GANESH HOUSING CORPORATION LIMITED,
Report on the Audit of the Standalone Ind AS Financial Statements
Opinion
We have audited the accompanying standalone financial statements of GANESH HOUSING CORPORATION LIMITED
("the company"), which comprise the Balance Sheet as at 31st March, 2023, the Statement of Profit and Loss (including other Comprehensive Income), the Cash Flow Statement, the statement of changes in Equity for the year then ended, notes to the financial statements and a summary of significant accounting policies and other explanatory information (hereinafter referred to as "Standalone financial statement").
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (the "Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, and its profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.
Key audit matters
Key audit matters ('KAM') are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone 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 matter described below to be the key audit matters to be communicated in our report.
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The key audit matters
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How our audit addressed the key audit matter
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Revenue recognition for real estate projects (as described in note 32(1.11) of the standalone Ind AS financial statements)
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The Company applies Ind AS 115 "Revenue from contracts with
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Our audit procedures included:
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customers" for recognition of revenue from real estate projects,
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Read the Company's revenue recognition accounting
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which is being recognised at a point in time upon the Company
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policies and assessed compliance of the policies with Ind AS
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satisfying its performance obligation and the customer obtaining
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115.
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control of the underlying asset.
Considering application of Ind AS 115 involves significant judgment in identifying performance obligations and determining when 'control' of the asset underlying the performance obligation is transferred to the customer, the same has been considered as
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Obtained and understood revenue recognition process including identification of performance obligations and determination of transfer of control of the asset underlying the performance obligation to the customer.
Read the legal opinion obtained by the Company to
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key audit matter.
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determine the point in time at which the control is transferred in accordance with the underlying agreements.
Tested, revenue related transactions with the underlying customer contracts, sale deed and handover documents, evidencing the transfer of control of the asset to the customer based on which revenue is recognised.
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Assessed the revenue-related disclosures included in Note 32(1.11) to the standalone Ind AS financial statements in accordance with the requirements of Ind AS 115.
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Investment in subsidiaries - projects (as described in note 4 of the standalone Ind AS financial statements)
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Assessment of impairment of investment in subsidiaries:
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Our
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audit procedures to assess recoverability included the
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The carrying amount of the investments in subsidiaries held at
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following:
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cost less impairment represents 25.37% of the Company's total
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Comparing the carrying amount of investments in the
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assets respectively.
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Company's books, with the net asset balance in the relevant
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The Company has investments in subsidiaries. These investments
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audited / unaudited balance sheet of subsidiaries. This is to
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are carried at cost less any diminution in value of such investments.
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identify if their net assets (being an approximation of their
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The investments are analyzed for impairment at each reporting
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minimum recoverable amount) were in excess of their
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date by comparing the carrying value of investments in the
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carrying amount;
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Company's books with the net assets of the relevant subsidiaries'
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For the investments where the carrying amount exceeded
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balance sheet. Further, the Company assesses the projected cash
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the Company's share in net asset value, we compared the
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flows of the real estate projects in these underlying entities. This
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carrying amount of the investment with the projected cash
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involve significant estimates and judgment, due to the inherent
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flows and profitability. This is based on approved business
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uncertainty involved in forecasting future cash flows. There is
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plans of the subsidiaries; and
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significant judgment in estimating the timing of the cash flows
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The loss of Madhukamal Infrastructure Private Limited
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and the relevant discount rate.
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has reduced & converted in gain from ' (8474.52) lakh to
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The company has three subsidiaries.
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' 13676.73 lakh during the year.
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Considering the impairment assessment involves significant
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Considering the adequacy of disclosures in respect of the
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assumptions and judgement, this is considered as a key audit
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investment in subsidiaries.
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matter
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The key audit matters
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How our audit addressed the key audit matter
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Inventories - projects (as described in note 8 of the standalone Ind AS financial statements)
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Assessment of net realisable value (NRV) of inventories:
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Our audit procedures to assess the net realisable value (NRV) of
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Inventories on construction of residential units comprising
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inventories included the following:
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ongoing and completed projects, initiated but unlaunched
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Enquiry with the Company's personnel to understand the
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projects and land stock, represents a significant portion of the
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basis of computation and justification for the estimated
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Company's total assets.
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recoverable amounts of the unsold units ("the NRV
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The Company recognises profit on the sale of each commercial
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assessment");
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& residential unit with reference to the overall profit margin
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Assessing the Company's valuation methodology for the
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depending upon the total cost incurred on the project. A project
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key estimates, data inputs and assumptions adopted in the
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comprises multiple units, the construction of which is carried out
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valuation. This involved comparing expected average selling
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over a number of years. The recognition of profit for sale of a unit,
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prices with published data such as recently transacted prices
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is therefore dependent on the estimate of future selling prices and
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for similar properties located in nearby vicinity of each
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construction costs. Further, estimation uncertainty and exposure
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project and the sales budget maintained by the Company;
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to cyclicality exists within long- term projects.
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While analyzing the expected average selling price, we have
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Forecasts of future sales are dependent on market conditions,
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performed a sensitivity analysis on the selling price and
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which can be difficult to predict and be influenced by political and
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compared this to the budgeted cost;
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economic factors.
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For our samples, obtained the fair valuation reports of such
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Considering the significance of the amount of carrying value of
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land parcels for assessing the valuation methodology, key
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inventories and the involvement of significant estimation and
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estimates and assumptions adopted in the valuation; and
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judgement in assessment of NRV, this is considered as a key audit
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Verifying the NRV assessment and comparing the estimated
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matter.
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construction costs to complete each development with the Company's updated budgets;
Obtaining a Register Valuer's certificate for a vast track of property becomes an extremely costly proposition for estimating NRV & hence, other methods are used.
