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Updated:22 Nov, 2019, 15:59 PM IST

BSE
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Updated:22 Nov, 2019, 16:01 PM IST

Auditors' Report on Standalone Financial Statements

To the Members of Reliance Infrastructure Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of Reliance Infrastructure Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

2. 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 the 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and the matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

5. We conducted our audit in accordance with the Standards on Auditing 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 standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the standalone 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 controls.

An audit also includes evaluating the appropriateness of the 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 standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

6. 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 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, and its profits and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the following matters in the Notes to the standalone financial statements:

7. We draw attention to Note no. 33 of the standalone financial statements regarding termination of Concession Agreement by Delhi Airport Metro Express Private Limited (DAMEPL), a SPV of the Company with Delhi Metro Rail Corporation (DMRC) for reasons stated therein. The matter is sub–judice and the ultimate recovery of the investment of the Company of Rs. 1,702.10 crore in DAMEPL is dependent upon the outcome of the arbitration proceedings. The net amount outstanding in books of account as on March 31, 2015 is Rs. 443.90 crore.

8. We draw attention to Note no. 34 of the standalone financial statements regarding the Scheme of amalgamation between Reliance Infraprojects Limited (wholly owned subsidiary of the Company) and the Company, sanctioned by the Hon'ble High Court of Judicature at Bombay vide order dated March 30, 201 1, wherein the Company, as determined by its Board of Directors, is permitted to adjust foreign exchange/derivative/hedging contracts losses/gains debited/credited in the Statement of Profit and Loss by a corresponding withdrawal from or credit to General Reserve, which override the relevant provisions of Accounting Standard 5 (AS–5) 'Net Profit or loss for the Period, Prior Period Items and Changes in Accounting Policies'. Pursuant to the option exercised under the above scheme, the net foreign exchange gain of Rs. 117.25 crore for the year ended March 31, 2015 has been credited to Statement of Profit and Loss and an equivalent amount has been transferred to General Reserve. Similarly, foreign exchange loss of Rs. 236.1 1 crore attributable to finance cost and net loss on account of derivative instrument/ forward contract of Rs. 16.59 crore have been debited to the Statement of Profit and Loss and an equivalent amount has been withdrawn from General Reserve. Had such transfer/ withdrawal not been done, profit before tax would have been lower by Rs. 135.45 crore and General Reserve would have been higher by an equivalent amount.

9. We draw attention to Note no. 36 of the standalone financial statements wherein pursuant to the Capital Reduction Scheme entered into by Reliance Power Transmission Limited (RPTL) (wholly owned subsidiary of the Company) sanctioned by the Hon'ble High Court of Judicature at Bombay vide order dated October 31, 2014, RPTL has reduced its equity share capital and securities premium account to the tune of Rs. 606.49 crore. Accordingly, the Company has also written off its investment in RPTL by an equivalent amount and debited the same in the Statement of Profit and Loss.

10. We draw attention to Note no. 35 of the standalone financial statements, wherein the Hon'ble High Court of Judicature at Bombay vide order dated July 15, 2014 subject to certain approvals had approved the Scheme of Amalgamation of two wholly owned Subsidiaries of the Company viz. Western Region Transmission (Maharashtra) Private Limited (WRTM) and Western Region Transmission (Gujarat) Private Limited (WRTG) with the Company w.e.f. April 1, 2013 (Appointed date). All requisite approvals have been obtained; however, certain procedural formalities with Central Electricity Regulatory Commission (CERC) are required to be completed. Pending completion of procedural formalities, the Company has given effect to the substance of the Scheme and accordingly these subsidiaries have been amalgamated with the Company during the year ended March 31, 2015 with effect from the Appointed date.

