non-availability of sufficient information, we are unable to comment on the adequacy of such provisions.

8. Current Investments

a. We refer to Note No. 7 regarding investments made by the Company in partnership firms amounting to INR 101.58 lakhs. We have not been provided with any details, ownership documents or any supporting information with respect to the said investments.

b. Para 9 of Ind AS 36 states that, "An entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset." However, we refer to Note No. 6 stating that for the financial year under audit, due to absence of sufficient information, the Company has not assessed any of the above investments for impairment.

c. We further refer to Note No. 7 stating that the Company has not valued the said investments at Fair Value as per the requirements of the Indian Accounting Standards.

d. We further refer to Note No. 7 regarding the non-availability of audited financial statements of the partnership firms. Due to absence of such statements, the Company has been unable to prepare the consolidated financial statements of the group for the financial year ending March 31, 2021, March 31,2022 and March 31,2023.

9. Trade Receivables

The Company has made a provision of INR 1,78,051.08 lakhs towards doubtful debts during earlier financial year. However, due to non-availability of sufficient information, we are unable to comment on the adequacy of such provisions.

10. Cash and Cash Equivalents

a. We refer to Note No. 9 regarding the difference in physical cash when compared to the books of accounts. No physical cash was available in the Main Cash Book and Impress Cash to Employees as against the book balance of INR 39.16 lakhs and INR 27.54 lakhs respectively.

During the year Cash balance of petty cash was physically verified subject to above differences.

Thus, out of the total cash on hand of INR 67.82 lakhs, an amount of INR 66.70 lakhs was not physically available in the Company. Since the reason for the difference could not be ascertained, no effect of the same has been given in the accounts.

b. We refer to Note No. 9 regarding bank balances totaling to INR 38.67 lakhs. The Company

has not received Bank statements for accounts having aggregate balances of INR 38 67 lakhs. ?

c. We refer to Note No. 9 regarding the only operational Bank A/c with ICICI Bank is reconciled and the remaining non-operational accounts with various banks wherein the balance aggregates to INR 307.95 lakhs could not be reconciled.

d. We refer to Note No. 9 regarding the non-availability of balance confirmations from the banks for the accounts maintained in the name of the Company, except account with ICICI Bank.

e. Owing to the above limitations, we are unable to express an opinion on cash & cash equivalents and the receipts and payments transactions during the year.

11. Other Current Financial Assets

The Company has made a provision of INR 5,585.57 lakhs towards doubtful loans to subsidiaries in earlier financial year. However, due to non-availability of sufficient information, we are unable to comment on the adequacy of such provisions.

12. Other Current Assets

a. We refer to Note No. 12 regarding advances given by the Company during earlier years to vendors amounting to INR 13,397.59 lakhs and towards land purchase / tenancy / claims / development rights amounting to INR 2,79,440.71 lakhs. However, proper documentation or balance confirmations from the parties were not available for verification.

b. The Company has made a provision of INR 13,397.59 lakhs and INR 2,79,440.71 iakhs towards doubtful advances in financial year 2019-20. However, due to non-availability of sufficient information, we are unable to comment on the accuracy of such provisions.

13. Equity Share Capital

We refer to Note No. 13 regarding the conversion of 2,00,00,000 equity share warrants into equity shares during earlier financial year having face value of INR 2,000.00 lakhs at a consideration of INR 6,220.00 lakhs. The terms of conversion relating to such issue were not available and hence could not be verified. Due to default in payment of CDSL and NSDL Fees, the BENPOS containing details of promoters shareholding could not be obtained by the management

14. Reserves and Surplus

The statement of changes in equity during earlier year reflects an effect of INR 1,153.14 lakhs towards “Other changes". However, we were not provided with any details or information for such change and hence the same could not be verified.

15. Current Borrowings - Term Loans and Debentures

We refer to Note No. 15 regarding Term Loans and Debentures standing in the books at INR 2,48,358.S1 iakhs and make the following observations:

a. The Corporate Insolvency Resolution Process (“CIRP”) of the Company commenced on August 20, 2019 and the Resolution Professional took charge of the Company on 26^th August 2019. The Resolution Professional invited claims from Financial Creditors and till 31^st March 2023 admitted financial claims from Banks and Financial Institutions towards Term Loans, Non-Convertible Debentures and Overdraft facilities amounting to INR 7,79,885.31 lakhs (including INR 90,304.01 lakhs from home buyers), INR 77,354.39 lakhs from operational creditors, lakhs from operational creditors, INR 1,158.97 lakhs from the employees and INR 18,023.61 from other creditors. The balances as per the books of accounts are different than the claims lodged as, among other reasons, the interest, penal interest charges etc. charged by the bankers have not been completely accounted for, by the erstwhile management in the books of accounts.