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Business Advances to Subsidiaries companies (refer to note 12 and 45 of the standalone Ind AS financial statements)
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Recoverability of business advances to subsidiaries
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Recoverability of business advances to subsidiaries and
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companies:
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group companies:
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The carrying amount of the business advances to subsidiaries
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Our audit procedures included:
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companies represents 5.64% of the Company's total assets
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We reviewed the controls in place for issuing new business
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respectively.
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advances and evidenced the Board / CFO approval
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The Company has extended business advances to subsidiaries
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obtained. We obtained management's assessment of the
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companies that are assessed for recoverability at each period end.
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recoverability of the business advances, which includes cash
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The company has given total loans & advances of ' 7169.72 lakh.
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flow projections over the duration of the business advances.
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Out of this ' 6622.83 lakh are business advances to subsidiaries
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These projections are based on underlying property
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companies. ' 506.56 lakh are for purchase of land on behalf of
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development appraisals;
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the company given to others and ' 0.40 lakh other miscellaneous
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We tested cash receipts received in relation to these business
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advances at 31st March 2023.
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advances during the year through bank statement; and
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Due to the nature of the business in the real estate industry, the
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We have obtained independent confirmations to ensure
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Company exposed to risk in respect of the recoverability of the
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completeness and existence on test check basis of business
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business advances granted to the aforementioned related parties.
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advances held by related parties as on 31st March 2023.
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There is also judgment involved as to the recoverability of the
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During the last year advances were ' 29443.38 lakhs. They
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working capital and project specific business advances, which rely on a number of property developments being completed over the time-period specified in agreements.
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got reduced to ' 6622.83 lakh. Thus, recovery is not an issue.
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The key audit matters
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How our audit addressed the key audit matter
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Related party transactions (as described in note 44 of the standalone Ind AS financial statements)
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The Company has undertaken transactions with its related parties
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Our procedures / testing included the following:
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in the ordinary course of business at arm's length. These include making new or additional investments in its subsidiaries; lending loans to related parties; sales and purchases to and from related parties, etc. as disclosed in note 44 to the standalone Ind AS
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Obtained and read the Company's policies, processes and procedures in respect of identifying related parties, obtaining approval, recording and disclosure of related party transactions.
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financial statements.
We identified the accuracy and completeness of the related party transactions and its disclosure as set out in respective notes to the standalone Ind AS financial statements as a key audit matter due to the significance of transactions with related parties and regulatory
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Read minutes of shareholder meetings, board meetings and minutes of meetings of those charged with governance in connection with Company's assessment of related party transactions being in the ordinary course of business at arm's length.
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compliances thereon, during the year ended 31 March 2023.
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Tested related party transactions with the underlying contracts, confirmation letters and other supporting documents.
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Agreed the related party information disclosed in the financial statements with the underlying supporting documents, on a sample basis.
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Evaluation of uncertain tax positions
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The Company is subject to periodic challenges by local tax
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Our
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audit procedures include the following substantive
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authorities on a range of tax matters during the normal course of procedures:
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business including direct and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions, consequently having an impact on related accounting and disclosures in the financial statements.
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Obtained understanding of key uncertain tax positions; and We along with our internal tax experts -0 Read and analysed select key correspondences, external legal opinions / consultations by management
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Refer Note 46 to the financial statements.
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for key uncertain tax positions;
0 Discussed with appropriate senior management and
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evaluated management's underlying key assumptions in estimating the tax provisions; and
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0 Assessed management's estimate of the possible
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outcome of the disputed cases.
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Information Other than the Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report, but does not include the consolidated financial statement, standalone financial statements and our auditors' report thereon. Our opinion on the standalone 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the 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.
Management's responsibility for the standalone 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 standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with relevant rules issued there under. 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.
In preparing the standalone financial statements, management and Board of Directors are responsible for assessing the Company's 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.
Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the standalone financial statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due 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 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 standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures 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 control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3X0 of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to standalone financial statements 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 management's 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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the standalone 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 financial statements, including the disclosures, and whether the standalone 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 financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure 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 the Companies (Auditor's Report) Order, 2020 ("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.
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 beliefs were necessary for the purposes of our audit;
b. I n our opinion proper books of accounts as required by Law have been kept by the Company so far as it appears from our examinations of those books;
c. The Balance Sheet, Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this report are in agreement with the relevant books of account;
d. In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with relevant rules issued there under;
e. On the basis of written representations received from the directors and on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2023 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 financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure - B.
g. With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act, as amended, In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
h. With respect to the other matters to be included in the Auditor'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 and according to the explanations given to us:
i. The company has disclosed the impact of pending litigations as at 31st March, 2023 on its financial position in its standalone financial statements as referred to in Note No. 46 [A to G] to the standalone financial statements.
ii. The company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2023.
iv. (a) The Management has represented that,
to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any
guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The Management has represented, that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, and based on the test checks carried out by the auditor, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement. (Refer note no. 52)
v. During the year, the company has not declared or paid any interim or final dividend. Hence, the question of payment of dividend in accordance with section 123 of the Act does not arise.
As stated in note no. 61 to the standalone Ind AS financial statements, the Board of Directors of the company have proposed final dividend for the year which is subject to the approvals of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the company with effect from April 1st, 2023, and accordingly, reporting under rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31st, 2023.
FOR, J M PARIKH & ASSOCIATES
CHARTERED ACCOUNTANTS FRN:- 118007W
JATIN PARIKH
PARTNER
PLACE:- AHMEDABAD MEMBERSHIP NO.:- 033811
DATE :- 09/05/2023 UDIN: 2303381 1BGXGZF3444
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