TO
THE MEMBERS OF SHREE RAM URBAN INFRASTRUCTURE LIMITED Report on the Standalone
Financial Statements
We have audited the accompanying standalone financial statements of SHREE RAM URBAN
INFRASTRUCTURE LIMITED ("the Company"), which comprise the Balance Sheet as at
March 31, 2017, the Statement of Profit and Loss and Cash Flow Statement for the year then
ended and a summary of the significant accounting policies and other explanatory
information.
Managements Responsibility for the Standalone Financial Statement
The Companys Board of Directors is responsible for the matters stated in Section
134(5) of the Companies Act,2013 ("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 and cash flows of the Company in accordance with the
accounting principles generally accepted in India, including the Accounting Standards
specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules,
2014.
This responsibility also includes maintenance of adequate accounting records, in
accordance with the provisions of the Act for safeguarding the assets of the Company, and
for preventing and detecting frauds and other irregularities; selection and application of
appropriate accounting policies; making judgements and estimates that are reasonable and
prudent; and design, implementation and maintenance of 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.
Auditors Responsibility
Our responsibility is to express an opinion on these standalone financial statements
based on our audit.
In conducting our audit we have taken into account the provisions of the Act, the
accounting and auditing standards and matters which are required to be included in the
audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit of the standalone financial statements in accordance with the
Standards on Auditing specified under section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal financial control relevant to the Companys preparation of the
financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of the accounting
estimates made by the Companys Directors, as well as evaluating the overall presentation
of the standalone financial statements.
We believe that the audit evidence obtained by us is sufficient and appropriate to
provide a basis for our qualified audit opinion on the standalone financial statements.
Basis for Qualified Opinion
We refer to:
I. Note No. 43 to the standalone financial statements, the Company received an order on
fire refuge area passed by the Municipal Corporation of Greater Mumbai (MCGM)
dt.31.08.2016 against which NGO, Janhit Manch has filed Public Interest Litigation (PIL)
in the Honble Bombay High Court and the court has restrained the Municipal Commissioner
from acting on the fire refuge order. Further, the MCGM has passed an order on
regularisation of the Public Parking Lot fixing premium/regularisation charges. The
Companys SLP is also pending before the Apex Court against the order of Honble Bombay
High court dt.27-01-2016. Consequently, till the outcome of the judgement from Apex Court,
we are unable to comment upon the financial impact of the same on the financial statements
over and above the premium/ regularisation charges confirmed by MCGM.
II. Note No.46 to the standalone financial statements, regarding non provision of
interest under subvention scheme amounting to Rs.73,48,22,190/-, as the Company is in
negotiation with the fund provider for waiver/reduction of interest and does not
anticipate subvention interest liability. Had the subvention interest provided, the Loss
for the current year would have been higher by Rs.29,59,84,153/-, Construction Work in
Progress would have been higher by Rs. 43,88,38,037/- and the Current Liabilities would
have been higher by Rs.73.48,22,190/- and Reserves and Surplus would have been lower by
Rs.29,59,84,153/-.
III. Note No.49 to the financial statements, the outstanding balances of loans and
advances and trade payables amounting to Rs.13,56,38,289/- (P.Y. Rs.17,73,32,033/-) and
Rs.24,28,72,164/- (P.Y.Rs.39,08,50,730/-) respectively, are subject to confirmation and
reconciliation. The consequential adjustments if any, arising out of these are not
quantifiable.
Qualified Opinion
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 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 31,2017 and its loss and cash flows for the year ended
on that date
Emphasis of Matter
We draw attention to:
1. Note No. 44 to the standalone financial statements, inventory includes Imported
Materials for the Construction Project of the Company, amounting to Rs. 15,77,11.694 /- is
lying in Custom Warehouse since 2013, however, the Company has confirmed that the quality
of the material is unaffected and hence no provision is required to be made.
2. Note No. 45 to the standalone financial statements in respect of pending winding up
petitions against the company and the matters being subjudice, the company is taking
necessary steps for settlement.
