PUNJ LLOYD Auditors Report

To the Members of Punj Lloyd Limited Report on the Standalone Financial Statements


1. We have audited the accompanying standalone financial statements of Punj Lloyd Limited (“the Company”), which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information, in which are incorporated the returns for the year ended on that date audited by the branch auditors of the Company''''s overseas branches and an unincorporated joint venture.


Management’s Responsibility for the Standalone Financial Statements


2. The Company''''s 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 and presentation 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 (as amended). 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


Auditors’ Responsibility


3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.


4. 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 there under.


5. We conducted our audit 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 standalone financial statements are free from material misstatement.


6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditors'''' judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company''''s preparation and presentation of the standalone 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company''''s Directors, as well as evaluating the overall presentation of the standalone financial statements.


7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.


Opinion


8. In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors on the financial statements of the branches and an unincorporated joint venture, 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 31 March 2016, its loss and its cash flows for the year ended on that date.


Emphasis of Matters


9. We draw attention to the following matters in the notes to the standalone financial statements:


a. note 35 (a) regarding unbilled revenue (work-in-progress) aggregating to Rs, 735.80 crores as at 31 March 2016, representing claims made by the Company which are subject matter of arbitration; and


b. note 35 (b) regarding the realization of the investments and net receivables aggregating to Rs, 1,103.72 crores as at 31 March 2016, from the subsidiaries of the Company as these have currently applied for judicial management in the Court of Singapore.


Pending ultimate outcome of the above matters which is presently unascertainable, no adjustments have been made in the accompanying standalone financial statements. Our opinion is not qualified in respect of these matters.


Other Matter


10. We did not audit the financial statements of certain branches and an unincorporated joint venture whose financial statements reflect total assets (net of elimination) of Rs, 4,223.01 crores as at 31 March 2016, total revenues (net of eliminations) of Rs, 968.78 crores and net cash inflows aggregating to Rs, 6.12 crores for the year ended on that date, as considered in the aforesaid standalone financial statements. The financial statements of these branches and an unincorporated joint venture have been audited by other auditors whose reports and additional information thereon have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches and an unincorporated joint venture, is based solely on the reports of the such auditors. Our opinion is not qualified in respect of this matter.


Report on Other Legal and Regulatory Requirements


11. As required by the Companies (AuditorRs,s 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 II, a statement on the matters specified in paragraphs 3 and 4 of the Order.


12. As required by Section 143(3) of the Act, we report that:


a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;


b. 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 and proper returns adequate for the purposes of our audit have been received from the branches not visited by us;


c. the reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing this report;


d. 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 and with the returns received from the branches not visited by us;


e. in our opinion, 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 (as amended);


f. for the matter described in sub paragraph (b) under the Emphasis of Matter paragraph, if the outcome does not turn out as anticipated by the management, in our opinion, may have an adverse effect on the functioning of the Company;


g. on the basis of the written representations received from the directors as on 1 April 2016 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016 from being appointed as a director in terms of Section 164(2) of the Act;


h. we have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 27 May 2016 as per Annexure I; and


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, 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 on its standalone financial position, as detailed in Note 31 to the standalone financial statements;


ii. the Company, has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts, as detailed in Note 36 to the standalone financial statements; and


iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.


Independent Auditor''''s report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)


1. We have audited the internal financial controls over financial reporting (“IFCoFR”) of Punj Lloyd Limited (“the Company”) as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the Company as of and for the year ended on that date.


Management’s Responsibility for Internal Financial Controls


2. The Company''''s 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 (“the Guidance Note”) 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 Company''''s 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


3. Our responsibility is to express an opinion on the Company''''s IFCoFR based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of IFCoFR. 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 IFCoFR were established and maintained and if such controls operated effectively in all material respects.


4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining an understanding of IFCoFR, 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 standalone financial statements, whether due to fraud or error.


5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''''s IFCoFR.


