We have audited the standalone financial statements of Prajay Engineers Syndicate Limited(“the Company) ,Which
comprise the standalone balance sheet as at 31 March 2025, the standalone statement of profit and loss (including other
comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows for the
year than ended, and notes to the standalone financial statements, including a summary of the significant accounting
policies and other explanatory information (hereinafter referred to as “Standalone Financial Statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone
financial statement 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 recognition and measurement principles laid down in the applicable
Indian Accounting Standards, and other accounting principles generally accepted in India, of the state of affairs of the
Company as at 31 March 2025, its profit/loss and other comprehensive income, changes in equity and its cash flows for
the year ended on the 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 Auditors’ 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 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.
Emphasis of Matters
We draw attention to below mentioned Notes to standalone annual financial results :
a. Note 41 relating to the Hon’ble NCLT, Hyderabad bench order referring the matter for resolution by way of mediation
to the International Commercial Arbitration and Mediation Centre (IAMC), Hyderabad.
In furtherance to the mediation proceedings pertaining to the disputes between the Investor Entities (i.e. White Stock
Limited & Belclare Limited) and Prajay Entities including Prajay Engineers Syndicate Limited (The Company), The
Settlement Agreement has been executed amongst and by the parties, under the auspices of International Arbitration and
Mediation Centre, (IAMC) Hyderabad and the filing of the compromise terms before the National Company Law Tribunal
(NCLT), Hyderabad has been completed. The cases filed by the Investor Entities before the Hon’ble NCLT Bench,
Hyderabad Bench have accordingly been disposed off.
b. The Government of Andhra Pradesh (Youth Advancement Tourism & Culture Department, now the Government of
Telangana) and the company along with its subsidiary M/s Secunderabad Golf & Leisure Resorts Private Limited, a
special purpose company to develop Golf Course, had entered into Lease Agreement and Construction & Management
agreement. Subsequently, for the issues that arose between the company and the Tourism Department, the Company
invoked the Arbitration clause as per the Agreements and the Hon’ble High Court vide its order dated 28.07.2022
appointed Hon’ble S.M.Rafee (retired District judge) as the Arbitrator in Arbitration Application No.86 of 2022. The
Arbitration proceedings are in progress.
c. Note 39(a) of the Standalone Financial Statements, in respect of trade receivable considered good include an amount
of Rs.8595.11 lakhs due from customers which are outstanding for more than six months. We are unable to
comment on the realization of these receivables in the absence of conformation from the concerned parties. An
amount of Rs.1246.96 Lakhs is set aside towards provision for trade receivables considered as doubtful. During the year
the company has written of bad and doubtful debts to the tune of Rs.1026.22 lakhs.
d. Note 39(b) of the standalone financial statements, in respect of Loans & Advances amounting to Rs.6696.79 lakhs
towards purchase of Land/Development towards certain project of long term nature, and an amount of Rs.956.93
Lakhs given to suppliers, etc. outstanding. We are unable to comment on the realization of
these advances. An amount of Rs.700 Lakhs is set aside towards provision for Advances considered as doubtful.
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgement, 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.
Revenue recognition (refer note 3.1 to the standalone financial statements)
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The key Audit Matter
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How the matter was addressed in our audit
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Revenue from sale of residential and commercial units
represents 75.13% of the total revenue from operations of
the company.
Revenue recognition - Fixed price development
contracts
The Company inter alia engages in fixed - price
development contracts, where, revenue is recognized using
the percentage of completion computed as per the input
method based on management’s estimate of contract costs (
Refer Note 3.1 to the standalone financial
statements).
Measurement of revenue recorded over time which is
dependent on the estimates of the costs to complete
Revenue recognition involves significant estimates related
to measurement of costs to complete for the projects.
Revenue from projects is recorded based on management’s
assessment of the work completed, costs incurred and
accrued and the estimate of the balance costs to complete.
Due to the inherent nature of the projects and significant
judgment involved in the estimate of costs to complete,
there is risk of overstatement or understatement of revenue.
At Year-end a significant amount of work in progress
related to these contracts is recognized on the balance sheet.
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Our audit procedures on revenue recognition included the
following;
• Evaluating that the company’s revenue recognition
accounting policies are in line with the applicable
Accounting standards and their application to the
key customer contracts including consistent
application; Sales cut-off procedures for
determination of revenue in the current reporting
period.
• Scrutinizing all the revenue journal entries raised
throughout the reporting period and comparing
details of a sample of these journals, Which met
certain risk-based criteria, with relevant underlying
documentation;
• Conducting site visits during the year for selected
projects to understand the scope and nature of the
projects and to assess the progress of the projects
and
• Considered the adequacy of the disclosures in note
2 & 3 to the standalone financial statement in
respect of the judgment taken in recognizing
revenue for residential and hospitality sector.
