R.P.P INFRA PROJECTS LIMITED
Basis for Opinion
Report on the Audit of the Standalone Financial Statements
Opinion
I have audited the accompanying standalone financial statements of R.P.P INFRA PROJECTS LIMITED ("the Company"), which comprise the Balance sheet as at 31st March 2023, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and a summary of significant accounting policies and other explanatory information, which includes two branches and Twelve jointly controlled operations
In my opinion and to the best of my information and according to the explanations given to me, 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 the 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, the profit and total comprehensive income, changes in equity and it's cash flows for the year ended on that date.
I conducted my audit in accordance with the Standards on Auditing ("SA"s) specified under section 143(10) of the Companies Act, 2013. My responsibilities under those Standards are further described in the Auditor's responsibilities for the Audit of the Financial Statements section of my report.
I am 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 my audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules made there under, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. I believe that the audit evidence obtained by me is sufficient and appropriate to provide a basis for my opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the standalone financial statements of the current period. These matters were addressed in the context of my audit of the standalone financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.
I have determined the matters described below to be the key audit matters to be communicated in my report.
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S. No Key Audit Matter
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Auditor's Response
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1. Revenue recognition in accordance with Ind AS 115
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My audit procedures on revenue recognized from fixed price
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"Revenue from Contracts with Customers"
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development contracts include
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The Company inter alia engages in Fixed-price development
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• Understanding of the systems, processes and controls
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contracts, where, revenue is recognized using the percentage
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implemented by management for recording and calculating
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of completion computed as per the input method based on
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revenue and work-in-progress/Contract Assets.
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management's estimate of contract costs. (Refer Notes No. 27
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• On
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selected samples of contracts, I tested that the revenue
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to the Standalone Financial Statements)
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recognized is in accordance with the accounting standard by -
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I identified revenue recognition of fixed price development contracts as a KAM considering -
• There is an inherent risk around the accuracy of revenues given, the customised and flexible nature of these contracts in terms of tenure of the projects.
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Evaluating the performance obligation;
Testing management's calculation of the estimation of contract cost and onerous obligation, if any. I :
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? Tbserved that the estimates of cost to complete
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were reviewed and approved by appropriate levels of
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• Application of revenue recognition accounting standard
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management;
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is complex and involves a number of key judgments and estimates including estimating the future cost-to-completion of these contracts, which is used to determine the percentage of completion of the relevant performance obligation;
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? Terformed a retrospective review of costs incurred with estimated costs to identify significant variations and verify whether those variations have been considered in estimating the remaining costs to complete the contract; and
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• These contracts may involve onerous obligations on the
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Company that require critical estimates to be made by
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? Tssessed the appropriateness of work in progress
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management; and
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(contract assets) in balance sheet by evaluating the underlying documentation to identify possible delays
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• At year-end a significant amount of work in progress
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in achieving milestones which may require change in
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(Contract assets and liabilities) related to these contracts
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estimated costs to complete the remaining performance
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is recognised in the balance sheet.
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obligations.
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S. No
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Key Audit Matter
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Auditor's Response
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2
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Measurement of contract assets in respect of overdue milestones and receivables in respect of overdue invoices
The Company, in its contract with customers, promises to transfer distinct services to its customers, which may be rendered in the form of engineering, procurement, and construction (EPC) services through design-build contracts, and other forms of construction contracts. The recognition of revenue is based on contractual terms, which could be based on agreed unit price or lump-sum revenue arrangements. At each reporting date, revenue is accrued for costs incurred against work performed that may not have been invoiced. Identifying whether the Company's performance has resulted in a service that would be billable and collectable where the works carried out have not been acknowledged by customers as of the reporting date, involves a significant amount ofjudgment. Assessing the recoverability of contract assets related to overdue milestones and amounts overdue against invoices raised which have remained unsettled for a significantly long period after the end of the contractual credit period also involves a significant amount of judgment. Refer to Note No. 2.14(i) and Note No.27of the standalone financial statements
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The procedures performed included the following:
• obtained an understanding of the Company's processes in collating the evidence supporting execution of work for each disaggregated type of revenue;
• obtained an understanding of the Company's processes in assessing the recoverability of amounts overdue and process over estimating the expected credit loss allowance;
• tested the design and operating effectiveness of the key controls over the completeness and accuracy of the key inputs and assumptions into the provisioning model;
• evaluated controls over authorisation and calculation of provisioning model;
• evaluated the delivery and collection history of customers against whose contracts un-invoiced revenue is recognised;
• verified for the sample selected, receipts post balance sheet date upto the approval of the financial statements by the Board of Directors of the Parent Company;
• performed an overall assessment of the expected credit loss provision to determine if they were reasonable considering the Company's portfolio, risk profile, credit risk management practices and the macroeconomic environment; and
• tested the appropriateness of the disclosures in the financial statements to ensure compliance with Ind AS 115
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3
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Claims and exposures relating to taxation and litigation
The Group is subject to a considerable number of tax and legal disputes, which have been disclosed / provided for in the financial statements based on the facts and circumstances of each case.
