We have audited the accompanying standalone financial statements of Puravankara Limited ("the Company"), which includes its 4 partnership entities, which comprise the Balance sheet as at March 31 2024, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of material accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of reports of other auditors on separate financial statements and on the other financial information of the partnership entities, the aforesaid standalone financial statements give the information required by the Companies Act, 2013, as amended ("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 March 31, 2024, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards 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 financial statements under the provisions of the Act and the Rules thereunder, 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 audit opinion on the standalone financial statements.
Emphasis of Matter We draw attention to:
i) Note 38(v) to the accompanying standalone financial statements in connection with certain ongoing legal proceedings related to property, income tax search and other matters. Pending resolution of the legal proceedings and based on legal opinions obtained by the management, no provision has been made towards any claims and the underlying assets are classified as good and recoverable in the accompanying standalone financial statements.
ii) Note 40(v) to the accompanying standalone financial statements in connection with transactions entered into by the Company and its subsidiary entities with a related party during the current year without prior approval of its shareholders as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Pending final outcome of the matter stated in the said note, no further adjustments have been made in the accompanying standalone financial statements.
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2024. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.
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Key audit matters
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How our audit addressed the key audit matter
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Recognition of Revenue from Contract with Customers (as described in Note 25 and 39 of the standalone financial statements)
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The Company applies Ind AS 115 for recognition of revenue
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Our audit procedures included, among others, the following:
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from real estate projects. The revenue from real estate
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We have read the accounting policy for revenue
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projects is recognised at a point in time upon the Company
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recognition and assessed compliance of the policy in
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satisfying its performance obligation and the customer
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terms of principles enunciated under Ind AS 115.
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obtaining control of the underlying asset, which involves
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We assessed the management evaluation of determining
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significant estimates and judgement.
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revenue recognition from sale of real estate inventory
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For revenue contract forming part of Joint Development
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property at a point in time in accordance with the
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Arrangements ('JDA') that are not jointly controlled
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requirements under Ind AS 115.
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operations, the revenue from the development and transfer of
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We obtained and understood the revenue recognition
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constructed area/revenue share with a corresponding land/
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process and performed test of controls over revenue
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development right received by the Company is measured at
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recognition including determination of point of transfer
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the fair value of the estimated construction service rendered by the Company to the land owner under JDA. Such revenue
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of control, completion of performance obligation and amount of estimated construction service under JDA, on
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is recognised over a period of time in accordance with the requirements of Ind AS 115.
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a sample basis.
We performed test of details, on a sample basis, and tested
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For contracts involving sale of real estate inventory property,
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the underlying customer/JDA contracts, evidencing the
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the Company receives the consideration in accordance with
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point of transfer of control of the asset to the customer
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the terms of the contract in proportion of the percentage
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based on which the timing of revenue recognition and
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of completion of such real estate project and represents payments made by customers to secure performance
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completion of performance obligation are determined.
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obligation of the Company under the contract enforceable by
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We obtained the joint development agreements
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customers.
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entered into by the Company and compared the ratio of constructed area/ revenue sharing arrangement between
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Application of Ind AS 115 involves significant judgment
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the Company and the landowner as mentioned in the
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in determining when 'control' of the property underlying
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agreement to the computation statement prepared by the
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the performance obligation is transferred to the customer. Further, for revenue contract
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management, on a sample basis.
We obtained and tested the computation of the amount of
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forming part of JDA, significant estimate is made by the
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the estimated construction service under JDA, on sample
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management in determining the fair value of the underlying revenue.
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basis.
We tested the computation for recognition of revenue over
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As the revenue recognition involves significant estimates and
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a period of time for revenue contracts forming part of JDA
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judgement, we regard this as a key audit matter.
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and management's assessment of stage of completion of projects and project cost estimates on a test check basis.
We assessed the disclosures made by management in compliance with the requirements of Ind AS 115.
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Key audit matters
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How our audit addressed the key audit matter
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Recoverability of the carrying value of inventory and land advances/deposits (as described in Note 08, 10 and 13 of the Standalone financial statements)
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As at March 31, 2024, the carrying value of the inventory of real estate projects is Rs.5,013.27 crores and land advances/ deposits of Rs. 299.73 crores.
The inventories are carried at the lower of cost and Net Realisable Value (NRV). The determination of the NRV involves estimates based on prevailing market conditions and taking into account the estimated future selling price, cost to complete projects and selling costs.
Deposits paid under joint development arrangements, in the nature of nonrefundable amounts, are recognised as land advance under other assets and on the launch of the project, the same is transferred as land stock under inventories. Further, advances paid by the Company to the seller/ intermediary towards outright purchase of land is recognised as land advance under other assets during the course of transferring the legal title to the Company, whereupon it is transferred to land stock under inventories. The aforesaid deposits and advances are carried at the lower of the amount paid/payable and net recoverable value, which is based on the management's assessment including the expected date of commencement and completion of the project and the estimate of sale prices and construction costs of the project.
We identified the assessment of the carrying value of inventory and land advances/deposits as a key audit matter due to the significance of the balance to the financial statements as a whole and the involvement of estimates and judgement in the assessment.
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Our procedures in assessing the carrying value of the inventories/land advances/deposits included, among others, the following:
We read and evaluated the accounting policies with respect to inventories/land advances/deposits.