3. Note No. 47 to the standalone financial statements, regarding modification in rate
of interest on Debenture from 20.20% p.a. to 0.01 % p.a. during the year, accordingly, the
Company has provided interest at the said modified rate. If the original rate of interest
had been continued the provision towards interest on debenture would have been higherby
Rs.43,33,04.021/-
Our opinion is not qualified in respect of the matters stated above.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2016 ("the Order")
issued by the Central Government of India in terms of section 143 (11) of the Act, 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) We have sought and except for the possible effects of the matters described under
"Basis for qualified opinion" paragraph, have obtained all the information and
explanations, which to the best of our knowledge and belief were necessary for the purpose
of our audit;
b) Except for the possible effects of the matter described in the "Basis for
qualified opinion" paragraph, in our opinion, proper books of account as required by
law have been kept by the Company, so far as appears from our examination of those books;
c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement
dealt with by this Report are in agreement with the books of account;
d) In our opinion, except for the possible effects of the matter described in the
"Basis for qualified opinion" paragraph, the aforesaid standalone financial
statements comply with the Accounting Standards specified under section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules 2014.
e) On the basis of written representations received from the directors as on March
31,2017, and taken on record by the Board of Directors, none of the directors is
disqualified as on March 31,2017, from being appointed as a directorin terms of section
164(2)oftheAct.
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" and
g) 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 explanation given to us:
i) The Company has disclosed the impact of pending litigation on its financial position
in its financial statements- Refer Note 20 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 were no amounts which required to be transferred to the Investors Education
and Protection Fund by the Company.
iv) The Company has provided requisite disclosures in its standalone financial
statements as regards its holdings as well as dealings in Specified Bank Notes as defined
in the Notification S O. 3407(E) dated the Novembers, 2016 of the Ministry of Finance,
during the period from Novembers, 2016 to December 30, 2016. Based on the audit procedures
performed and the representations provided to us by the Management we report that the
disclosures are in accordance with the books of account maintained by the Company and as
produced to us by the management. Refer Note 37 to the standalone financial statements.
For HABIB & Co.
Chartered Accountants Firm Registration No. 103479W
(D. P. SHROFF)
Partner
Membership No. 045417
Place : Mumbai Date : 27* May, 2017
ANNEXURE-ATOTHEINDEPENDENT AUDITORSREPORT
(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements
section of our
report of even date)
i) I n respect of its fixed assets;
a) The Company has maintained proper records showing particulars including quantitative
details and situation of fixed assets.
b) The fixed assets were physically verified during the year by the Management in
accordance with a programme of verification which, in our opinion provides for physical
verification of ail fixed assets at reasonable intervals. No material discrepancies were
noticed on such verification.
c) According to the information and explanation given to us and on the basis of our
examination of the records of the Company, the title deeds of immovable properties are
held in the name of the Company.
ii) As explained to us, the inventory has been physically verified during the year
other than inventory lying at Customs. In our opinion, the frequency of verification is
reasonable. No material discrepancies were noticed on physical verification.
iii) The Company has granted unsecured loans to three bodies corporate listed in the
register maintained under Section 189oftheCompaniesAct, 2013. (the Act).
a) In our opinion and according to the information and explanation given to us, the
other terms and conditions for such interest free loans were not, prima facie, prejudicial
to the interest of the Company.
b) In absence of any stipulations, the regularity of receipts of principal amount is
not commented upon.
c) There are no overdue amounts in respect of the loan granted to the bodies corporate
listed in the register maintained under section 189 of the Act.
iv) In our opinion and according to the information and explanations given to us, the
Company has complied with the provisions of section 185 and 186 of the Act to the extent
applicable.
v) The Company has not accepted any deposits from the public.
vi) We have broadly reviewed the books of account maintained by the Company pursuant to
the rules made by Central Government of India, regarding the maintenance of cost records
under subsection (1) of Section 148 of the Companies Act, 2013 and are of the opinion that
prima facie, the prescribed accounts and records have been maintained. We have, however,
not made a detailed examination of the records with a view to determine whether they are
accurate or complete.
vii) In respectofstatutorydues:
a) According to the information and explanations given to us, undisputed statutory dues
including Tax Deducted at Source, Interest on Tax deducted at source, Service Tax,
Property Tax, Custom Warehouse Rent and Interest on Custom Duty have not been
regularly deposited with the appropriate authorities and there have been delays in many
cases.
