PVP Ventures Limited
Report on the Audit of the Standalone Financial StatementsOpinion
We have audited the accompanying Standalone Financial Statements of PVP Ventures Limited (hereinafter referred to as "the Company"), which comprise the Balance Sheet as at 31 March 2024, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity, for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the 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 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards ("Ind AS") prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standard) Rules, 2015, as amended, ("the Rules") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, and its profit, total comprehensive income, its cash flows and 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) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibility 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 ("ICAI") 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 made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Financial Statements.
Emphasis of Matter
a) We draw attention to Note No. 51 & 52 of the Standalone Financial Statements w.r.t the interest free secured loan
provided to New Cyberabad City Projects Private Limited ("NCCPL"), erstwhile subsidiary and currently a related party of the Company and the related accounting. An amount of Rs. 21,843.49 Lakhs is outstanding from the said party as at 31 March 2024. The Management is confident of recovering the loan within the extended tenor duly factoring in the future business plans of the related party, despite the challenges associated w.r.t recoverability of the loan, enforceability and market value of security as highlighted in the said note. Accordingly, the Management believes that there is no necessity to create an allowance for expected credit loss.
The provisions of Section 186(1) & 188 of the Act have been complied with to the extent applicable.
Based on internal assessment/ professional opinion received in this regard, the Company believes that the other provisions of Section 186 of the Act in respect to loans, making investments, providing guarantees and securities are not applicable to the Company as it is involved on the business of providing infrastructural facilities.
Further, the Company has complied with provisions of Section 185 of the Act in respect of loans to entities in which director is interested.
Our opinion is not modified in respect of above matter.
b) We draw attention to Note No. 48 of the Standalone Financial Statements, which is related to the sale of Company's erstwhile subsidiary NCCPL to Picturehouse Media Limited ("PHML"), related party of the Company, for an amount of Rs. 3,256.44 Lakhs out of which an amount of Rs. 2,880 Lakhs is due to be received from PHML as at 31 March 2024 stipulated to be recovered within a maximum period of 10 years. As stated in the said note, the Management is confident of receiving the amount within the stipulated/agreed period and there is no necessity to create an allowance for expected credit loss despite the related party having negative Net worth, continuing losses and no significant business activity being carried out by the said related party.
c) We draw attention to Note No. 50 of the Standalone Financial Statements, w.r.t acquisition of Humain Healthtech Private Limited ("HHT") from PV Potluri Ventures Private Limited ("PV Potluri"), related party of the Company for an amount of Rs. 2,249.60 Lakhs. As stated in the said note considering the future business
projections, estimated cash flows of the subsidiary and the support intended to be provided by the Company, the Management believes that no impairment is required to be provided against the aforesaid investment.
d) We draw attention to Note No. 35 of the Standalone Financial Statements w.r.t exceptional gain (net) amounting to Rs. 3,650.28 Lakhs for the year ended 31 March 2024 accounted pursuant to the divestment of subsidiaries.
e) We draw attention to Note No. 44.3 of the Standalone Financial Statements w.r.t the balance lying in escrow account pending fulfillment of the conditions stipulated in Joint development agreement. As stated in the said note, Management believes that same is required to be accounted upon fulfillment of conditions stipulated in the Joint development agreement.
f) We draw attention to Note No. 40.1(ii) of the Standalone Financial Statements w.r.t non-remittance of Income Tax liability for the financial year 2022-23 on account of challenges related to working capital and the corresponding interest cost accounted in the year ended
31 March 2024. However, the Management believes that the payment of outstanding tax liability along with the interest will be made upon receipt of advances from other joint developers/ receipt of interest free security deposit from a joint developer.
g) We draw attention to Note No. 39 of the Standalone Financial Statements w.r.t Income Tax appeals which have been filed w.r.t various tax matters and are pending adjudication with the appellate authorities. Based on professional advice, the Company believes that it has a good case to support its stand and no provision is required to be created in this regard.
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 of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our Report.
Key Audit Matter
Auditor's Response
Acquisition of Subsidiary
The Company has entered into a Share Purchase Agreement ("SPA") dated 06 October 2023 with PV Potluri Ventures Private Limited ("PV Potluri") and Humain Healthtech Private Limited ("HHT") for purchase of 100% of shares of HHT from PV Potluri, a related party for consideration which shall be discharged partly in cash and partly in shares of the Company. The consideration payable are as follows:
Principal audit procedures performed included the following:
• Obtained an understanding of the terms and conditions of the Share Purchase Agreement and mode of the consideration transferred.
