Tantia Constructions Ltd Directors Report.

To the members of Tantia Constructions Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the accompanying standalone I nd AS financial statements of Tantia Constructions Limited ("The Company"), which comprises the Balance Sheet as at 31st March, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flows for the year then ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the 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 matters described in the Basis for Qualified Opinion section of our Report, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013 as amended ("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 31,2019, its loss including other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

Attention is invited to the following:-

a. Note 44 to the standalone Ind AS financial statement which states that the Net Worth of the Company has completely eroded. This has significantly affected the going concern assumption of the Company. A CDR package was approved by the Lending Banks (JLF) which was communicated to the Company vide letter of approval dated 6th May 2015 and cut-off date (COD) for CDR proposal was 1st July 2014. The company could not generate sufficient surplus and the loans were categorized as NPA. The State Bank of India, in its capacity as financial creditor, then filed a petition under the Insolvency and Bankruptcy Code, 2016 (IBC) with The Honble National Company Law Tribunal (NCLT), Kolkata Bench. On 13 March, 2019, the NCLT vide its order of even date, has admitted the Corporate Insolvency Resolution Process (CIRP) in respect of the Company and appointed Mr. Kshitiz Chhawchharia, as the Interim Resolution Professional (IRP) in terms of the IBC. Further, the Committee of Creditors (COC) in its meeting held on 11 April, 2019 have approved the appointment of Mr. Kshitiz Chhawchharia as Resolution Professional(RP). Considering these, the Company has presented these statements on going concern basis.

b. Note 41 to the standalone Ind AS financial statement which states that the Company have not made any provision for Gratuity and Leave Encashment in line with IND-AS-19 which has resulted in understatement of loss for the year to that extent. Further, no actuarial valuation was made for Gratuity and Leave Encashment.

c. Note 47 to the standalone Ind AS financial statement as per which, during last two financial year, Bank Guarantees aggregated to र 8746.64 lacs have been invoked by the various banks at the behest of vendors/clients, out of which the Company has charged off during the current financial year र 1813.65 lacs in the Statement of Profit and Loss. Amount of र 4389.45 Lacs shown under Current Assets relating to the projects against which the Company has already filed arbitration petition and no effect have been given in the accounts for the balance र 2543.54 lacs as the same have not been debited by the respective bank(s). We are unable to comment on the appropriateness of the aforesaid balance being classified as Current Asset in the standalone financial results including the extent of recoverability, the period over which these are expected to be recovered and any other impact that may arise in this regard.

d. Note 55 to the standalone Ind AS financial statement, according to which three Trade Receivable (Debtors) Parties aggregating to र 2,428.38 lakhs including Retention Money of H88.70 lacs of the Company, have gone into liquidation. The Company have filed claims, to the respective Official Liquidators, which were delayed/rejected. This should have been written off in the Accounts with corresponding impact on loss of the Company for the year.

e. Note 56 to the standalone Ind AS financial statement as per which during the current financial year, the Company have neither paid nor provided any interest against loans taken from some of the Banks in the absence of complete details from those Banks. Further, interest on Inter Corporate Deposits (ICDs) were also not provided. The impact of the same could not be determined in the absence of necessary documentary evidences, these have resulted in understatement of loss for the year to that extent.

f. Note 40 to the standalone Ind AS financial statement in relation to Corporate Guarantee provided by the Company against loan availed by one of the subsidiaries of H26,458.38 lacs (excluding interest) invoked by consortium of Banks amounting to H25,579.92 Lacs due to non payment by that subsidiary. No effect is given in the accounts and accordingly loss of the year is understated to that extent.

g. The standalone Ind AS financial statement includes unbilled revenue of र 109.85 lacs under Other Current Assets and work in progress of र 58.25 lacs under Inventory against completed projects which are not under arbitration are yet to be billed by the Company. We are unable to comment on the appropriateness of the balances being disclosed as recoverable in the standalone financial results under Current Assets including the extent of recoverability of the above balances, the period over which these are expected to be realised and any other consequential impact that may arise in this regard.

h. Trade Receivable shown in the standalone Ind AS financial statement aggregating H12879.95 lacs, excluding the receivables from clients under liquidation, are yet to be realised by the Company and are outstanding for a period exceeding three years. We are unable to comment on the appropriateness of the balances being disclosed in the standalone financialresults as recoverable under Current Assets including the extent of recoverability of the above balances, the period over which these are expected to be realised and any other consequential impact that may arise in this regard.

i. South Indian Bank (SIB) had advised the Company on 21.03.2017 to the effect that pursuant to an assignment agreement dated 17.03.2017, SIB have assigned the entire outstanding financial assistance granted to the Company, together with all underlying securities, rights, title and interest in respect thereof to Phoenix ARC Pvt Ltd under Section 5 of the SARFAESI Act. In the absence of complete reconciliation with them, actual liability could not be ascertained.