Meaning of Internal Financial Controls over Financial Reporting


6. A company''''s IFCoFR 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 company''''s IFCoFR 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 company''''s assets that could have a material effect on the financial statements.


Inherent Limitations of Internal Financial Controls over Financial Reporting


7. Because of the inherent limitations of IFCoFR, 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 IFCoFR to future periods are subject to the risk that IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Opinion


8. In our opinion and based on reliance on work performed by other auditors, the Company has, in all material respects, adequate IFCoFR and such IFCoFR were operating effectively as at 31 March 2016, 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 issued by the ICAI.


Other Matters


9. We did not audit the IFCoFR insofar as it relates to certain branches and an unincorporated joint venture, whose financial statements reflect total assets (net of eliminations) of Rs, 4,223.01 crores as at 31 March 2016, total revenues (net of eliminations) of Rs, 968.78 crores and net cash inflows amounting to Rs, 6.12 crores for the year ended on that date. Our report on the adequacy and operating effectiveness of the IFCoFR for the Company, under Section 143(3)(i) of the Act insofar as it relates to the aforesaid branches and an unincorporated joint venture, is solely based on the information provided by the auditors of such branches/ unincorporated joint venture. Our opinion is not modified in respect of this matter.


Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:


(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.


(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.


(c) The title deeds of all the immovable properties (which are included under the head ‘fixed assets'''') are held in the name of the Company.


(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies, between physical inventory and book records, were noticed on such verification.


(iii) The Company has not granted any loan, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.


(iv) In our opinion, the Company has complied with the provisions of Section 186 of the Act in respect of loans, investments, guarantees and security. Further, the provisions of clause 3(iv) of the Order with respect to Section 185 of the Act are not applicable since the Company has not entered into transactions covered under the aforesaid section.


(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.


(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Company''''s products and services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.


(vii) (a) Undisputed statutory dues including provident fund, employees'''' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have not been regularly deposited to the appropriate authorities and there have been significant delays in a large number of cases. Further, no material undisputed amounts payable in respect thereof, were outstanding at the year-end for a period of more than six months from the date they became payable.


(b) The dues outstanding at the year end, in respect of income-tax, sales-tax, service tax, duty of customs, duty of excise and value added tax on account of any dispute, are as follows:


































































































































































Nature of dues



Name of statute



Amount (Rs, in crores)



Period to which relates



Forum where the dispute is pending



Sales tax and value added tax



Andhra Pradesh General Sales Tax Act, 1957



9.23



1998-99 to 2004-05



Sales Tax Appellate Tribunal, Vizag



Bihar Value Added Tax Act, 2005



25.51



2009-10



Commercial Tax Tribunal, Patna



Haryana Value Added Tax Act, 2003



4.64



2003-04,


2004-05



Sales Tax Appellate Tribunal, Chandigarh



0.79



2009-10



Joint Commissioner Appeal



Kerala Value Added Tax Act, 2003



3.96



2005-06,


2006-07



Deputy Commissioner of Commercial Tax, Ernakulum and Commercial Tax Tribunal, Kochi