• Obtained the Board Resolution passed at the Board Meeting approving the acquisition of HHT from PV Potluri.
• Obtained Valuation Report provided by an independent
Particulars Amount
(Rs. in Lakhs)
registered valuer for determining the valuation of business of HHT and the valuer's assessment associated with the determination of valuation of business of HHT and performed the following procedures:
» Conducted meetings and discussions with key Management to identify factors, if any, that should be taken into account in the analysis.
» Assessed the reasonableness of the valuation methodology considered by external valuer, appointed by the Management.
» Evaluated the valuer's assumptions used in determining the valuation of business of HHT.
Total Valuation (A)
4,004.58
Less: Debt outstanding towards related party - PV Potluri (B)
1,754.98
Total Consideration payable for Acquisition of HHT (C=A-B) (Investment)
2,249.60
Consideration payable in Cash (D)
691.80
Consideration paid by issue of Equity Shares of the Company (E=C-D)
1,557.80
As at the year ended 31 March 2024, the operations of HHT continue to face challenges such as significant reduction of actual sales and profit after tax, suspension of operations at one of its centers, etc.
However, being the first year of acquisition and based on
•
Performed comparison between the projected numbers
future business projections, estimated cash flows from HHT,
for the year ended 31 March 2024 in the valuation report
synergy benefit and support intended to be provided by the
obtained at the time of acquisition and actual numbers
Company, no provision has been created for impairment of
of HHT for year ended 31 March 2024 to assess the
investment in HHT for the year ended 31 March 2024.
reasonability of the estimate used for the valuation.
Given the significant level of judgement involved and the
Assessed the reasonableness of the Management
quantitative significance, we have determined this to be a
estimates and judgements used for preparation of future
key audit matter.
projections/ cash flow, business plans of HHT based on situations prevailing as at 31 March 2024.
Evaluated the appropriateness and adequacy of related disclosures in the Standalone Financial Statements.
Recoverability of Loan advanced to New Cyberabad City
Principal audit procedures performed included the
Projects Private Limited
following:
The Company had invested in 24,832; 22% Secured
Obtained and reviewed the Debenture Subscription
Redeemable Non-Convertible Debentures ("NCD") of Rs.
Agreement to understand the terms and conditions of
100,000 each issued by NCCPL, erstwhile subsidiary and
the NCD issuance, and the subsequent loan agreement
currently a related party of the Company.
detailing the conversion of the NCDs into a secured loan.
On 16 March 2015 the said investment of Rs. 24,832 lakhs in
Examined the charge documents filed and deposit of
debentures was converted to an interest free secured loan.
title deeds for the land given as security.
The loan was secured against the land and land development rights available with NCCPL which was originally repayable on 31 March 2017. Subsequently, the repayment period was extended by 10 years to 31 March 2027. A further extension of 1 year until 31 March 2028 was granted vide supplementary agreement dated 07 February 2024. The outstanding loan
Conducted discussions with the Management w.r.t NCCPL's plans to monetise the land bank by means of development of residential/ commercial properties and performed the physical verification of land/ properties in the vicinity.
amount as on 31 March 2024 is Rs. 21,843.49 Lakhs.
Assessed the reasonableness of Management's estimates
There are various challenges associated with the enforceability and market value of security resulting in challenges in recoverability of the loan advanced.
in determining the recoverable amount of the land by comparing the market value of a nearby land serving as a proxy to the land with development rights held by NCCPL.
Considering NCCPL's business plans to monetise the land banks by developing residential/ commercial properties, availability of market value of proxy land in the vicinity of the land over which development rights are available with
Obtained and reviewed the professional opinion obtained by the Company for non-applicability of provisions of Section 186 of the Act.
NCCPL, the Management believes that the amounts are fully
Obtained and reviewed Management Note on the
recoverable and there is no necessity to create an allowance
ongoing legal cases with Securities and Exchange Board
for expected credit loss.
of India ("SEBI") and Enforcement Directorate ("ED") w.r.t current status, recent developments etc. in relation to the land over which development rights are available with NCCPL as security for the loan advanced by the Company.
Assessed the reasonableness of the Management estimates and judgements used for determination of discount rate, tenor of loan for the purpose of accounting as per Ind AS - 109.