Our opinion is modified in respect of above matters.

Emphasis of Matters

We draw attention to:

a. Note 22 to the standalone Ind AS financial statement regarding non payment of short term loan from Vijaya Bank against which the Bank has issued notice under the SARFAESI Act (2002) and has taken symbolic possession of land, belonging to third party, mortgaged with the Bank against the said loan.

b. Note 49 to the standalone Ind AS financial statement in relation to excess payment of 784 lacs as managerial remuneration to the Chairman and Managing Director for the financial year(s) 2012-13 and 2013-14. The Company had sought approval from the concerned authorities, viz Ministry of Corporate Affairs, for waiver in respect of recovery of the aforesaid excess amount from the Chairman and Managing Director, which was rejected by Ministry of Corporate Affairs. The Company have adjusted 724.29 lacs against his old dues till the end of the current financial year and the balance amount of 759.71 lacs is yet to be recovered.

c. Note 47 to the standalone Ind AS financial statement as per which seven projects were terminated, during the last two financial years, out of which the Company has gone into arbitration in respect of two projects and in case of one project where the Company was providing service as EPC Contractor has also been terminated by the client, where the principal i.e. the main contractor has also filed arbitration petition.

d. Note 19 para (a) of the standalone Ind AS financial statement where as part of the CIRP creditors of the Company were called upon to submit their claims to the Interim Resolution Professional (IRP) as on 13 March, 2019 and later on to Resolution Professional (RP). Claims submitted by financial and operational creditors are being verified and admitted by the RP. In some instances, the amount of claim admitted by the RP is differing from the amount reflected in the books of accounts of the Company. Pending final outcome of the CIRP process no adjustments has been made in the books for the differential amount in the claims admitted. Hence, consequential impact, if any, on the financial results is not currently ascertainable.

Our opinion is not qualified in respect of above matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, 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.

Sr. No. Key Audit Matter How our audit addressed the key audit matters
1 Recognition of Contract Revenue, margin and Contract Cost (Refer Our audit procedures included, but were not limited to, the following:
Note 50 of the standalone financial statements) The Companys revenue significantly generated from Construction • Evaluated the appropriateness of the Companys revenue recognition policies.
Contract, which by its nature is very complex. For determination of yearend value of work in progress and unbilled revenue, construction cost, progress of the work, billing status are taken into consideration in accordance with Ind AS-11. These contract estimates are reviewed by the management on a periodic basis by exercising judgement in its assessment of valuation of contract including variation in quantity of work executed. • For a sample of contracts, tested the appropriateness of amount recognized by evaluating key management judgement inherent in the forecasted contract revenue and costs to complete that drive the accounting under the percentage of completion method, including:
• Reviewed the contract terms and conditions
• Evaluated the identification of performance obligation of the contract
Accordingly we have identified this as a key audit matter. • Assessed that the disclosures made by the management are in accordance with applicable accounting standards.

 

No. Key Audit Matter How our audit addressed the key audit matters
2 Uncertainties regarding recoverability of work in progress (inventory) and unbilled revenue (other current assets) Our audit procedures included, but were not limited to, the following:
The Company as at March 31,2019 has work in progress and unbilled revenue of र 58 lacs and र 4,642 lacs respectively grouped under • Obtaining an understanding of the management process for assessing the recoverability of unbilled work in progress (other current assets), non-current trade receivables and current trade receivables.
Inventories and Other Current Assets which represents various claims raised till date in respect of projects already completed or closed/ suspended and where claims are under liquidation. • Discussed extensively with management regarding steps taken for recovering the amounts and evaluated the design and testing operating effectiveness of controls.
Considering the amount involved, uncertainty associated with the outcome of negotiation/arbitration and significant management judgement in its recoverability. This was considered to be a key audit matter in the audit of the standalone financial statement. • Verified contractual arrangements to support managements position on the tenability and recoverability of these receivables.
Accordingly we have identified this as a key audit matter. • Assessed that the disclosure made by the management are in accordance with applicable accounting standards.
3 Indirect tax litigations Our audit procedures amongst others included the following:
The Company is subject to assessment by tax authorities on various indirect tax matters resulting into litigations/disputes (refer Note 39 to the standalone Ind AS financial statements). • Obtained list of indirect tax litigations as at march 31, 2019 from management.
The tax matters involve significant amounts which are at various stages of litigations and the proceedings take significant time to resolve. • Discussed the matters with the management to understand the possible outcome of these disputes.
Accordingly we have identified this as a key audit matter. • Assessed contingent liability disclosures in Note 39 to the accompanying standalone Ind AS financial statements.