11. We draw attention to Note no. 39 of the standalone financial statements, wherein pursuant to the Scheme of amalgamation between Western Region Transmission (Maharashtra) Private Limited (WRTM) and Reliance Cement Works Private Limited sanctioned by the Hon'ble High Court of judicature at Bombay on April 25, 2014, WRTM or its successors is permitted to offset any extra ordinary/exceptional items, as determined by the Board of Directors, debited in the Statement of Profit and Loss by a corresponding withdrawal from General Reserve, which override the relevant provisions of Accounting Standard 5 (AS–5) 'Net Profit or loss for the Period, Prior Period Items and Changes in Accounting Policies'. The Company being the successor of WRTM shall now be entitled to all the rights and the privileges of and shall be liable to fulfill all the obligations of and shall follow all the policies applicable to WRTM as if successor was the transferee company. During the year ended March 31, 2015, the Board of Directors of the Company in terms of the aforesaid scheme, determined an amount of Rs. 1,924.15 crore as Exceptional items being loss on reduction in value of investment in RPTL of Rs. 606.49 crore and write off of investments aggregating to Rs. 1,317.66 crore comprising of investment in Mumbai Metro Transport Private Limited Rs. 59.46 crore and Delhi Airport Metro Express Private Limited Rs. 1,258.20 crore, which have been debited in the Statement of Profit and Loss and an equivalent amount has been withdrawn from General Reserve. Had such withdrawal not been done, profit before tax would have been lower by Rs. 1,924.15 crore and General Reserve would have been higher by an equivalent amount.

Our opinion is not modified in respect of above matters.

Report on Other Legal and Regulatory Requirements

12. 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, to the extent applicable.

13. 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 purpose of our audit.

b. 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014; as referred to in paragraph 8 and 11 above, the Company has exercised the option available as per court orders which overrides the relevant provisions of Accounting Standard 5 (AS–5) 'Net Profit or loss for the Period, Prior Period Items and Changes in Accounting Policies'.

e. 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 Act.

f. With respect to the other matters to be included in the Auditors' 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 26(a) to the standalone financial statements;

ii. Provision has been made for material foreseeable losses, if any, on long term contracts including derivative contracts – Refer Note 52 to the standalone financial statements;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure to Auditors' Report on Standalone Financial Statements

Referred to in our Auditors' Report of even date to the members of Reliance Infrastructure Limited on the Standalone financial statements for the year ended March 31, 2015

(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of its fixed assets.

(b) As informed to us, the fixed assets are physically verified by the Management according to a phased program designed to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. However, we are informed that distribution system being underground is not physically verifiable.

(ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, 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) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

(iii) In our opinion and according to the information and explanations given to us, the Company has not granted any loan, secured or unsecured, to any company, firm or other party covered in the register maintained under Section 189 of the Act. Accordingly, the provisions stated in paragraph 3(iii)(a) and (b) of the Order are not applicable.

(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, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct any major weaknesses in the aforesaid internal control system of the Company.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions of Sections 73 to 76 of the Act and the rules framed there under.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where the maintenance of cost records has been specified by the Central Government under sub–section (1) of Section 148 of the Act and the rules framed there under and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, employees' state insurance, income–tax, sales tax, wealth tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income–tax, sales tax, wealth tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues as applicable were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income–tax, sales–tax, wealth–tax, service–tax, customs duty, excise duty, value added tax and cess as at March 31, 2015 which have not been deposited on account of a dispute are as follows:

(d) The Company has transferred the amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1 956) and rules made thereunder within the time limit prescribed.

(viii) The Company has no accumulated losses as at March 31, 2015 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(ix) According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders.

(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company, for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the Company.

(xi) In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

(xii) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management except in case of theft of electricity reported by the vigilance department of the Company, the amount of which, as informed to us, is not material.

For Haribhakti & Co. LLP

Chartered Accountants

Firm Regn. No: 103523W

Bhavik L. Shah

Partner

Membership No. 1 22071

For Pathak H. D. & Associates

Chartered Accountants

Firm Regn. No: 107783W

Vishal D. Shah

Partner

Membership No. 119303

Date: May 27, 201 5

Place: Mumbai

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