b) According to the information and explanations given to us, undisputed statutory dues
remaining unpaid for a period of more than six months from the date they became payable
are as given below:
| Name of the Statute |
Nature of the Dues |
Amount |
Period to which the |
|
|
(In Rs.) |
amount relates |
| Income Tax Act, 1961 |
Tax Deducted at Source |
76,92,012 |
March ,2015 to September, 2016 |
|
Interest on delay in deposit |
10,45,000 |
February, 1998 to November, 1998 |
|
of Tax Deducted at Source |
12,68,786 |
March, 2015 to September, 2016 |
| Maharashtra Value |
Maharashtra Value Added |
2,04,98,838 |
October, 2010 to |
| Added Tax Act, 2002 |
Tax (including Interest) |
|
September, 2016 |
| Mumbai Municipal |
Property Tax |
16,51,79,016 |
April, 2008 to |
| Corporation Act, 1888 |
|
|
September, 2016 |
| Custom Act, 1962 |
Interest on Custom Duty |
1,88,07,434 |
May, 2013 to September, 2016 |
|
Custom Warehouse Rent |
35,80,713 |
March, 2013 to September, 2016 |
c) According to the information and explanations given to us, and the records examined
by us, dues in respect of Income tax, Maharashtra Value Added Tax, Excise Duty, Custom
duty and Service Tax as at March 31,2017 that have not been deposited with the appropriate
authority on account of any disputes and the forum where the dispute is pending are as
under:-
| Sr. No. |
Name of the Statute |
Nature of the Dues |
Period to which the amount relates |
Amount
(Rs.) |
Forum where dispute is pending |
| 1 |
Income Tax Act, |
Income Tax |
April, 2002 to March, 2003 |
1,08,86,963 |
Assessing Authorities |
|
1961 |
|
April. 2004 to March, 2005 |
8,74,93,855 |
Supreme Court |
|
|
|
April, 2008 to March, 2009 |
17,62,020 |
Income Tax Appellate Tribunal |
|
|
|
April, 2008 to March, 2009 |
50,41,158 |
Commissioner of Income Tax (Appeal) |
|
|
|
April, 2011 to March, 2012 |
18,31,05,565 |
Commissioner of Income Tax (Appeal) |
|
|
|
April, 2012 to March, 2013 |
2,28,34,73,527 |
Commissioner of Income Tax (Appeal) |
|
|
|
April. 2013to March, 2014 |
13,03,30,444 |
Commissioner of Income Tax (Appeal) |
| 2 |
Income Tax Act, 1961 |
Demand against short deduction of tax at source and interest thereon |
April. 1999 to March, 2000 |
56,64,844 |
Commissioner of Income Tax (Appeal) |
|
|
|
April, 2000 to March, 2001 |
45,209 |
Income Tax Appellate Tribunal |
|
|
|
April, 2001 to March, 2002 |
32,050 |
Income Tax Appellate Tribunal |
|
|
|
April, 2009 to March, 2010 |
10,64,630 |
Commissioner of Income Tax (Appeal) |
| 3 |
M VAT Act,2002 |
MVAT and Interest |
April, 2007 to March, 2008 |
2,08,48,345 |
Commissioner of Sales Tax |
|
|
|
April, 2008 to March, 2009 |
83,49,216 |
Commissioner of Sales Tax |
|
|
|
April. 2010to March,2011 |
25,69,905 |
Commissioner of Sales Tax |
|
|
|
April.2012toMarch,2013 |
8,46,95,499 |
Commissioner of Sales Tax |
| 4 |
Central Excise Act. 1944 |
Excise Duty |
October, 2000 |
3,39,250 |
Customs, Excise and Service Tax Appellate Tribunal |
| 5 |
Service Tax under Finance Act. 1994 |
Service Tax |
April,2010to March, 2013 |
6,28,91,213 |
Commissioner of Service Tax |
|
|
Interest |
July,2010 to March,2013 |
8,47,40,911 |
|
|
Service Tax |
April,2013to March,2014 |
49,06,841 |
Commissioner of Service Tax |
|
|
Interest |
April, 2013to March. 2014 |
37,99,299 |
In process of filing reply to Commissioner of Service Tax. |
|
|
Service Tax |
April, 2014 to March. 2015 |
12,79,14,388 |
Commissioner of Service Tax |
|
|
Interest |
April,2014to March, 2015 |
5,94,43,286 |
| 6 |
Customs Act, 1962 |
Custom Duty |
July, 2008 |
6,98,250 |
Customs, Excise and Service Tax Appellate Tribunal |
viii) Based on our audit procedures and according to the information and explanations
given to us, there have been defaults in the repayments of dues to the financial
institutions and debenture holder as mentioned below:-
| Particulars |
Amount of Default as at the Balance Sheet date (PrincipalAmount) |
Period of Default (Principal
Amount) |
Interest |
Period of Default (Interest) |
Remarks |
| 1. Financial Institutions- a. SREI Equipment Finance Ltd. (NBFC) |
Nil |
0-3 months |
2,66,61,703 (Gross) |
0-3 Months |
Delay in repayment of interest which were outstanding as on March 31, 2017 (continuing
default) |
| b. India Bull Housing Finance Ltd. |
90.83.33.333 33.33.33.334 |
0-3 months 3-6 months |
12,74,55,694 19,97,98,559 |
0-3 months 3-6 Months |
All Defaults during the year were made good on or before March 31, 2017 except
repayment of principal of Rs.16,66,66,667/- which was due on March 01, 2017 (continuing
default) |
With regard to repayment of dues to Debenture holders, we are informed that the Company
has modified its terms of Issue of Debenture vide Memorandum of Understanding dt.