In addition, we have the performed the following
procedures:
Revenue recognition prior to receipt of OC / similar
approval and intimation to the customer
• Discussing and challenging key management
judgments in interpreting contractual terms
including obtaining in- house legal interpretations;
• Testing sample sales of units for projects with the
underlying contracts, completion status and
proceeds received from customers;
• Identified and tested operating effectiveness of key
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controls around approvals of contracts, milestone
billing, intimation of possession letters / intimation
of receipt of occupation certificate and controls
over collection from customers; and
• We have obtained confirmations, on a sample
basis, from major customers for selected projects to
confirm revenue recognized during the year end,
performing alternative procedures by comparing
details with contracts , collection details and other
underlying project related documentation for cases
where confirmations are not received.
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Measurement of revenue recorded over time which is
dependent on the estimates of the costs of complete
Compared, on a sample basis, revenue transactions
recorded during the year with the underlying contracts,
progress reports, invoices raised on customers and
collections in bank accounts and whether the related
revenue had been recognized in accordance with the
Company’s revenue recognition policies;
• Identification and testing operating effectiveness of
key controls over recording of actual costs incurred
for the projects;
• Review of the costs to complete workings,
comparing the costs to complete with the budgeted
costs and inquiring into reasons for variance; and
• Sighting approvals for changes in budgeted costs
with the rationale for the changes and assessment
of contract costs to determine no revenue nature
costs are taken to inventory.
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Inventories (refer note 11 to standalone financial statements)
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The key Audit Matter
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How the matter was addressed in our audit
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Inventories comprising of land, construction work in
progress, food & beverages represent 32.32% of the
Company’s total assets.
Assessing net realizable value
The Company recognizes profit on each sale by reference
to the overall project margin, which is the projected profit
percentage for a phase that may comprise multiple units
and can last a number of years. The recognition of profit is
therefore dependent on the estimate of future selling prices
and build costs including an allowance for risk. Further
estimation uncertainty and exposure to cyclicality exists
within the long term projects.
Forecasts of future sales are dependent on market
conditions, which can be difficult to predict and be
influenced by political and economic factors.
Inventory represents the capitalized project costs to date
less amounts expensed on sales by reference to the
aforementioned projections. It is held at the lower of cost
and net realizable value, the latter also being based on the
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Our audit procedures to assess the net realizable value
(NRV) of inventories included the following:
• Discussion with the management to understand the
basis of calculation and justification for the
estimated recoverable amounts of the unsold units
(“the NRV assessment”);
• Evaluating the design and implementation of the
Company’s internal controls over the NRV
assessment. Our evaluation included assessing
whether the NRV assessment was prepared and
updated by appropriate personnel of the Company
and whether the key estimates, including estimated
future selling prices and costs of completion for all
property development projects, used in the NRV
assessment, were discussed and challenged by
management as appropriate;
• Evaluating the management’s valuation
methodology and assessing the key estimates, data
inputs and assumptions adopted in the valuations,
which included comparing expected future average
selling prices with available market data such as
recently transacted prices for similar properties
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forecast for the project. As such inappropriate assumptions
in these forecasts can impact the assessment of the carrying
value of inventories.
Further, due to their materiality in the context of total assets
of the Company this is considered significant to our overall
audit strategy and planning.
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located in the nearby vicinity of each property
development project and the sales budget plans
maintained by the Company;
• Re-performing the calculations of the NRV
assessment and comparing the estimated
construction costs to complete each development
with the Company’s updated budgets.
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Land Advances - (refer note 10 to the standalone financial statements)
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The key Audit Matter
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How the matter was addressed in our audit
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Assessment of recoverability of land advances
Land advance represents a sizeable portion of the
Company’s total assets.
Land advance represents the amount paid towards
procurement of land parcels to be used in the future, for
construction of residential projects. These advances are
carried at cost less impairment losses, if any. These land
advance will be converted into land parcels as per the terms
of the underlying contract under which these land advances
have been given. To assess the carrying value of land
advances, these advances are tested for recoverability by
the Company by comparing the valuation of land parcels in
the same area for which land advances have been given.
Further due to their materiality in the context of total assets
of the company this is consider significant to our overall
audit.
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Our audit procedures to assess the recoverability of land
advances included the following;
• For our samples, verified the underlying
agreements in possession of the Company, based
on which land advances were given;
• Discussion with the management to understand
their plan for conversation of these land advances
into land parcels; and
• For our samples, verified the valuation reports of
land stock.
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Investment in subsidiaries and loans to group companies (refer to note 8, 9 and 10 to the standalone financial
statements)
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The key Audit Matter
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How the matter was addressed in our audit
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The carrying amount of the investments in subsidiaries,
held at cost represents 12.79%, to associate, represents
5.18% of the Company’s total assets respectively.
Recoverability of investment in subsidiary, joint
ventures and an associate
The Company has investments in subsidiaries, joint
ventures and an associate company which are considered to
be associated with significant risk in respect of valuation of
such investments. These investments are carried at cost less
any diminution in value of such investments.
In addition, considering the materiality of the investments
in subsidiaries, joint ventures and an associate, vis-a-vis the
total assets of the Company, this is considered to be
significant to our overall audit strategy and planning.