b. With respect to the book balance outstanding as on 31^st March 2023 of INR 248,358.81 lakhs of the said borrowings, the Resolution Professional has sent requests for balance confirmations in accordance with SA 505, “External Confirmations ", to the concerned parties for the previous year but he has not received any confirmations. Consequently, we cannot comment on the actual liabilities in relation to these borrowings.

c. Ind AS adjustments relating to unwinding of finance cost required to be made, however owing to the non-availability of relevant documents and calculations, the said adjustment, if any, has not been made. Hence, we are unable to comment on the same.

16. Trade Payables

We refer to Note No. 16 regarding expenses worth INR 1,812.67 lakhs which have been accounted in one of the earlier years but the same have not been credited to the respective vendors personal accounts. They are reflected in the control accounts maintained by the Company under "Other Trade Payables"

17. Other Current Financial Liabilities

a. We refer to Note No. 17 regarding employees dues includes INR 1,605 77 lakhs towards earlier years and based on enquiries and information obtained from the Company, it is noted that there is an unreconciled difference of INR 136.00 lakhs, for earlier years, between salary payable as per books and salary payable as per physical records maintained by the HR department of the Company.

b. We refer to Note No. 17 regarding “Provisions for Outstanding Expenses" amounting to INR 190.07 lakhs during the earlier financial year. The Company has not revised its estimates to reflect the correct position of the said provisions due to iack of proper information about the same.

18. Other Current Liabilities

a We refer to Note No. 18 regarding outstanding balances of advances, for more than a year, received from customers towards Land, Units. TDR, FSI, Advance Rental, Maintenance and

other purposes amounting to INR 1,91,848.20 lakhs. In case of these advances, we are not able to comment whether the same can be treated as deposits under section 73 or under any other applicable Rules of the Companies Act, 2013.

b. We refer to Note No. 18 regarding the advances received by the Company towards rental income includes since F.Y. 2010-11 totaling to INR 262.47 lakhs. Such advances have not been appropriated towards the rental income in any of the subsequent years and there is no explanation for the same.

c. We refer to Note No. 18 regarding statutory dues of INR 2,281.55 lakhs which include an amount of INR 693.76 lakhs payable towards Service Tax and VAT including interest relating to earlier years. However, we have not received any information or details for the same from the Company.

d. We refer to Note No. 18 regarding dues towards Tax Deducted at Source (TDS), Tax Collected at Source (TCS), Provident Fund, ESIC, Profession Tax and Goods & Services Tax (GST) totaling to INR 1,200.04 lakhs which are outstanding in the books of accounts of the Company. During the year, the Company has not made any payment towards such dues. However, no provisions have been made towards interest or penalties payable on such liabilities.

e. We have not received any workings, calculations or statements as to how the figures up to 31^st March 2020 are arrived at,

19. Current Provisions

a. We refer to Note No. 19 regarding provision for Gratuity and Leave encashment amounting to INR 944.50 lakhs.

b. As per Para 66 of Ind AS 19 - "Employee Benefits”,

In order to measure the present value of the post-employment benefit obligations and the related current service cost, it is necessaiy:

(a) to apply an actuarial valuation method;

(b) to attribute benefit to periods of service; and

(c) to make actuarial assumptions

However, during the year, due to lack of appropriate information, the Company has not been able to obtain an actuarial valuation as required under the provisions of Ind AS 19 Hence, the provisions have been made based on the estimates of earlier years.

20. Current Tax Liabilities

a. We refer to Note No. 20 regarding income tax provisions pertaining from A.Y. 2010-11 to A.Y. 2019-20 amounting to INR 17,417.01 lakhs. We are given to understand that the Resolution Professional was unable to gather relevant information excepting the demand notices mentioned in (b) below. Owing to the non-availability of information and documents,

we are unable to comment on the status of Income tax liabilities and the corresponding Advance tax payments.

b. We have been provided with Notices for Demand from the Income Tax Department totaling to INR 4,351.00 lakhs. However, the same could not be verified since relevant and appropriate information was not available.