28-02-2017, executed between the Company and the Debenture Holders deferring its original
term in respect of payment of interest and principal redemption in instalment to the next
five years with a condition that if the cash flow permits the Company will consider for
prepayment. In view of the same, there are no instances of defaults in repayment of dues
to debenture holders.
ix) The Company did not raise any money by way of initial public offer or further
public offer (including debt instruments) during the year and with regard to Term loan
raised during the year, according to the information and explanation given to us, the term
loans were applied forthe purposes forwhich they were raised.
x) According to the information and explanations given to us, no material fraud by the
Company or on the Company by its officers or employees has been noticed or reported during
the course of our audit.
xi) According to the information and explanations given to us, and based on our
examination of the records of the Company, the Company has paid/provided for managerial
remuneration in accordance with the requisite approvals mandated by provisions of section
197 read with Schedule V of the Companies Act,2013.
xii) In our opinion and according to the information and explanations given to us, the
Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not
applicable.
xiii) According to the information and explanations given to us and based on our
examination of the records of the Company, transactions with the related parties are in
compliance with sections 177 and section 188 of the Companies Act,2013, where applicable
and details of such transactions have been disclosed in the financial statements as
required by the applicable accounting standards.
xiv) According to the information and explanations given to us and based on our
examination of the records of the Company, the Company has not made any preferential
allotment or private placement of shares or fully or partly convertible debentures during
the year.
xv) According to the information and explanation 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. Accordingly, paragraph 3(xv) of
the Order is not applicable.
xvi) The Company is not required to be registered under section 45-IAof the Reserve
Bank of India Act, 1934.
For HABIB & Co.
Chartered Accountants Firm Registration No. 103479W
(D. P. SHROFF)
Partner
Membership No. 045417
Place: Mumbai Date :27lh May, 2017
Annexure-B to the Independent Auditors Report
(Referred to in paragraph 1 (f) under Report on Other Legal and Regulatory
Requirements section of our report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-Section 3 of Section
143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Shree Ram
Urban Infrastructure Limited ("the Company") as of March 31,2017 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 (ICAI). 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 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. 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 Companies Act, 2013, 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 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 qualified 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 (1) pertain 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 authorisations of
management and directors of the Company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorised 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 frauds 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.
Basis for Qualified Opinion
According to the information and explanations given to us, and based on our audit, the
internal financial control over financial reporting needs to be strengthened in respect of
review control of periodic reconciliation of balances in parties account including timely
resolution thereof, to the extent of such parties covered in the basis for qualified
opinion of our main audit report, which could potentially result in the material
misstatement in the value of Companys Loans and Advances and Trade Payables.
Opinion
In our opinion, except for the effects of the matter described above on the achievement
of the objectives of the control criteria, the Company has maintained , in all material
respects, an adequate internal financial control system over financial reporting and such
internal financial controls over financial reporting were operating effectively as at
March 31, 2017 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.
For HABIBS Co.
Chartered Accountants Firm Registration No. 103479W
(D.P. SHROFF)
Partner
Membership No. 045417
Place: Mumbai Date : 27" May, 2017
+91-9892691696
