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IRB Infrastructure Developers Ltd. Auditor Report
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You can view full text of the latest Auditor's Report for the company.
Market Cap. (Rs.) 35358.35 Cr. P/BV 2.81 Book Value (Rs.) 20.81
52 Week High/Low (Rs.) 72/23 FV/ML 1/1 P/E(X) 49.11
Bookclosure 08/02/2024 EPS (Rs.) 1.19 Div Yield (%) 0.34
Year End :2023-03 

IRB Infrastructure Developers Limited

Report on the Audit of the Standalone Financial StatementsOpinion

We have jointly audited the accompanying standalone financial statements of IRB Infrastructure Developers Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2023, and the Statement of Profit and Loss (Including Other Comprehensive Income), Statement of Changes in Equity and 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 our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (“the Act’) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, and profit, other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our joint audit 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 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 (ICAI) together with the ethical requirements that are relevant to our joint 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 obtained by us is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our joint audit of the standalone financial statements for the year ended March 31, 2023. These matters were addressed in the context of our joint 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.

The Key Audit Matter

How the matter was addressed in our joint audit

Assessment of impairment of investment in and loans/other

A)

Impairment of investment in subsidiaries and joint ventures.

receivables provided to subsidiaries and joint ventures (refer Note 4, 5 and 6 to the standalone financial statements)

Our audit procedures included:

A) The carrying amount of the investments (including sub-debt) in subsidiaries and joint ventures held at cost less impairment as at March 31,2023 is ' 81,255.66 million.

1.

Evaluated the design and implementation and verified, on a test check basis the operating effectiveness of key controls placed around the impairment assessment process of the recoverability of the investments made, including the estimation of future cash flows forecasts, the

These investments are associated with significant risk in

process by which they were produced and discount rates used.

respect of valuation. Changes in business environment could also have a significant impact on the valuation. The investments are carried at cost less any impairment in value of such investments. These investments are unquoted and

2.

Examined the key controls in place for making investments in subsidiaries / joint ventures and evidenced the Board of Directors approval obtained.

hence it is difficult to measure the recoverable amount. The

3.

Assessed the net worth of subsidiaries / joint ventures on the basis of

Company performs an annual assessment of impairment for

latest available financial statements. Further :

its investments at each cash generating unit (CGU) level, to identify any indicators of impairment. The recoverable amount of the CGUs which is based on the higher of the value in use or fair value less costs to sell, has been derived from discounted forecast cash flow models which requires management to make significant estimates and assumptions related to future

- Compared the carrying amount of investments with the relevant subsidiaries/ joint ventures balance sheet to identify their net assets, being an approximation of their minimum recoverable amount. Where the net assets are in excess of their carrying amount, also assessed that those subsidiaries/joint ventures have historically been profit-

revenue growth, concession period, operations costs, the discount rate and assessments of the status of the project and cost to complete balance work.

making.

The Key Audit Matter

How the matter was addressed in our joint audit

- For the investments where the carrying amount exceeded the net

asset value, comparing the carrying amount of the investment with the expected value of the business based discounted cash flow analysis.

4.

Tested and Verified some of the key assumptions such as future revenue growth, concession period, operations costs, the discount rate and assessments of the status of the project and cost to complete balance work, which were most sensitive to the recoverable value of the investments.

5.

Assessed the work performed by management’s as well as management’s external valuation expert, including the valuation methodology and the key assumptions used. Also assessed the competence, capabilities and objectivity of the expert used by the management in the process of evaluating impairment models.

6.

Involved our internal valuation specialist, where appropriate, to evaluate the reasonability of the methodology, approach and assumptions used in the valuation carried out for determining the carrying amount of investments.

7.

Verified that the disclosures made in the Company’s standalone financial statements in respect of the investment in the subsidiaries / joint ventures are adequate.

B) The Company has extended loans to subsidiaries and joint ventures which are assessed for impairment at each year

B)

I mpairment of loans/advances to subsidiaries and joint ventures and other receivable from joint ventures.

end. Financial assets, which include loans to subsidiaries and joint ventures aggregated to ' 18,068.05 million at March 31, 2023. The Company also has other receivable of ' 32,095.57 million as March 31, 2023 from a joint venture on account of transfer of 9 project companies to the said joint ventures.

Our procedures included:

1. Evaluated the design and implementation and verified, on a test check basis the operating effectiveness of key internal controls placed around the impairment assessment process of the loans/advances to subsidiaries and joint ventures and other receivable from joint venture.

Due to the nature of the business in the infrastructure projects, the Company is exposed to heightened risk in respect of the impairment of the loans granted to the aforementioned

2.

Examined the key controls in place for issuing new loans and evidenced the Board of Directors approval obtained.

related parties and other receivables due from the said joint

3.

Assessed Group’s identification of CGU with reference to the guidance

venture.

in the applicable accounting standards.

There is a significant judgment and estimation uncertainty

4.

Assessed the net worth of subsidiaries and joint ventures based on

involved in assessing the impairment of above loans made

latest available financial statements along with assessing that those

to related parties, because it is dependent on number of

subsidiaries/joint ventures have historically been profit-making and are

infrastructure projects being completed as per the schedule

servicing the principal and interest schedule on timely basis.

timeline and generation of future cash flows.

5.