Recoverability of Sale Consideration from Picture House Principal audit procedures performed included the following:
Media Limited • Obtained an understanding of the terms and conditions The Company has entered into a SPA dated 06 October of the Share Purchase Agreement and mode of the 2023 with PHML, erstwhile subsidiary and currently a related consideration transferred. party for the Company, for sale of its 100% stake i.e. 81%
• Obtained the Board Resolution passed at the Board
held by it in its subsidiary NCCPL for consideration payable
Meeting approving the sale of NCCPL to PHML.
in cash determined based on the valuation report under
Rule 11UA of the Income Tax Rules, 1962 obtained from • Obtained Valuation Report provided by an independent an independent registered valuer. The total consideration registered valuer for determining the valuation of business received / receivable from PHML for sale of NCCPL has been of NCCPL and the valuer's assessment associated with summarised below: the determination of valuation of business of NCCPL and
performed the following procedures:
Particulars
Amount (Rs. in Lakhs)
» Evaluated the valuer's assumptions used in determining the valuation of business of NCCPL.
• Conducted discussions with the Management w.r.t NCCPL's plans to monetise the land bank by means of development of residential/ commercial properties
• Assessed the reasonableness of the Management estimates and judgements used for preparation of future projections/ cash flows of NCCPL from the planned developments as well as used for determination of discount rate, tenor for the purpose of accounting as per Ind AS - 109.
• Evaluated the appropriateness and adequacy of related disclosures in the Standalone Financial Statements.
Total Consideration for sale of NCCPL Consideration received upto 31 March 2024 Consideration receivable from PHML
3,256.44
376.44
2,880.00
PHML along with its subsidiaries (PVP Cinema Private Limited and PVP Capital Limited) have a negative net worth, incurring continuing losses and other related factors indicating the existence of material uncertainty that will cast significant doubt on PHML's ability to continue as a going concern.
However, considering NCCPL's business plans to monetise the land banks by developing residential/ commercial properties, availability of market value of proxy land in the vicinity of the land over which development rights are available with NCCPL, estimated future cash flows which will be repatriated to PHML (Company of NCCPL). Based on this, the Management believes that it will be able to recover the sale consideration from PHML within the tenor of 10 years.
The Company has carried the consideration receivable at amortized cost as at 31 March 2024 in accordance with the requirements of Ind AS-109 - Financial Instruments.
Given the significant level of judgement involved and the quantitative significance, we have determined this to be a key audit matter.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
Ý The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Management discussion and analysis, Board's Report including annexures to Board's Report and Report on Corporate Governance but does not include the Standalone Financial Statements and our auditor's report thereon. The Management Discussion and Analysis, Boards' report including the Annexures to the Board Report and Corporate Governance are expected to be made available to us after the date of this auditor's report.
Ý Our opinion on the Standalone Financial Statements does not cover the other information and we will not express any form of assurance conclusion thereon.
Ý 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 during the course of our audit or otherwise appears to be materially misstated.
Ý When we read the information included in the Management Discussion and Analysis, Board's Report including the Annexures to the Board Report and
Report on Corporate Governance, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance as required under SA 720 'The Auditor's responsibilities Relating to Other Information'.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these Standaione Financiai Statements that give a true and fair view of the financiai position, financiai performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Ind AS and accounting principies generally accepted in India under Section 133 of the Act read with relevant rules issued thereunder. 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; the selection and application of appropriate accounting policies; making judgments and the estimates that are reasonabie and prudent; and the design, impiementation and maintenance of adequate internal financiai controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standaione Financiai Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Standaione Financiai Statements, Management and Board of Directors are responsibie for assessing the Company's abiiity to continue as a going concern, disciosing, as appiicabie, matters reiated to going concern and using the going concern basis of accounting uniess the Board of Directors either intends to iiquidate the Company or to cease operations, or has no reaiistic aiternative but to do so.
The Board of Directors are aiso responsibie for overseeing the Company's financiai reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonabie assurance about whether the Standaione Financiai Statements as a whoie are free from materiai misstatement, whether due to fraud or error, and to issue an Auditor's report that inciudes our opinion. Reasonabie assurance is a high ievei of assurance, but is not a guarantee that an audit conducted in accordance with SAs wiii aiways detect a materiai misstatement when it exists. Misstatements can arise from fraud or error and are considered materiai if, individuaiiy or in the aggregate, they couid reasonabiy be expected to influence the economic decisions of users taken on the basis of these Standaione Financiai Statements.