Madhya Pradesh Commercial Tax Act, 1994



0.05



2003-04



High Court, Bhopal



Madhya Pradesh Value Added Tax Act, 2002



0.65



2009-10,


2010-11



Commercial Tax Tribunal, Bhopal



Punjab Value Added Tax Act, 2005



37.47



2008-09,


2012-13



Deputy Commissioner, Patiala



24.33



2011-12



Commercial Tax Tribunal, Chandigarh



Rajasthan Value Added Tax, 2003



0.03



2012-13



Deputy Commissioner, Kota



Karnataka Value Added Tax Act, 2003



4.78



2009-10



High Court, Karnataka



Gujarat Sales Tax Act, 1969



0.07



2002-03



Deputy Commissioner (Appeals), Vadodara



West Bengal Value Added Tax, 2003



23.60



2009-10



Appellate & Revisional Board, Kolkata



7.85



2012-13



Sr. Joint Commissioner (Appeal), Midnapur



Entry tax



Bihar Entry Tax Act, 1993



0.21



2009-10



Commissioner of Commercial Tax, Patna



Haryana Local Area Development Tax Act, 2000



0.40



2003-04



Supreme Court, New Delhi



Chhattisgarh Entry Tax Act, 1976



0.26



2005-06,


2006-07



Supreme Court, New Delhi



Madhya Pradesh Entry Tax Act, 1976



0.01



2003-04



High Court, Bhopal



0.35



2009-10,


2010-11



Commercial Tax Tribunal, Bhopal



Rajasthan Tax on the Entry of Goods in to the Local Area Act, 1957



1.00



2005-06



High Court, Jodhpur



Uttar Pradesh Trade Tax Act, 1948



0.05



1999-2000,


2000-01,


2004-05



Commercial Tax Tribunal, Agra



0.11



2010-11



Additional Commissioner (Appeal), Aligarh



Karnataka Sales Tax Act, 1957



0.12



2002-03 to 2004-05



Jt. Commissioner Appeal, Bangalore



Excise duty



Central Excise Act, 1944



0.73



2006-07



Commissioner of Custom and Central Excise, Mumbai



Service tax



The Finance Act 2004 and the Service Tax rules



8.06



2003-04,


2005-06,


2006-07



CESTAT, Delhi



(viii) As at the year end, the following are the amounts of defaults in repayment of dues to banks, financial institutions and debenture holders:
























































































































Particulars



Period of default (in days)



Up to 90



91 and above



Banks



Standard Chartered Bank Limited



20.47



62.59



ICICI Bank Limited



1.86



1.71



IDBI Limited



3.45



-



Oriental Bank of Commerce Limited



3.38



-



State Bank of Patiala



3.33



-



United Bank of India



3.13



-



Bank of India



1.39



-



Ratanakar Bank Limited



0.47



-



Dhanlaxmi Bank Limited



0.09



0.24



KVB Bank Limited



0.02



-



State Bank of India



0.01



-



Financial institutions



International Finance Corporation



10.77



29.34



Tata Capital Limited



3.54



9.58



IFCI Limited



7.31



2.00



L & T Infrastructure Finance Company Limited



1.57



0.75



Religare Finvest Limited



0.90



0.47



Magma Fincorp Limited



0.82



0.27



SREI Infrastructure Finance Limited



0.11



-



Debentures



19.53



374.33



Further, during the year, the Company delayed in repayment of dues to banks, financial institutions and debenture holders, as detailed below:









































































































Particulars



Period of delays (in days)



Up to 90



91 and above



Banks



Central Bank of India



20.57



13.65



State Bank of Patiala



3.33



10.00



State Bank of India



11.77



0.29



Union Bank of India



6.25



-



HDFC Bank Limited



2.98



-



ICICI Bank Limited



1.54



-



Dhanlaxmi Bank Limited



0.90



-



Kotak Mahindra Bank Limited



0.89



-



Axis Bank Limited



0.16



-



Financial institutions



SREI Equipment Finance Private Limited



5.32



16.48



Tata Capital Limited



0.50



6.50



SREI Infrastructure Finance Limited



-



6.00



Religare Finvest Limited



5.13



-



Magma Fincorp Limited



1.98



-



L & T Finance Limited



0.74



-



Debentures



-



4.08



(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans were applied for the purposes for which the loans were obtained.


(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.


(xi) Managerial remuneration has been provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act, read with Schedule V to the Act.


(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.


(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable accounting standards.


(xiv) During the year, the Company has neither made any preferential allotment or private placement of shares nor issued any debentures.


(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.


(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.


For Walker Chandiok & Co LLP


(Formerly Walker, Chandiok & Co)


Chartered Accountants


Firm''''s Registration No.: 001076N/N500013


per Anupam Kumar


Partner


Place: Gurgaon Membership No.: 501531


Date: 27 May 2016

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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