We have determined that there are no other key audit matters to communicate in our report.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Management is responsible for the preparation of the other information. The other information comprises the Corporate Information, Management discussion and analysis and Directors Report including Annexures to Directors Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the standalone Ind AS financial statements and our auditors report thereon.

Our opinion on the standalone Ind AS 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 Ind AS financial statement, 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 during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Managements Responsibility for the Standalone Ind AS Financial Statements

In accordance with the applicable provisions of the Insolvency and Bankruptcy Code, 2016, (Code) the corporate insolvency process (CIRP) of Tantia Constructions Limited was initiated by the financial creditors of the Company. The Kolkata bench of National Company Law Tribunal (NCLT) has admitted petition application filed by the financial companies

and CIRP was initiated on 13th march, 2019 against the Company. Mr. Kshitiz Chhawchharia was appointed as Interim Resolution Professional to manage the affairs of the Company. Subsequently Mr. Chhawchharia was confirmed as the Resolution Professional (RP) by the committee of creditors (COC). On appointment of the RP under the Code, the powers of the Board of Directors of the Company were suspended. The accompanying statement is the responsibility of the Companys Management and has been approved by Key Managerial Personnel (KMP) and provided to the Resolution Professional (RP) and has been approved by them.

The Companys Management is responsible for the matters stated in section 134(5) of the Companies Act, 2013 with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including comprehensive income, changes in equity and cash flows of the Company in accordance with the other accounting principles generally accepted in India including Indian Accounting Standard (Ind AS). 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 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 fraud or error.

In preparing the 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 are responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 assurance, but 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of materialmisstatement of the standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedure 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 financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act 2013, we are also responsible for expressing our opinion 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 such disclosures 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 conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS 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 Ind AS financial statements for the financial year ended on March 31,2019 and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosures 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 Section 143(3) of the Act, based on our audit we report that:

a) We have sought and except for the matters described in the Basis for qualified opinion section, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) Except for the matters described in the Basis for qualified opinion section, in our opinion, 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 The Statement of Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account.

d) Except for the matters described in the Basis for qualified opinion section, in our opinion, the aforesaid financial statements comply, with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015.

e) The matters described in the Basis for Qualified Opinion and Emphasis of matter section 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 directors as on March 31, 2019 none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164(2) of the Act. However this was not taken on record by the Management as Corporate Insolvency Resolution process (CIRP) is initiated against the Company and the powers of the Board are suspended during the CIRP

g) The qualifications relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified section above.

h) 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 A" to this report.

i) 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, as amended in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at March 31, 2019 on its financial position in its Standalone Ind AS Financial Statements - Refer Note 39 to the Standalone Ind AS Financial Statements.

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

iii. Unpaid/Unclaimed dividend of Equity Shareholders for the year 2010-11 amounting to H1.48 lakhs were required to be transferred to the Investor Education and Protection Funds have been transferred by the Company during the year under review but the said transfer was affected after the due date.

2. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

For Konar Mustaphi & Associates
Chartered Accountants
Firm Registration No. 314125E
C.A. S.K. MUSTAPHI
Place: Kolkata Partner
Date: 14th August, 2019 (Membership No.051842)

"Annexure A" to the Independent Auditors Report

Referred to in paragraph 1(h) with the heading Report on Other Legal & Regulatory Requirements of our report of even date on the Standalone Ind AS Financial Statements for the year ended March 31,2019:

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

We have audited the internal financial controls over financial reporting of Tantia Constructions Limited ("the Company") as of March 31, 2019 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 financial information, as required under the Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financialcontrols over financialreporting with reference to these Standalone Ind AS FinancialStatements 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, 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 ICAI. 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 with reference to these Standalone Ind AS Financial Statements was established and maintained and if such controls operated effectively in all material respects.

An audit involves performing procedures to obtain audit evidences about the adequacy of the internal financial controls system over financial reporting with reference to these Standalone Ind AS Financial Statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these Standalone Ind AS Financial Statements, 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 judgment, 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 Standalone 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 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.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting, 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.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financialcontrols over financialreporting were operating effectively as at March 31, 2019, based on the internalcontrolover 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 Konar Mustaphi & Associates
Chartered Accountants
Firm Registration No. 314125E
C.A. S.K. MUSTAPHI
Place: Kolkata Partner
Date: 14th August, 2019 (Membership No.051842)