21. Revenue and Other Income:

a. We refer to Note No. 22 regarding lease rental income of INR 63.55 lakhs to which certain Ind AS adjustments required, have not been made. We have not been provided with any details or documents for to the same.

b. We refer to Note No. 22 regarding the policy of revenue recognition. As per the Accounting Policy mentioned in the financials for F.Y. 2018-19, the Company has stated that, for ongoing projects, it followed "Project Completion Method" which is a deviation from the requirement of Ind AS 18 which prescribes the "Percentage of Completion Method”. This is not in line with the requirements of Ind AS 18.

c. The Company has provided the Salaries payable to employees at ad-hoc amount and accordingly has deducted the employees contribution for PF and ESIC. Employers contribution towards the same is also made on the as-hoc provision.

22. Related Party Transactions:

We refer to Note No. 30 regarding related party transactions entered into by the Company.

Related party transactions are disclosed only to the extent information is made available to the

RP and hence the same could be verified only to the same extent.

23. Ongoing investigations:

The Company is faced with certain on-going investigations initiated by governmental authorities

such as Enforcement Directorate (ED), Economic Offences Wing (EOW), Serious Fraud

Investigation Office (SFIO) and Central Bureau of Investigation (CBI). However, the outcome of

such investigations and its effect on the financial statements cannot be ascertained as of now.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the 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 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 financial statements.

1. Uncertainties regarding recoverability of work in progress (inventory), loans and advances given and investments made by the Company:

The Company is having gross work in progress of INR 10,99,047.13 lakhs which is supposed to represent the projects undertaken by the Company that are not yet finished or sold.

The Company is having loans and advances of INR 5,585.57 lakhs which have been given to, inter alia, its related entities.

The Company is having investments in property, subsidiaries and associates amounting to INR 59,286.90 lakhs.

Considering the amount involved, uncertainty associated with the outcome of the CIRP and significant management judgement about its recoverability, this was considered to be a key audit matter in the audit of the standalone financial statement.

Our audit procedures included, amongst others, the following:

• Obtaining an understanding of the management process for assessing the recoverability of work in progress, loans and advances and investments.

• Discussed extensively with the present management regarding steps taken for recovering the amounts and evaluated the provisions to be made for the projects whose value is substantially not recoverable.

• Assessed that the disclosures made by the present management are in accordance witn applicable accounting standards.

2. Litigations and investigations:

The Company is subject to assessment by various government authorities, including tax authorities on various matters resulting into litigations, disputes and unresolved inquiries. Moreover, there are numerous civil litigations and proceedings against the Company lodged with various judicial authorities which are, as on the date of this report, undecided.

The tax matters involve significant amounts which are at various stages of litigations and the proceedings take significant time to resolve. Proceedings related to other matters are still under process and the outcome of the same is unknown. Accordingly, we have identified this as a key audit matter

Our audit procedures included, amongst others, the following:

• Obtained list of indirect tax litigations from the present management.

• Discussed the matters with the present management to understand the possible outcome of these disputes

• Assessed contingent liability disclosures in Note 33 to the accompanying standalone financial statements.

MATERIAL UNCERTAINTY RELATED TO GOING CONCERN

As mentioned in Note No. 1.1 to the financial statements, the Company has been referred to National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 (the Code), and there is considerable decline in level of operations of the Company and net worth of the Company as on the reporting date is negative and it continues to incur losses. The Company is a co-obiigor and has received demand notices in respect of borrowings of other obligors/ borrowers. Since Corporate Insolvency Resolution Process (CIRP) is currently in progress, as per the Code, it is required that the Company be managed as a going concern during CIRP. Accordingly, the financial statements are continued to be prepared on going concern basis. However, there exists a material uncertainty about the ability of the Company to continue as a “Going Concern”. The same is dependent upon the resolution plan to be approved by the Honble National Company Law Tribunal. The appropriateness of the preparation of financial statements on going concern basis is critically dependent upon CIRP as specified in the Code. Necessary adjustments required on the carrying amount of assets and liabilities are not ascertainable at this stage.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR PREPARATION OF FINANCIAL STATEMENTS

The Companys Board of Directors / Resolution Professional is responsible tor the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. 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 detecting frauds and other irregularities; selection and application of appropriate accounting policies, making judgments and estimates that are reasonable and prudent; and 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 presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors / Resolution Professional is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to gorng concern and using the going concern basis of accounting unless the Boam of Directors / Resolution Professional! Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so

The Board of Directors / Resolution Professional are responsible for overseeing the Companys financial reporting process.

