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Independent Auditor's Report
To the Members of GPT Infraprojects Limited
Report on the Financial Statements
We have audited the accompanying standalone financial statements of GPT Infraprojects Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, in which are incorporated the returns for the year ended on that date audited by the branch auditors of the Company's branch at Mozambique.
Management’s Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("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 and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.
Basis for qualified opinion
Attention is invited to note 27(C) to the standalone financial statements regarding unbilled revenue, accrued price escalations and trade receivables on certain significantly completed construction and supply contracts aggregating X3,645.91 lacs, which are yet to be billed/ realised by the Company and that are largely outstanding for more than 2 years. Due to the uncertainty over the eventual billings/ collections of the said amounts, we are unable to comment on the appropriateness or otherwise of the aforesaid transactions being carried forward in these financial statements including the extent of recoverability of the above asset balances and any other consequential impact that may arise in this regard.
In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above,the attached standalone financial statements give the information required by 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, 2015, of its profit and its cash flows for the year ended on that date.
Emphasis of Mat
Without qualifying our opinion, attention is drawn to note no. 27(B) of the standalone financial statements regarding discontinuation of execution of an EPC contract by the Company (such contract was received from its subsidiary) pursuant to the termination of a concession agreement between the subsidiary and its customer and the uncertainty on recoverability of net assets aggregating Rs.1,866.83 lacs as at March 31, 2015.Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub–section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by section 143(3) of the Act, we report that:
(a) We have sought and, except for the matters described in the Basis for Qualified Opinion and Emphasis of Matter paragraphs above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;
(b) Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.
(c) The report on the accounts of the foreign project site of the Company audited under section 143 (8) of the Act by the branch auditor has been sent to us and have been properly dealt by us in preparing this report;
(d) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from branches not visited by us;
(e) Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
(f) The matters described in the Basis for Qualified Opinion and Emphasis of Matter paragraphs above and paragraph (vii) of the attached Annexure as referred to in paragraph 1 above, in our opinion, may have an adverse effect on the functioning of the Company;
(g) On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of section 164 (2) of the Companies Act, 2013;
(h) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.
(i) 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 financial statements – Refer Note 27(A) and 27(B) to the financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long–term contracts including derivative contracts – Refer Note 35 to the financial statements;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
1. We did not audit financial statements of the Company's joint ventures, whose financial statements reflect the Company's share of X431.73 lacs in the net profit of the joint ventures for the year ended March 31, 2015. Those financial statements and other financial information have been audited by other auditors whose report has been furnished to us. Our opinion, in so far as it relates to the share of profit of the joint ventures, is based solely on the reports of other auditors. Our opinion is not qualified in respect of this matter.
2. We did not audit total assets of Rs.1,096.90 lacs as at March 31, 2015, total revenues of Rs.321.02 lacs, profit before tax Rs.303.38 lacs and net cash outflows amounting to Rs.5.03 lacs for the year then ended, included in the accompanying financial statements in respect of a foreign project site not visited by us, whose financial statements and other financial information have been audited by another auditor and whose report has been furnished to us. Our opinion, in so far as it relates to the affairs of such foreign project site is based solely on the report of another auditor. Our opinion is not qualified in respect of this matter.
Annexure referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of GPT Infraprojects Limited as at and for the year ended March 31, 2015
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets, except for Steel Shutterings at the various construction sites of the Company.
(b) All fixed assets have not been physically verified by the management during the year but there is a planned programme of verifying each item of fixed assets once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.
(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on their physical verification.
(iii) (a) The Company has granted loans to two Companies, including a wholly owned subsidiary, covered in the register maintained under section 189 of the Companies Act, 2013. The maximum amount involved during the year for such loans granted was Rs.2,800 lacs and the year–end balance was Rs.316.68 lacs. The loans granted and interests thereon are repayable on demand. We have been informed that the Companies to whom loans have been granted are regular in repayment of principal and interest thereon whenever demanded.
(b) There is no overdue amount of loans granted to Companies, firms or other parties listed in the register maintained under section 189 of the Companies Act, 2013.
(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.
(v) The Company has not accepted any deposits from the public.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii) (a) Undisputed statutory dues including sales tax, wealth tax, customs duty and value added tax have generally been regularly deposited with the appropriate authorities. However, such dues for provident fund, employees' state insurance, income–tax, service tax,excise duty, and other material statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases.
(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees' state insurance, income–tax, wealth–tax, service tax, sales–tax, customs duty, excise duty, value added tax, cess and other material statutory dues which were outstanding, at the year end, for a period of more than six months from the date they became payable, are as follows:
(d) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company, during the year in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder.
(viii) Without considering the consequential effects, if any, of the matters stated in the basis for qualified opinion paragraph of our auditors' report, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current financial year. The Company has not incurred cash losses in the immediately preceding financial year.
(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks. During the year, the Company did not have any outstanding debentures or dues to a financial institution.
(x) According to the information and explanations given to us, the Company has given corporate guarantees for loans taken by a subsidiary company from banks, the terms and conditions whereof, in our opinion, are not prima–facie prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from financial institutions.
(xi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these loans were obtained except for a term loan of X2,000 lacs received during the year, out of which X1,064 lacs has been temporarily utilized by the Company for advancing loans to its group Companies including a wholly owned subsidiary.
(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.
For S.R. Batliboi& CO. LLP
ICAI Firm Registration Number: 301003E
per Bhaswar Sarkar
Membership Number: 55596
Date: May 26, 2015