Taxation and litigation exposures have been identified as a key audit matter due to the complexities involved in these matters, timescales involved for resolution and the potential financial impact of these on the financial statements. Further, significant management judgement is involved in assessing the exposure of each case and thus a risk that such cases may not be adequately provided for or disclosed.
(Refer Note No. 40, Note no. 12.1)
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My audit procedures included the following:
• Gained an understanding of the process of identification of claims, litigations and contingent liabilities and identified key controls in the process.
• For selected controls I have performed tests of controls.
• Obtained the summary of Group's legal and tax cases and critically assessed management's position through discussions with the Legal Counsel, on both the probability of success in significant cases, and the magnitude of any potential loss.
• Examined external legal opinions (where considered necessary) and other evidence to corroborate management's assessment of the risk profile in respect of legal claims.
• Assessed the relevant disclosures made within the financial statements to address whether they reflect the facts and circumstances of the respective tax and legal exposures and the requirements of relevant accounting standards.
• Assessed the competence and objectivity of the Group's experts, to satisfy ourselves that these parties are suitable in their roles.
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I have determined that there are no other Key Audit Matters to communicate in my report.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report, but does not include the standalone financial statements and my auditors' report thereon.
My opinion on the standalone financial statements does not cover the other information and I do not express any form of assurance conclusion thereon.
In connection with my audit of the standalone financial statements, my 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 my knowledge obtained in the audit or otherwise appears to be materially misstated. Based on the work I have performed, I have nothing to report in this regard.
Management's Responsibility 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 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, (changes in equity) and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
My objectives are to obtain reasonable assurance about whether the 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 my 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 financial statements.
As part of an audit in accordance with SAs, I exercise professional judgment and maintain professional scepticism throughout the audit. I also:
• I dentify 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 my 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 financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3X0 of the Act, I am also responsible for expressing my opinion on whether the Company has adequate internal financial controls system 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 management's use of the going concern basis of accounting 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 I conclude that a material uncertainty exists, I am required to draw attention in my auditor's report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my audit 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.
• Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. I consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements
I 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 I identify during my audit.
I also provide those charged with governance with a statement that I 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 my independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, I 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.
I describe these matters in my auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other Matter
I did not audit the financial statements of Two branches and twelve jointly controlled operations included in the standalone financial results of the Company, whose results reflect total assets of Rs. 123.90 Crore as at 31st March, 2023 and total revenues of Rs. 395.95 Crore and Rs.(1.56) Crore, net profit/(Loss) after tax and total comprehensive income of Rs. Nil for the year ended March 31st 2023, respectively and net cash flows amounting to Rs.12.86 Crore for the year then ended. These branch financial statements have been audited by other Auditors whose reports and these JV's financial statements have been audited by other Auditors whose reports have been furnished to me by the Management and my opinion on the standalone financial results, in so far as it relates to the amounts and disclosures included in respect of these entities, is based solely on the report of such auditors and the procedures performed by me are as stated in paragraph above. The RPP HSEA JV, RPP INFRASTRUCTURE JV, RPP OPG JV though incorporated, business is yet to commence.
My opinion is not modified in respect of this matter.
Emphasis of Matter
I invite attention to:
(a) Note No.40 which lists out the status of Income Tax Assessments of various years and also the year wise status of various notices received from Goods & Service Tax.
(b) Note No.40 where the Company has declared that the reconciliation of Input Tax Credit & GSTR 2A is under progress
(c) Note No.17 & 18 where the Company has declared that they have initiated a rectification process to resolve the difference between Paid up Share capital appearing in the books and MCA portal
My 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, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies
Act, 2013, I give in the Annexure -B 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, I report that:
(a) I have sought and obtained all the information and explanations which to the best of my knowledge and belief were necessary for the purposes of my audit.
(b) In my opinion, proper books of account as required by law have been kept by the Company so far as it appears from my examination of those books.
(c) The reports and accounts of the branch offices situated in Sri Lanka and Bangladesh have not been audited by me and I have not received any audit report for the same.
(d) 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 Cash Flow Statement dealt with by this Report are in agreement with the books of accounts.
(e) I n my 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) On the basis of the written representations received from the directors as on 31st March, 2023 taken on record by the Board of Directors, none of the directors are disqualified as on 31st March, 2023 from being appointed as a director in terms of Section 164 (2) of the Act.
(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to my separate Report in "Annexure B".
(h) I n my opinion and to the best of my information and according to the explanations given to me, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
(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 my opinion and to the best of my information and according to the explanations given to me:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note No.40 to the 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 has been a delay in transferring the amount of unclaimed dividend to the Investor Education and Protection Fund.
iv. (a) The Management has represented that, to
the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) 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 (which are material either individually or in the aggregate) 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 under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement
For CA S.N. Duraiswamy
Membership No.: 026599 UDIN: 23026599BGQHXQ5909
Place: Erode Date: 29 May 2023
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