We have audited the accompanying financial statements of Peninsula Land
Limited (the Company), which comprise the Balance Sheet as at March
31, 2014, the Statement of Profit and Loss and the Cash Flow Statement
for the year then ended, and a summary of significant accounting
policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for 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 Standards referred to in subsection (3C) of Section 211
of the Companies Act, 1956 (the Act). This responsibility includes
the design, implementation and maintenance of internal control 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.
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditors'' judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the
explanations given to us, the 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
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
(b) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter
Attention is invited to:
1. Note No.23 (4) & 23 (5) to the financial statements with regard to
method of certain accounting being followed while giving effect to the
amalgamation / merger of four entities with the Company as explained
therein, (i) the restated / recorded values of work-in-progress and
(ii) adjustment resulting there from & goodwill, merger scheme expenses
etc. adjusted directly against general reserve / capital reserve /
accumulated profits are not in conformity with the relevant provisions
of Accounting Standard -14 Accounting for Amalgamations and
Accounting Standard - 5 Net Profit or Loss for the period, Prior
Period Items and Changes in Accounting Policies. Had such accounting
been in conformity with these Accounting Standards, the profit after
tax would have been lower by Rs. 293.17 Crores.
2. Note No.23 (7) to the financial statements with regard to pending
approval of the Central Government for the excess managerial
remuneration of Rs. 3.26 Crores. We are informed that the Company will
recover such excess remuneration from the relevant Directors during
Financial Year 2014-15 in case of its non approval from the Central
3. Note No.23 (9) to the financial statements with regard to the
recognition of expenses and income for ongoing projects which is based
upon estimated costs & overall profitability of a project as per the
judgment of management, which have been relied upon by us, these being
4. Note No.23 (27) to the financial statements with regard to MAT
Credit Entitlement of Rs. 60.42 Crores based on the judgment of the
Our opinion is not qualified in respect of the above matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors'' Report) Order, 2003 (the
Order) issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Act, we give in the Annexure, a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by Section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
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
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
d. in our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the accounting standards referred to in
sub-section (3C) of Section 211 of the Act;
e. on the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
Section 274 of the Act.
ANNEXURE TO INDEPENDENT AUDITORS'' REPORT
[Referred to in paragraph 1 under ''Report on Other Legal and Regulatory
Requirements'' in the Independent Auditors'' Report of even date to the
members of Peninsula Land Limited on the financial statements for the
year ended March 31, 2014]
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
(b) We are informed that the fixed assets of the Company are physically
verified by the management according to phased programme designed to
cover all the items over a period of the three years, which, in our
opinion, is reasonable having regard to the size of the Company and the
nature of its assets. Pursuant to the programme, physical verification
has been carried out during the year and as informed, no material
discrepancies were noticed on such verification.
(c) In our opinion and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
of by the Company during the year.
(ii) (a) Inventories comprise of expenditure incurred on acquisition of
plot of lands, development rights and other expenditure on construction
and development thereof. The inventory has been physically verified by
the management during the year. In our opinion, the frequency of
verification is reasonable.
(b) The procedures of physical verification of inventory followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification carried
out at the end of the year.
(iii) (a) The Company has granted loan to nineteen companies covered in
the register maintained under section 301 of the Companies Act, 1956.
The maximum amount involved during the year was Rs. 1054.24 Crores and
the year-end balance of loans granted to such parties was Rs. 814.08
(b) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are prima facie, not prejudicial to the interest of the
(c) The loans granted are repayable on demand. As informed, the Company
has not demanded repayment of any such loan and interest during the
year, thus, there has been no default on the part of the parties to
whom the money has been lend. The payment of interest has been regular.
(d) There is no overdue amount of loans granted to companies, firms or
other parties listed in the register maintained under section 301 of
the Companies Act, 1956.
(e) As informed, the Company has not taken any loans, secured or
unsecured from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations
given to us, there exists an adequate internal control system
commensurate with the size of the Company and the nature of its
business with regard to purchase of inventory, fixed assets and with
regard to the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to correct major
weakness in internal control system of the Company.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the particulars of contracts or arrangements
referred to in section 301 of the Companies Act, 1956 that need to be
entered into the register maintained under section 301 have been so
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees five lakhs have been entered
into during the financial year at prices which are reasonable having
regard to the prevailing market prices at the relevant time. However,
in respect of one such transaction, due to the specialized nature of
such transaction, we are unable to comment upon the prevailing market
(vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
within the meaning of Sections 58A and 58AA of the Act and the rules
framed there under.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) 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 clause (d) of sub-section (1) of
section 209 of the Companies Act, 1956 and are of the opinion that,
prima facie, the prescribed accounts and records are required to be
(ix) (a) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including investor education and
protection fund, employees'' state insurance, sales-tax, income-tax,
wealth-tax and other material statutory dues, if any, applicable to it.
However, there have been several delays in depositing tax deducted at
source, service tax, provident fund, value added tax and works contract
tax. As explained to us, the provisions regarding custom duty and
excise duty are presently not applicable to the Company.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees'' state insurance, income-tax,
wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
other undisputed statutory dues were outstanding, at the year end, for
a period of more than six months from the date they became payable.
(c) According to the information and explanation given to us, there are
no dues of income tax, sales-tax, wealth tax, service tax, customs
duty, excise duty and cess which have not been deposited on account of
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.
(xii) According to the records of the Company and according to the
information and explanations provided to us, we are of the opinion that
the Company has not granted loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended)
are not applicable to the Company.
(xiv) In respect of dealing / trading in shares, securities, debentures
and other investments, in our opinion and according to the information
and explanations given to us, generally the Company did not deal or
trade in it. However, on short term basis, surplus funds were invested
in mutual fund for which proper records for the transaction and
contracts have been maintained and timely entries have been made
therein. The shares, securities, debentures and other investments have
been held by the Company, in its own name.
(xv) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks during the year. However, the Company has given
guarantee for loans taken by others from financial institutions during
the year, which are prejudicial to the interest of the Company.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purpose for which
the loans were raised. However, on short term basis, excess borrowings
were parked in fixed deposits of various banks.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
(xviii) According to the information and explanations given to us, the
Company had not made preferential allotment of shares to parties and
Companies covered in the register maintained under section 301 of the
(xix) According to the information and explanations given to us, during
the period covered by our audit report, the Company had issued 2570
debentures of Rs. 10,00,000 each. The Company has created charge in
respect of debentures issued.
(xx) During the year the Company has not raised any money through
(xxi) During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the management.
For Haribhakti & Co.
Firm Registration No.103523W
Date:26th May, 2014