To the Members of Godrej Properties Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
Opinion
We have audited the standalone financial statements of Godrej Properties Limited (the "Company”) which comprise the standalone balance sheet as at 31 March 2023, and the standalone statement of profit and loss (including other comprehensive income), standalone statement of changes in equity and standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information in which are incorporated returns from branches in Singapore, Qatar and Dubai (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 statements give the information required by the Companies Act, 2013 ("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 31 March 2023, and its profit and 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 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 opinion on the standalone financial statements.
Key Audit Matter(s)
Key audit matters 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.
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Revenue recognition
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(See note 30 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 Company's most significant revenue streams involve sale of residential, commercial units and plotted and other lands representing 68.58% of the total revenue from operations of the Company.
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Our audit procedures included following:
• Obtaining and understanding revenue recognition process including identification of performance obligations and determination of transfer of control of the asset underlying the
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Revenue is recognised post transfer of control to
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performance obligation to the customer.
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customers for the consideration (transaction price)
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• Evaluating the design and implementation and tested operating
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which the Company expects to receive in exchange
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effectiveness of key internal controls around approvals of
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for those units.
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contracts, milestone billing, intimation of receipt of occupation
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The trigger for revenue recognition is normally completion of the project or receipt of approvals on completion from relevant authorities, post which the contract becomes non-cancellable. The Company records revenue, over time till the actual possession to the customers, or on actual possession to the customers, as determined by the terms of contract
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certificate, recording of project cost and controls over collection from customers .
• Evaluating the accounting policies adopted by the Company for revenue recognition to check those are in line with the applicable accounting standards and their consistent application to the significant sales contracts.
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with customers.
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• Testing timeliness of revenue recognition by comparing individual sample sales transactions to underlying contracts.
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The risk for revenue being recognised for arrangements that do not meet the definition of a contract or do not exist is considered as a key audit
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• Conducting site visits during the year for selected projects to understand the scope, nature and progress of the projects.
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matter.
Measurement of revenue recorded over time
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• Evaluating revenue overstatement or understatement by assessing Company's key judgments in interpreting contractual terms. Determining the point in time at which the
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which is dependent on the estimates of the costs
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control is transferred by evaluating Company's in-house legal
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to complete
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interpretations of the underlying agreements i.e. when contract
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Revenue recognition involves significant estimates
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becomes non-cancellable.
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related to measurement of costs to complete for
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• Requesting confirmations, on a sample basis for trade
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the projects. Revenue from projects is recorded
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receivable and advances from customer. In case of non-receipt
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based on the Company's assessment of the work
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of confirmations, we have performed alternative procedures by
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completed, costs incurred and accrued and the
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comparing details with contracts, collection / invoicing details
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estimate of the balance costs to complete.
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and other underlying project related documentation.
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Considering the significant estimate involved
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• Assessing the costs incurred and accrued to date on the balance
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in measurement of revenue and risk of revenue
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sheet by examining underlying invoices and signed agreements
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being recognised in an incorrect period, we have
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on a sample basis. Assessing contract costs to check no costs
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considered measurement of revenue as a key audit
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of revenue nature are incorrectly recorded in the balance sheet.
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matter.
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• Comparing, 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. Also, checked the related revenue had been recognised in accordance with the Company's revenue recognition policies.
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• Comparing the costs to complete workings with the budgeted costs and inquiring for variance.
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• Sighting Company's internal approvals, on sample basis, for changes in budgeted costs along with the rationale for the changes.
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• Scrutinising 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.
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• Considering the adequacy of the disclosures in the standalone financial statements in respect of the judgments taken in recognising revenue for residential, commercial units and plotted and other lands units in accordance with Ind AS 115.
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Investment in subsidiaries, joint ventures and an associate and loans/financial instruments to subsidiaries
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and joint ventures
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(See Note 6, 7, 9, 18 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,
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Recoverability of investments in subsidiaries, joint
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joint ventures and an associate held at cost less
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ventures and an associate
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impairment represents 8.16% of the Company's total assets. The loans/financial instruments to subsidiaries
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Our audit procedures included:
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and joint ventures represents 34.55% of the Company's total assets.
Recoverability of investments in subsidiaries,
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• Evaluating design and implementation and testing operating effectiveness of controls over the Company's process of impairment assessment and approval of forecasts.
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• Assessing the valuation methods used, financial position of
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joint ventures and an associate
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the subsidiaries, joint ventures and an associate to identify
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The Company's investments in subsidiaries, joint
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excess of their net assets over their carrying amount of
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ventures and an associate are carried at cost less any
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investment by the Company and assessing profit history of
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diminution in value. The investments are assessed for
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those subsidiaries, joint ventures and an associate.
