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PVP Ventures

BSE: 517556|NSE: PVP|ISIN: INE362A01016|SECTOR: Construction & Contracting - Real Estate
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Auditor's Report (PVP Ventures) Year End : Mar '16

To the Shareholders of PVP Ventures Limited, Chennai

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of PVP Ventures Limited (herein after referred to the Company) which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as the Financial Statements).

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

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 of these 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; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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.

AUDITOR''S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on 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 there under.

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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosure in the financial statements. These procedures selected depend on the auditor''s judgment, including the assessment of the risk 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 Company''s 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Board of Directors, as well as evaluating the overall presentation of the 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 financial statements.

BASIS FOR QUALIFIED OPINION

Attention is drawn to the (a) Note 12 in notes to the financial statements with regard to the investment in equity shares of subsidiary companies with provision made, (b) Note 13 loans and advances to subsidiary companies. The management is of the view that considering the market value of the assets and expected cash flows from the business of these subsidiary companies the provision already made are adequate. However considering the net worth of the subsidiary companies is negative, dependence on the parent to continue as a going concern, absence of cash flows, delay in commencement of projects and other related factors indicate that the existence of material uncertainty in carrying the value of investments and loans and advances at cost less provision already made. Hence we were unable to determine whether any adjustments to these net carrying amounts are necessary and additional provision for diminution, if any, to be made are not quantifiable.

QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us, except to the possible effects of the matters described in Basis for Qualified Opinion paragraph, the aforesaid 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 31st March, 2016, and their Profit, and its cash flows for the year ended on that date.

EMPHASIS OF MATTERS

We draw the attention to (a) the Note No.24.6 with regard to the Income Taxes disputed before respective authorities, which describes the uncertainty related to the outcome of the Appeals filed against the Orders of the Authorities; and (b) the Note No.24.6.4 with regard to the security by way of mortgage of property given to the lenders for the borrowings by other body corporate and they have not repaid the loan with interest to the lenders. All these items describe the uncertainty related to the outcome of the future events. Our opinion in respect of these matters is not modified.

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 statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. 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 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 relevant books of account.

d. except for the possible effects of the matter described in Basis for Qualified Opinion paragraph, in our opinion, the aforesaid 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.

e. on the basis of written representation received from the Directors as on 31st March,

2016 taken on record by the Board of Directors, none of the directors of the Company is disqualified as on 31st March, 2016, from being appointed as a director in terms of section 164(2) of the Act;

f. with respect to the adequacy of the internal financial controls over the 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 Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditor''s) 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 on its financial statements - Refer Note: 24.6 to the financial statements

ii) The Company did not have long term contracts including 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 and Protection Fund by the Company.

ANNEXURE-A TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements in our Independent Auditors'' Report of even date)

In terms of the information and explanations sought by us and given by the Company and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:

1 a. The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b. The company has physically verified the fixed assets at reasonable intervals and there are no discrepancies noticed on such verification.

c. The company''s fixed assets do not have any immovable properties.

2. The company holds inventory of Land. The physical verification of the lands was conducted at reasonable intervals by the management and there is no material discrepancies noticed on such verification.

3. During the year the company has granted unsecured loans to the parties covered in the register maintained under section 189 of the Act. The outstanding loans Rs.58843.71 lakhs is due from four parties. It is represented that these loans are repayable on demand. The other clauses regarding repayment of principal, interest and overdue are not applicable.

4. The company has complied with the provisions of section 185 and 186 of the Companies Act in respect of securities and guarantees given.

5. The Company has not accepted deposits from public during this year. Therefore the provision of clause 3 (v) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

6. The Company has made and maintained the cost records prescribed by the Central Government under sub-section (1) of Section 148 of the Act.

7. a. The Company is depositing, with delays, undisputed statutory dues with appropriate authorities, like Provident Fund, Employee''s State insurance, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs Duty, Excise Duty, Value Added Tax, Cess, wherever applicable. The ULT tax of Rs.9.03 lakhs is arrears of outstanding dues as at 31st March, 2016 for a period of more than six months from the date they become payable.

b. The details of disputed statutory dues, which have not been deposited on account of dispute are as under:

Nature Of Statue

Nature Of Dues

Amount Rs In Lakhs

Period To Which Amount Relates

Forum Where Dispute Is Pending

Income Tax Act

Income Tax

78.21

AY 2007-08

ITAT, Hyderabad

Income Tax Act

Income Tax

1480.00

AY 2008-09

High Court, Chennai

Income Tax Act

Penalty

1276.58

AY 2008-09

CIT-A, Chennai

Income Tax Act

Income Tax

13.24

AY 2009-10

CIT-A, Chennai

Income Tax Act

Income Tax

493.43

AY 2013-14

CIT-A, Chennai

8. The company has not defaulted in repayment of loans or borrowings from financial institutions, bank or government. The interest on Debentures amounting to Rs.963.45 lakhs due and not paid for the period from 15-12-2015.

9. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). The term loans obtained were applied for the purpose for which those were raised.

10. There are no fraud by the company or any fraud on the company by its officers or employees and hence the provision of clause 3 (x) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

11. The company has paid managerial remuneration in accordance with the provisions of section 197 read with Schedule V to the Companies Act.

12. The company is not a Nidhi company and hence the provision of clause 3 (xii) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

13. The transactions with the related parties are in compliance with section 177 and 188 of the Act wherever applicable and the details have been disclosed in the financial statements as required by the applicable accounting standards.

14. The company has not made any preferential allotment of shares or private placement of shares or convertible debentures during the year and hence the provision of clause 3 (xiv) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

15. The company is not entered into any non-cash transactions with directors or persons connected with them and hence the provision of clause 3 (xv) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

16. The company is not required to be registered under section 45-IA of Reserve Bank of India Act, 1934 and hence the provision of clause 3 (xvi) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company for the year under audit.

ANNEXURE - B TO THE AUDITORS'' REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the Act”) (Referred to in paragraph 2(f) of Report on Other Legal and Regulatory Requirements in our Independent Auditors'' Report of even date)

We have audited the internal financial controls over financial reporting of PVP Ventures Limited (the Company”) as on 31 March 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

MANAGEMENT''S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

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 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 Companies Act, 2013.

AUDITORS'' RESPONSIBILITY

Our responsibility is to express an opinion on the Company''s 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 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 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 controls 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 auditor''s 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 Company''s internal financial controls system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company''s 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 company''s 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 company''s 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 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.

QUALIFIED OPINION

According to the information and explanations given to us and based on our audit, the following weakness has been identified as at 31st March, 2016. The Companies internal control system for advance given to subsidiary companies and investments in subsidiary companies, which could potentially result in existence of uncertainty that may cast significant doubt about the recoverability or otherwise of these advances and investments and thereby non provision for the shortfall as at the balance sheet date could not have been reasonably established.

A material weakness'' is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company''s annual financial statements will not be prevented or detected on a timely basis.

In our opinion, except for the possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting 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.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2016 standalone financial statements of the Company, and the material weaknesses does affect our opinion on the standalone financial statements of the Company.

for M/s CNGSN & ASSOCIATES LLP

CHARTERED ACCOUNTANTS

Firm Registration No: 004915S

Camp: Hyderabad

Date : 23rd May, 2016

Sd/-

R. Thirumalmarugan

Partner

Membership No: 200102

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