Obtained Company’s assessment of the impairment of the loans/

There is also a significant judgement involved on assessing

advances and other receivables which includes cash flow projections

impairment of other receivables which rely on key

over the duration of the loans/advances and other receivables. These

assumptions such as timing of collection, the discount rate,

projections are based on underlying infrastructure project cash flows

and the probability of success in respect of the claims.

which are sensitive to some of the claims to be settled with the

customers.

6.

Assessed the work performed by management's as well as management's external valuation expert, including the valuation methodology and the key assumptions used. Further, also assessed the competence, capabilities and objectivity of the expert used by the management in the process of evaluating impairment models.

7.

Involved our internal valuation specialist, where appropriate, to evaluate the reasonability of the methodology, approach and assumptions used in the valuation carried out for determining the carrying amount of investments.

8.

Obtained confirmations to evaluate the completeness and existence of loans/advances to subsidiaries and joint ventures and other receivables from joint venture as on March 31, 2023

9.

Verified the classification and adequacy of disclosures of the loans/ advances and other receivables.

The Key Audit Matter

How the matter was addressed in our joint audit

Measurement of construction Revenue.

Measurement of construction Revenue (refer Note 21 to the

standalone financial statements)

Our audit procedures included:

Revenue from construction contracts is recognized using

1.

Evaluated the accounting policy for revenue recognition of the Company and assessed compliance of the policy in terms of principles

percentage of completion method (“POC”) as per the input method prescribed under Ind AS 115 - Revenue from contracts

enunciated under Ind AS 115.

with customers ("Ind AS 115") where performance obligations are

2.

Evaluated the design and implementation and verified, on a test check

satisfied over time.

basis the operating effectiveness of key controls around the contract

It represents 89.48% of the total revenue from operations of the

price, estimation of costs to complete and billings to customers and

Company.

management’s testing of these attributes.

The Company has construction contracts whose revenue recognition is dependent on a high level of judgement over the

3.

Obtained and verified on test check basis the contract and other related contractual provisions including contractually agreed deliverables,

percentage of completion. It is based on their best estimate of

termination rights, penalties for delay, etc. to understand the nature and

the costs to complete, valuation of contractual variations, claims

scope of the arrangements with the customer.

and ability to deliver the contract within the contractual time limit.

4.

Assessed key judgements inherent in the estimation of significant construction contract projects. It includes comparing the stage-of

The Company’s current year revenue from construction contracts

completion and costs to completion on significant projects using

and a significant amount of its expenses incurred, arise from transactions with related parties. These related parties are

Lender’s Engineer latest certificate/Monthly Progress report.

principally subsidiaries /joint ventures of the Company.

5.

Assessed the estimated costs to complete, variations in contract price and contract costs and sighted underlying invoices, signed contracts/

The Company uses an input method based on costs incurred

statements of work completed for ongoing projects.

to measure progress of the projects. Under this approach, the Company recognises revenue based on the costs incurred to date relative to the estimated total costs to complete the performance obligation. Profit is not recognised until the outcome of the contract is fairly certain.

6.

Obtained the Company’s process for identifying related parties and recording related party transactions. Assessed Company’s key controls in relation to the assessment and approval of related party transactions and examined Company’s disclosures in respect of the transactions.

7.

Verified on test check basis, the approvals of the Audit Committee and

Revenue is a key performance indicator of the Company.

Board of Directors for related party transactions.

Accordingly, there can be a risk that the Company may influence

8.

Verified samples of manual journals posted to revenue to identify

the judgements and estimates of revenue recognition in order to achieve performance targets to meet market expectations or

unusual items.

incentive links to performance for reporting period.

9.

Assessed the disclosures made by the management is in compliance of Ind AS -115

Revenues, total estimated contract costs and profit recognition may deviate significantly from original estimates based on new knowledge about cost overruns and changes in scope/ term of a construction contract.

In view of above, the above matter has been identified as a key audit matter.


Information Other than the Standalone Financial Statements and Auditor’s Report Thereon

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 joint audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Board of Directors 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, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards 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 statement 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 Board of Directors and Management 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.

Those Board of Directors 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.

We give in “Annexure A” a detailed description of Auditor’s responsibilities for Audit of the Standalone Financial Statements.

Other Matter

The standalone financial statements of the Company for the year ended March 31, 2022, were audited jointly audited by B S R & Co. LLP, Chartered Accountants and Gokhale & Sathe, Chartered Accountants, the statutory auditors of the Company whose report dated May 17, 2022 expressed an unmodified opinion on those statements.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and 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 Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account.

(d) I n our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.

(e) On the basis of the written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors are disqualified as on March 31,2023 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 standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure C”.

(g) 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:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 30 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 were 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(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.

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(s) or entity(ies), including foreign entities (Funding Parties), with the understanding, whether recorded in writing or otherwise, as on the date of this audit report, 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 Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

c) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, and according to the information and explanations provided to us by the Management in this regard 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 (iv)(a) and (iv)(b) above, contain any material mis-statement.

v. The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with section 123 of the Companies Act 2013.

The 2nd interim dividend declared by the Company for the year is in accordance with section 123 of the Companies Act 2013 to the extent it applies to declaration of dividend. However, the said dividend was not paid on the date of this audit report (Refer Note 13(c) to the Standalone financial statements).

vi. As proviso to rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the company only w.e.f. April 1, 2023, reporting under this clause is not applicable.

3. I n our opinion, according to information, explanations

given to us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 of the Act and the rules thereunder.


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