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impairment at each reporting date.
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• For the investments where the carrying amount exceeded
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The impairment assessment involves the use of
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the net asset value, understanding from the Company
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estimates and judgements. The identification of
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regarding the basis and assumptions used for the projected
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impairment event and the determination of an
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profitability.
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impairment charge also require the application of significant judgement by the Company. The judgement,
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• Verifying the inputs used in the projected profitability.
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in particular, is with respect to the timing, quantity and
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• Testing the assumptions and understanding the forecasted
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estimation of projected cash flows of the real estate
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cash flows of subsidiaries, joint ventures and an associate
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projects in these underlying entities.
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based on our knowledge of the Company and the markets in
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In view of the significance of these investments
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which they operate.
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and above, we consider valuation / impairment of
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• Assessing the comparability of the forecasts with historical
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investments in subsidiaries, joint ventures and an
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information.
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associate to be a key audit matter.
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• Analysing the possible indications of impairment and
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Recoverability of loans/financial instruments to subsidiaries and joint ventures
The Company has extended loans/financial
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understanding Company's assessment of those indications.
• Considering the adequacy of disclosures in respect of the investments in subsidiaries, joint ventures and an associate.
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instruments to joint ventures and subsidiaries. These
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Recoverability of loans/financial instruments to
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are assessed for recoverability at each period end.
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subsidiaries and joint ventures
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Due to the nature of the business in the real estate industry, the Company is exposed to heightened risk
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Our procedures included:
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in respect of the recoverability of the loans/financial
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• Evaluating the design and implementation and testing
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instruments granted to the aforementioned parties. In
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operating effectiveness of key internal controls placed around
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addition to nature of business, there is also significant
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the impairment assessment process of the recoverability of
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judgment involved as to the recoverability of the
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the loans/financial instruments.
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working capital and project specific loans/
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• Assessing the net worth of subsidiaries and joint ventures
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financial instruments. This depends on property
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on the basis of latest available financial statements.
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developments projects being completed over the time
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• Assessing the controls for grant of new loans/financial
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period specified in agreements.
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instruments and sighting the Board approvals obtained. We
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We have identified measurement of loans/ financial
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have tested Company's assessment of the recoverability
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instruments to subsidiaries and joint ventures as
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of the loans/financial instruments, which includes cash
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key audit matter because recoverability assessment
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flow projections over the duration of the loans/ financial
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involves Company's significant judgement and estimate.
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instruments. These projections are based on underlying property development appraisals.
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• Tracing loans/financial instruments advanced /repaid during the year to bank statement.
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• Obtaining independent confirmations to assess completeness and existence of loans/financial instruments given to subsidiaries and joint ventures as on 31 March 2023.
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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 annual report, but does not include the financial statements and auditor's report(s) thereon. The annual report is expected to be made available to us after the date of this auditor's report.
Our opinion on the standalone financial statements does not cover the other information and we will 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 identified above when it becomes available 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.
Management's and Board of Directors' Responsibilities 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 flows 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 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 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, the 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The 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 professionaljudgment 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 the Management and Board of Directors.
• Conclude on the appropriateness of the Management and Board of Directors use of the going concern basis of accounting in preparation of standalone financial statements 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 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.
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 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.
2(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 and proper returns adequate for the purposes of our audit have been received from branches not visited by us.
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 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 2023 taken on record by the Board of Directors, none of the directors is disqualified as on 31 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 with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B”.
(iii) Based on the audit procedures performed that have been 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 (i) and (ii) of Rule 11(e), as provided under (i) and (ii) above, contain any material misstatement.
e. The Company has neither declared nor paid any dividend during the year.
f). As proviso to rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Company only with effect from 1 April 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is not applicable.
(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
(B) 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, in our opinion and to the best of our information and according to the explanations given to us:
a. The Company has disclosed the impact of pending litigations as at 31 March 2023 on its financial position in its standalone financial statements -Refer Note 29 and 51 to the standalone financial statements.
b. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
c. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
d. (i) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the Note 57 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 person(s) or entity(ies), 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 by or on behalf of the Company ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(ii) The management has represented that, to the best of its knowledge and belief, as disclosed in the Note 57 to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), 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 by or on behalf of the Funding Parties ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
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 B S R & Co. LLP
Chartered Accountants Firm's Registration No: 101248W/W-100022
Mansi Pardiwalla
Partner
Place: Mumbai Membership No: 108511
Date: 03 May 2023 ICAI UDIN: 23108511BGYYGC2089
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