However, in case of the Company, the Honble National Company Law Tribunal, Mumbai Bench, vide its order dated August 20, 2019 superseded the Board of Directors of the Company and appointed the Resolution Professional, thereby commencing the Corporate Insolvency Resolution Process. The Resolution Professional is responsible, among other things, to run the Company as a “going concern. Accordingly, the standalone financial statements for the year ended 31^stMarch 2022 have been prepared on going concern assumptions.

RESPONSIBILITIES OF THE AUDITOR FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our responsibility is to conduct an audit of the Companys standalone financial statements in accordance with Standards on Auditing and to issue an auditors report. However, because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these standalone financial statements.

We are independent of the Company in accordance with the ethical requirements in accordance with the requirements of the Code of Ethics issued by ICAI and the ethical requirements as prescribed under the laws and regulations applicable to the Company.

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 companies Act, 2013, we give in the “Annexure A” 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) Because of the reasons mentioned in the "Basis for Disclaimer of Opinion" para above, we were unable to obtain all the information and explanations, which to the best of our knowledge and belief, were necessary for the purposes of our audit. .

(b) Due to the possible effects of the matters, individually and cumulatively, described in the “Basis for Disclaimer of Opinion" para above, we are unable to comment whether proper books of account as required by law have been kept by the Company.

(c) The Balance Sheet, the Statement of Profit and Loss, the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account as maintained. As mentioned in 2(b) above, we are unable to comment whether the books of accounts are proper

(d) Because of the possible effects of the matters mentioned in the “Basis of Disclaimer of Opinion” para above, and owing the general lack of information, we cannot form an opinion whether the aforesaid financial statements comply with the ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) Since, we were not able to obtain a written confirmation from the erstwhile Directors, we are unable to comment whether the directors are disqualified from being appointed in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”. We have disclaimed our opinion on the Companys internal financial controls over financial reporting.

(g) With respect to the matter to be included in the Auditors Report under Section 197(16) of the Act, to the best of our information and according to the explanations given to us, the Company has not paid any remuneration to its directors during the year.

(h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has more than five hundred pending litigations and due to non-availability of adequate information, it is not possible to quantify the same.

. ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no dues which were required to be transferred to Investor Education and Protection Fund by the Company.

iv. (a) Up to August 20, 2019, when Interim RP was appointed by the Honble National Company Law Tribunal, Mumbai Bench, the Board of Directors of the Company has advanced or loaned or invested to or in any other persons or entities, including foreign entities. Due to non-availability of information the same cannot be commented upon. Post said date, the RP has represented that, to the best of his 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 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 on behalf of the Ultimate Beneficiaries.

(b) Up to August 20, 2019, when Interim RP was appointed by the Honble National Company Law Tribunal, Mumbai Bench, the Board of Directors of the Company has received from any persons or entities, including foreign entities. Due to non-availability of information the same cannot be commented upon. Post said date, the RP has represented that, to the best of his knowledge and belief, other than as disclosed in the financial statement, 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 Company shall 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 Party or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on such audit procedures as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (iv) (a) and (iv) (b) contain any material mis-statement.

v. The Management of the Company have not proposed any dividend for the year.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023

For Dayal and Lohia

Chartered Accountants Firm Regn. No. 102200W

Place: Mumbai Date: 31.07.2023.

UDIN: 23031626BGRBIN5783

ANNEXURE - ‘A TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE

FINANCIAL STATEMENTS OF HOUSING DEVELOPMENT AND INFRASTRUCTURE LIMITED.

Statement on the matters specified in paragraphs 3 and 4 of 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 Companies Act, 2013 (“the Act”) to the extent applicable.

i) In respect of its Property, Plant and Equipment:

a) The Company, on the basis of available information, has maintained proper records showing fuil particulars including quantitative details and situations of Property, Plant and Equipment and intangible assets;

b) The Resolution Professional has clarified that he has not been able to carry out physical verification of all the Property, Plant and Equipment owned by the Company and therefore, we cannot comment whether there are any materia! discrepancies in physical assets when compared with the records;

c) As per the financial statements presented to us, the Company owns lands Costing to INR 11,298.00 lakhs. We have received for verification, the ownership documents signifying the ownership of the Company on such lands Documents for Companys immovable properties other than Land are not available for verification hence unable to comment whether title deeds are held in the name of the Company or not;

d) According to information and explanations given to us and on the basis of examination of the records of the Company, none of its Property. Plant and Equipment (including Right of Use assets) or intangible assets or both are revalued during the year;

e) No information is available whether the Company hold any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made there under.