As part of an audit in accordance with SAs, we exercise professionai judgment and maintain professionai skepticism throughout the audit. We aiso:
Ý Identify and assess the risks of materiai misstatement of the Standaione Financiai 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 materiai misstatement resuiting from fraud is higher than for one resuiting from error, as fraud may invoive coiiusion, forgery, intentionai omissions, misrepresentations, or the override of internai controi.
Ý Obtain an understanding of internai financiai controi reievant 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 aiso responsibie for expressing our opinion on whether the Company has adequate internai financiai controis with reference to Standaione Financiai Statements in piace and the operating effectiveness of such controis.
Ý Evaiuate the appropriateness of accounting poiicies used and the reasonabieness of accounting estimates and reiated disciosures made by Management.
Ý Conciude on the appropriateness of Management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a materiai uncertainty exists reiated to events or conditions that may cast significant doubt on the Company's abiiity to continue as a going concern. If we conciude that a materiai uncertainty exists, we are required to draw attention in our auditor's report to the reiated disciosures in the Standaione Financiai Statements or, if such disciosures are inadequate, to modify our opinion. Our conciusions 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.
Ý Evaiuate the overaii presentation, structure and content of the Standaione Financiai Statements, inciuding the disciosures, and whether the Standaione Financiai Statements represent the underiying transactions and events in a manner that achieves fair presentation.
Materiaiity is the magnitude of misstatements in the Standaione Financiai Statements that, individuaiiy or in aggregate, makes it probabie that the economic decisions of a reasonabiy knowiedgeabie user of the Standaione Financiai Statements may be influenced. We consider quantitative materiaiity and quaiitative factors in (i) pianning the scope of our audit work and in evaiuating the resuits of our work; and (ii) to evaiuate the effect of any identified misstatements in the Standaione Financiai Statements.
We communicate with those charged with governance regarding, among other matters, the pianned scope and timing of the audit and significant audit findings, inciuding
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" statement on the matters specified in the paragraph 3 and 4 of the order.
2. As required by Section 143 (3) of the Act, based on our audit we report, to the extent applicable 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 purpose of our audit.
b) In our opinion proper books of account as required by law relating to preparation of the aforesaid Standalone Financial Statements have been kept by the Company so far as appears from our examination of those books except for not complying with the requirement of maintenance of audit trail as stated in 2(i)(vi) below.
c) The Standalone Balance Sheet, the Standalone Statement of Profit and Loss including Other Comprehensive Income, the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
d) In our opinion, aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act.
e) On the basis of written representations received from the directors as on 31 March 2024, taken on record by the Board of Directors, except for the following, none of the directors are disqualified
as on 31 March 2024 from being appointed as a director in terms of Section 164(2) of the Act.
Sl
No
Name of the Director
Category of Directorship
1.
Prasad V. Potluri
Managing Director Non-Executive Woman Director
Independent Director
2.
P J Bhavani
3.
Subramanian
Parameswaran
f) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in Paragraph (b) above.
g) With respect to the adequacy of the Internal financial control over financial reporting of the Company and operating effectiveness of such controls, refer to our separate report in "Annexure B". Our report expresses a unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting.
h) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of Section 197 of the Act.
i) With respect to the other matters to be included 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:
i. The Company has disclosed the impact of pending litigations as at 31 March 2024 on its financial position in its Standalone Financial Statements (Refer Note 39 to the Standalone Financial Statements);
ii. The Company did not have any material foreseeable losses on long-term contracts including derivative contracts;
iii. There are no amounts which were 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, 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 or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or
invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b) The Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations provided under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. The Board has not declared any dividend during the year. Hence, reporting on whether the same is in compliance with the provisions of section 123 of the Act does not arise.
vi. Based on our examination , the Company uses Tally Prime as its primary accounting software. However, the Company has not implemented the Audit trail feature (Edit log facility) in the accounting software. Hence, neither was the audit trail feature of the said software enabled nor was it operating during the year for all relevant transactions recorded in the software. Accordingly, the requirement of examining whether there were any instances of the audit trail feature being tampered with and the requirement of preservation of the same by the Company as per the statutory requirements for record retention, does not arise.
For PSDY & Associates
Chartered Accountants Firm Registration Number: 010625S
Yashvant G
Partner
Date : 19 July 2024 Membership Number: 209865
Place : Chennai UDIN: 24209865BKGEEA1205