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Recoverability of investment in subsidiary, joint
ventures and an associate
Our audit procedures included:
• Comparing the carrying amount of investments
with the relevant subsidiaries, joint ventures and
associate balance sheet to identify whether their net
assets, being an approximation of their minimum
recoverable amount, were in excess of their
carrying amount and assessing whether those
subsidiaries, joint ventures and an associate have
historically been profit-making;
• For the investments where the carrying amount
exceeded the net asset value, comparing the
carrying amount of the investment with the
projected profitability based on approved business
plans of the subsidiaries joint ventures and an
associate;
• Considering the adequacy of disclosures in respect
of the investment in subsidiaries, joint ventures and
an associate.
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The key Audit Matter
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How the matter was addressed in our audit
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Recoverability of loans to subsidiaries and joint
ventures
The Company has extended loans to joint ventures and
subsidiaries that are assessed for recoverability at each
period end.
Financial assets, which include current loans to joint
ventures and subsidiaries aggregated to Rs 1646.07 lakhs at
31 March 2025.
Due to the nature of the business in the real estate industry,
the Company is exposed to heightened risk in respect of the
recoverability of the loans and advances granted to the
aforementioned related parties.
There is also judgment involved as to the recoverability of
the working capital and project specific loans, Which rely
on a number of property developments being completed
over the time period specified in agreements.
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Recoverability of loans to subsidiaries and joint
ventures
Our procedures included:
• We reviewed the controls in place for issuing new
loans and evidenced the Board/MD approval
obtained. We obtained management’s assessment
of the recoverability of the loans, which includes
cash flow projections over the duration of the
loans. These projections are based on underlying
property development appraisals;
• We tested cash receipts received in relation to these
loans during the year through to bank statement;
and
We have obtained independent confirmations to ensure
completeness and existence of loans and advances held by
related parties as on 31 March 2025.
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Other Information
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 standalone financial
statements and our auditors’ report there on.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form
of assurance conclusion there on.
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 statement 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 Management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act,
with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs,
profit/loss and other comprehensive income, changes in equity and cash flow 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. 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 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.
Auditors’ Responsibility 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 auditors’ 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(3) (i) of the Act, we are also responsible for expressing our
opinion on whether the Company has adequate internal financial controls with reference to 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 auditor’s 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
As required by the Companies (Auditor’s Report) Order, 2020 (‘the Order’), issued by the Central Government of India in
terms of Section 143(11)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.
(A) 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 purposes 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;
(c) The standalone balance sheet, the standalone statement of profit and loss (including other comprehensive
income), the standalone statement of changes in equity and the standalone statement of cash flows dealt
with by this report are in agreement with the books of account;
(d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards
(Ind AS) specified under Section 133 of the Act;
(e) On the basis of the written representations received from the directors as on 31 March 2025 taken on
record by the Board of Directors, none of the directors is disqualified as on 31 March 2025 from being
appointed as a director in terms of Section 164 (2) of the act; and
(f) With respect to the adequacy of the internal financial controls with reference to the standalone financial
Statements of the Company and the operating effectiveness of such controls, refer to our separate Report
in “Annexure B”.
(B) 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 as at 31 March 2025 on its financial position
in
Its standalone financial statements - Refer Note 34 & 41 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 31 March 2025; and
(iv) a) The management has represented that , to the best of its knowledge and belief, no funds have been
advanced or loaned or invested (either from borrowing funds or share premium or any other sources or
Kind of funds) by the Company to or in any other person or entities, including foreign entities
(“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the
Intermediary shall:
• Directly or indirectly lend or invest in other persons or entities identified in any manner
whatsoever (“Ultimate Beneficiaries”) by or on behalf of the company or
• Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
b) The Management has represented that to the best of its knowledge and belief, no funds have been
received by the Company from any persons or entities, including foreign entities(“Funding Parties”),
with the Understanding, whether recorded in writing or otherwise, that the Company shall:
• Directly or indirectly lend or invest in other persons or entities identified in any manner
whatsoever (“Ultimate Beneficiaries”) by or on behalf of the Funding Party or
• Provide any guarantee, security or the like from or on behalf of the Ultimate
Beneficiaries.
c) Based on such audit procedures as considered reasonable and appropriate in the circumstances,
nothing has come to our notice that has caused us to believe that the representations under sub-clause
(iv) (a) and (iv) (b) contain any material mis-statement.
(v) . During the year, the company has not declared any dividend.
(vi) . Based on our examination, which included test checks, the company has used accounting software for
maintaining its books of account for the financial year ended March 31, 2025 which has a feature of
recording audit trail (edit log) facility and the same has been operated throughout the year for all
relevant transactions recorded in the software. Further, during the course of our audit we did not come
across any instance of the audit trail feature being tampered with and the audit trail has been preserved
by the company in accordance with the statutory requirement for record retention.
(C) With respect to the matter to be included in the Auditor’s Report under Section 197(16) of the Act:
In our opinion and according to the information and explanations given to us, the remuneration paid by the
Company to its directors during the current year is in accordance with the provisions of Section 197 of the act. The
Remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry
of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be
commented upon by us.
For and on behalf of
Karumanchi & Associates
Chartered Accountants
Firm’s registration number : 001753S
Sd/-
N.Gopala Krishna
Partner
M.No : 211124
UDIN No : 25211124BMOAZV8573
Place : Hyderabad
Date : 28.05.2025
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