ii) a) The Resolution Professional has informed us that the physical verification of the inventory was carried out at the time of taking charge by the Interim Resolution Professional. The discrepancies, only to the extent ascertained, have been adjusted in the books by making appropriate provisions.

b) No information is available whether the Company has been sanctioned working capital limits in excess of Rupees five crore, in the aggregate, from banks on the basis of security of current assets and whether quarterly returns or statements are filed by the Company with such banks.

iii) According to the information and explanations given to us and on the basis of our examination

of books of account, during tne year the Company has not made investments in, granted and

loans or advances, provided any guarantee or security to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, paragraph 3(iii) of the order is not applicable Further, the Company has granted unsecured loans to its group companies amounting to I NR 4,520.95 lakhs during the earlier years.

iv) No information is available whether that at the time of making investments, granting loans and providing any guarantee or security, the Company has complied the provisions of section 185 and 186 of the Act, hence we are unable to comment whether the Company has complied with the provisions of section 186 of the Act.

v) According to the information and explanation given to us, during the year, the Company has not accepted any deposits or amounts which are deemed to be deposits as per the provisions of Section 73 to 76 or any other relevant provisions of the Act and the rules framed there under.

vi) Since the Company is engaged in real estate development as defined under para 5(a) of Schedule VI of the Companies Act 2013, the Company is required to maintain cost records under section 148(1) of the said Act. However, since the turnover during last year is not exceeding the limits, the Company is not required to maintain Cost Records.

vii) a) Based on the books of accounts, undisputed statutory dues including Provident Fund,

Employees State Insurance, Income-tax, Sales tax, Service tax, Customs Duty, Excise Duty. Value Added Tax, Cess, Goods and Services Tax and other material statutory dues, as applicable have not been regularly deposited with the relevant authorities and there have been significant delays in a large number of cases. Undisputed amounts payable in respect thereof, which were outstanding at the year-end are as follows:

Particulars of Dues	Amount (in INR Lakhs)
Provident Fund	680.71
Tax Deducted at Source and Tax Collected at Source	907.54
Value Added Tax	120.31
Goods and Services Tax	(342.55)
Service Tax	572.02 . I

The above-mentioned figures have been taken from the books of accounts of the Company. However, we were not provided with proper supporting documents or information to verify the same.

b) As per records produced before us and explanations given to us and on the basis of our examination of the records of the Company, details of dues of Income-tax, Service tax, Duty of Customs and Value added tax which have not been deposited as on March 31, 2023 on account of disputes are given below:

Year	Particulars of Dues	Amount involved (in INR Lakhs)
2011-12	Professional Tax	114.90
2017-18	Professional Tax	27.20
2018-19	Professional Tax	13.74
2018-19	E.S.I.C. Dues	6.85
2018-19	E.S.I.C. Dues	0.08
2018-19	E.S.I.C. Dues	0.18
2018-19	E.S.I.C. Dues	5 03
2016-17	Provident Fund	749.81
2015-16	Maharashtra Value Added Tax	362.15
2017-18	Maharashtra Value Added Tax	265.55
2015-16	Maharashtra Goods & Service Tax	607.54
2009-10 to 2018-19	Income Tax	14,606.90

viii) On the basis of our examination of the books and according to the information and explanations given to us, there is no transaction which is not recorded in the books of account and have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).

ix) a) Based on our audit procedures and on the basis of information and explanations given to us, we are of the opinion, that during the year, the Company being under the CIRP process its liability for repayment of principal and interest to banks, financial institutions, & debenture-holders stands abated. Hence the question of default in repayment does not arise.

b) The Company being under the CIRP process and no information being available with the Company, we are unable to comment about whether the bank or financials institution has declared the Company as wilful defaulter.

c) The Term Loan taken during the year has been utilised for the purpose for which it is obtained.

d) According to the information and explanations given to us, and the procedure performed by us, and on overall examination of the financial statements of the company, we report that no funds raised on short-term basis have been used for long-term purposes by the company.

e) As referred in para 22 of Basis for Disclaimer of Opinion above, regarding related party transactions entered into by the Company are disclosed only to the extent information is made available to the RP. During the year, the Company has not obtained any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.

