The Members of
PSP Projects Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of PSPProjects Limited (the "Company") which comprise the Balance sheet as at March31 2019 the Statement of Profit and Loss including the statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act_2013 (the "Act") in the manner sorequired and give a true and fair view in conformity with the accounting standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019the profit and total comprehensive income changes in equity and its cash flows for theyear ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs') as specified under section143(10) of the Act. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Standalone FinancialStatements' section of our report. We are independent of the Company in accordancewith the Code of Ethics' issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements andICAI's Code of Ethics. We believe that the audit evidence we have obtained andevidence obtained by the other auditors in terms of their reports referred to in theOther Matters' paragraph below is sufficient and appropriate to provide abasis for our opinion on the standalone financial statements
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key audit matters ||How our audit addressed the Key Audit Matter |
|Revenue Recognition accounting for construction contracts || |
|There are significant accounting judgements including estimation of costs to complete determining the stage of completion and the timing of revenue recognition. ||Our procedures included : |
| ||Testing of the design and implementation of controls involved for the determination of the estimates used as well as their operating effectiveness; |
|The company recognises revenue and profit/loss on the basis of stage of completion based on the proportion of contract costs incurred at balance sheet date relative to the total estimated costs of the contract at completion. ||We selected a sample of contracts to test using a risk based criteria which included individual contracts with: |
|The accounting standard requires an entity to select a single measurement method for the relevant performance obligation that depicts the entity's performance in transferring goods or services or if a contract is onerous present obligations are recognized and measured as provisions. ||- significant revenue recognised during the year or |
| ||- significant accrued value of work done balances held at the year-end; |
| ||Obtained an understanding of management's process for reviewing long term contracts the risk associated with the contract and any key judgments. |
| ||Evaluated the design and implementation of key internal controls over the contract revenue and cost estimation process through the combination of procedures involving inquiry and observations reperformance and inspection of evidence in respect of Operations of these controls. |
|We identified contract accounting as a key audit matter because the estimation of the total revenue and total cost to complete the contract prepared based on the prevailing circumstances is inherently subjective complex and require significant management judgment and forecast of contract revenue and/or contract cost may get subsequently changed due to change in prevailing circumstances assumptions contract variations or any other factor and could result in material variance in the revenue and profit or loss from contract for the reporting period. ||Verified underlying documents such as original contract and its amendments if any key contract terms and milestones etc. for verifying the estimation of contract revenue and costs and /or any change in such estimation. |
| ||Inquired with management on the progress of works and collections from customers to identify specific customers with which the company might have disagreements or disputes. |
|Refer to note number 2.15 and 39 of the Standalone Financial Statements ||Tested samples of un-invoiced revenue entries with reference to the reports from the records and costs incurred against the services delivered to confirm the work performed and application of appropriate margin applied for the respective services. |
| ||Tested cut-offs for revenue recognized against un-invoiced amounts by matching the revenue accrual against accruals for corresponding cost; |
| ||Reviewed the delivery and collection history of customers against whose contracts un-invoiced revenue is recognised; and Verification of subsequent receipts post balance sheet date. |
| ||Evaluated the status of trade receivables on sample basis which are past due as at year end the Company's on-going business relationship with customer and past payment history of the customers through discussion with management. |
Information Other than the Standalone Financial Statements and Auditor's ReportThereon
The Company's Board of Directors is responsible for thepreparation of the other information comprising of the information included in theManagement Discussion and Analysis Directors' Report including Annexures toDirectors' Report Corporate Governance and such other disclosures relatedInformation excluding the standalone financial statements and auditors report thereon(Other Information'). The other information is expected to be made available tous after the date of this auditors' report. Our opinion on the standalone financialstatements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information when it becomes available and indoing so consider whether the other information is materially inconsistent with thestandalone financial statements or our knowledge obtained during the course of our auditor otherwise appears to be materially misstated.
When we read the other Information and if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance as required under SA 720 The Auditor's responsibilitiesRelating to other Information'.
Responsibilities of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and the accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
- Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
- Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theCompany to cease to continue as a going concern.
- Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the financial year ended March 31 2019 and are therefore thekey audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
The comparative financial information of the Company for the year endedMarch 31 2018 included in these standalone financial statements are based on thepreviously issued statutory financial statements prepared in accordance with theaccounting principles generally accepted in India including the Accounting standardsspecified under Section 133 of the Act audited by the predecessor auditor whose reportfor the year ended March 31 2018 dated May 10 2018 expressed an unmodified opinion.
Our opinion is not modified in respect of the above matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016(the Order') issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure_A" a statementon the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;
(b) In our opinion proper books of account as required by law havebeen 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 theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read with
Companies (Indian Accounting Standards) Rules 2015 as amended;
(e) On the basis of the written representations received from thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March_31_2019 from being appointed as a director in termsof Section 164 (2) of the Act;
(f ) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these standalone financialstatements and the operating effectiveness of such controls refer to our separate Reportin "Annexure B" to this report;
(g) In our opinion the managerial remuneration for the year endedMarch 31 2019 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in theAuditor's 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 andaccording to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Ind AS financial statements Refer Note 38 to thestandalone financial statements; ii. The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses; iii.There were no amounts which were required to be transferred to the Investor Education andProtection Fund by the company.
|For Kantilal Patel & Co. ||For Riddhi P. Sheth & Co. |
|Chartered Accountants ||Chartered Accountants |
|ICAI Firm registration number: 104744W ||ICAI Firm registration number: 140190W |
|per Jinal A. Patel ||per Riddhi P. Sheth |
|Partner ||Proprietor |
|Membership No: 153599 ||Membership No: 159123 |
|Place: Ahmedabad ||Place: Ahmedabad |
|Date: May 27 2019 ||Date: May 27 2019 |