We assessed the Company's methodology applied in assessing the carrying value including current market conditions, applied in assessing the net realizable value, launch of the project, development plan and future sales.
We obtained and tested the computation involved in assessment of carrying value and the net realisable value/ net recoverable value on test check basis.
We enquired from the management regarding the project status and verified the underlying documents for related developments in respect of the land acquisition, project progress and expected recoverability of advances paid towards land procurement (including deposits paid under JDA), on test check basis.
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Recoverability of carrying value of Investments and loans made in subsidiaries, associate and joint venture entities (as described in Note 06 and 07 of the Standalone financial statements)
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As at March 31,2024, the carrying values of Company's investment in subsidiary, joint venture and associate entities amounted to Rs. 351.17 crores. Further, the Company has granted loans to its subsidiaries, joint ventures and associates and the outstanding amount as at March 31, 2024 is Rs. 629.77 crores
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Our procedures in assessing the impairment of the investment and loans included, among others, the following:
We read and evaluated the accounting policies with respect to investment and loans.
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Key audit matters
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How our audit addressed the key audit matter
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Management reviews on a periodical basis whether there are any indicators of impairment of such investments and loans.
For cases where impairment indicators exist, management estimates the recoverable/realisable amounts of the investments, being higher of fair value less costs of disposal and value in use. Significant judgements are required to determine the key assumptions used in determination of fair value / value in use.
The loans are carried at the lower of the carrying value and net recoverable value, which is based on the management’s assessment of recoverability of loans.
The management has reassessed its future business plans and key assumptions as at March 31,2024 while assessing the adequacy of carrying value of the investment and loans made by the Company in its Subsidiaries, associates and joint venture entities (collectively referred to as "component entities").
As the impairment assessment involves significant assumptions and judgement, we regard this as a key audit matter.
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We examined the management assessment in determining whether any impairment indicators exist.
We assessed the Company’s methodology applied in assessing the carrying value of investments and loans.
We assessed the Company’s valuation methodology and assumptions based on current economic and market conditions, applied in determining the recoverable/ realisable amount.
We compared the recoverable/realisable amount of the investment and loans to the carrying value in books.
We read the most recent audited financial statements of component entities and performed inquiries with management on the project status and future business plan of component entities.
We assessed the disclosures made in the financial statements regarding investments and loans.
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Other Information
The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone financial statements and our auditor’s 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 such other information is materially inconsistent with the 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.
Responsibilities of Management for the Standalone Financial Statements
The Company’s Board of Directors is 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 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 the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 the 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 is 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.
Those charged with governance are 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(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 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.
© For the partnership entities included in the standalone financial statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.
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 for the financial year ended March 31, 2024 and are therefore the key audit matters. We describe these matters in our auditor’s 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.
Other Matter
The accompanying standalone financial statements
include the Company’s share of net profit/(loss) after
tax in respect of 4 partnership entities, whose financial
statements and other financial information include the Company’s share of net profit/(loss) after tax Rs. (2.62) crore and total comprehensive income of Rs. (2.62) crore for the year ended March 31, 2024, as considered in the accompanying standalone financial statements, whose financial statements have been audited by their respective other auditors.
The reports of such other auditors on financial statements of these partnership entities have been furnished to us and our opinion on the accompanying financial statements, in so far as it relates to the amounts and disclosures included in respect of these partnership entities, is based solely on the report of such other auditors.
Our opinion on the financial statements is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.
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, based on our audit and on the consideration of report of the other auditors on separate financial statements and the other financial information of the partnership entities, as noted in the 'Other Matter’ paragraph, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, to the extent applicable, 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 except for the matters stated in the paragraph 2(j) (vi) below on reporting under Rule 11(g);
(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity 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 Accounting Standards specified under Section 133 of the Act, read with
Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) The matter described in Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;
(f) On the basis of the written representations received from the directors as on March 31, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024 from being appointed as a director in terms of Section 164 (2) of the Act;
(g) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 2(b) above on reporting under Section 143(3)(b) and paragraph 2(j)(vi) below on reporting under Rule 11(g).
(h) With respect to the adequacy of the internal financial controls with reference to standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;
(i) I n our opinion, the managerial remuneration for the year ended March 31, 2024 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(j) 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 on its financial position in its standalone financial statements - Refer Note 38(b) to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any provision for 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.
iv. a) The management has represented that,
to the best of its knowledge and belief,
other than as disclosed in the note 44(v) to the standalone financial statements, no funds 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 persons or entities, including foreign entities ("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, as disclosedin the note 44(vi) to the standalone financial statements, 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, 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; and
c) Based on such audit procedures performed that were considered reasonable and appropriatein the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. I n respect of interim dividend declared and paid during the year by the Company, except for not transferring amount of dividend to separate bank account within the timeline specified in subsection (4) of section 123 of the Act as described in note 19 to the standalone financial statements, declaration and payment of dividend is in accordance with section 123 of the Companies Act 2013.
vi. Based on our examination which included test checks, the Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the accounting software except that, audit trail feature is not enabled for certain changes made, if any, using certain access rights, as described in note 46 to the standalone financial statements. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of the accounting software.
For S.R. BATLIBOI & ASSOCIATES LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
per Sudhir Kumar Jain
Partner
Membership Number: 213157
UDIN:242131 57BKFNHH8055
Place: Bengaluru
Date: May 23, 2024
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