f) During the year the Company has not raised any loans on the pledge of securities held in subsidiaries, joint ventures or associate companies.

x) a) In our opinion and on the basis of information and explanations given to us, the

Company has not raised any money by way of initial public offer or further public offer (including debt instruments).

b) In our opinion and on the basis of information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year

xi) According to the information and explanations given to us, during the course of our audit, no material fraud by the Company or on the Company has been noticed or reported during the year.

xii) In our opinion and according to information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable,

xiii) We refer to para 22 of our report regarding Basis for Disclaimer of Opinion, in respect of related party transactions entered into by the Company are being disclosed only to the extent information is made available to the RP. The company being under CIRP process, Powers of the Boards vested in the RP and hence we are unable to comment whether the Company has complied with the provisions of Section 177 and 188 of the Act.

xiv) According to information and explanations given to us and based on our examination of the records of the Company, it does not have internal audit system and hence no Internal audit report for the year was available for our consideration

xv) According to information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him.

xvi) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under section 45- IA of Reserve Bank of India Act, 1934.

xvii) The Company has incurred cash loss of I NR 1,707.30 Lakhs in the financial year and of INR 976.16 Lakhs in the immediately preceding financial year.

xviii) There has been no resignation of the statutory auditors during the year.

xix) As the Company is under the CIRP process we are unable to comment whether any material uncertainty exist as to whether the Company is 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.

xx) According to the information and explanations given to us and based on our examination of the records of the Company, during the year provisions of sections 135 of the Act is not applicable.

xxi) As mentioned in para 5 (d) of our report regarding Basis for Disclaimer of Opinion, since the financial statements of subsidiary, associates or joint venture are not available and hence Consolidated Statement having not been prepared, we are unable to comment on any qualification or adverse remarks by the respective auditors in the Companies (Auditors Report) Order,

For Dayal and Lohia

Chartered Accountants Firm Regn. No. 102200W

Place ; Mumbai Date: 31.07.2023.

UDIN : 23031626BGRBIN57S8

ANNEXURE - ‘B TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF HOUSING DEVELOPMENT AND INFRASTRUCTURE LIMITED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act)

We were engaged to audit the internal financial controls over financial reporting of Housing Development and 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 flCAl). 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 Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit conducted in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note") and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both issued by the institute of Chartered Accountants of India.

Because of the matter described in Disclaimer of Opinion paragraph below, we were not able fo obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on internal financial controls system over financial reporting of the Company.

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 pnnciples. A Companys internal financial control over financial reporting includes those policies and procedures that

(1) pertains to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) 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

(3) 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.

Basis for Disclaimer of Opinion

Because of the cumuiative effect of the reasons described in the basis for disclaimer opinion paragraph of our main report, it can be concluded that the Company has not established adequate internal financial controls and that whatever financial controls have been established were not operating effectively. While reference may be made to the aforesaid Paragraph, amongst others, the following significant aspects of material weaknesses in internal control system are particularly noteworthy;

• The quantitative records of inventory maintained by the Company did not match with its books of accounts.

• The confirmations of balances of secured and unsecured loans, trade receivables, trade and other payables and loans and advances are not available.

• The Company had not made any assessment of impairment of fixed assets, loans and advances and other assets as at the balance sheet date.

• The Companys internal control process in respect of closure of outstanding entries in Bank Reconciliation Statements are not adequate.

• The Companys internal financial control with regard to compliance with the applicable Indian Accounting Standards and evaluation of carrying values of assets and liabilities and other matters, as explained in the basis for disclaimer of opinion of our main report, resuiting in the Company not providing for adjustments, which are required to be made, to the standalone financial statements.

With respect to the operations of the Company prior to the commencement of the CIRP, the internal controls could not be tested and therefore we are unable to comment on the same.

‘material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial statements, such that there is a reasonable possibility that a material misstatement of the Companys financial statements Will not be prevented or detected on a timely basis.

Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer Opinion paragraph above, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively during the year. Accordingly, we do not express an opinion on the Companys internal financial controls over financial reporting.

We have considered the disclaimer reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company for the year ended 31st March, 2023, and this report affects our report dated 31^st July, 2023 which expresses a disclaimer of opinion on the standalone financial statements of the Company.

Place : Mumbai

Date 31 07.2023

UDIN 23031626BGRBIN5788

For Dayal and Lohia

Chartered Accountants Firm Regn. No. 102200W

Anil Lohia (Partner)

M. No.31626