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GPT Infraprojects Ltd.

BSE: 533761 Sector: Infrastructure
NSE: GPTINFRA ISIN Code: INE390G01014
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155.05

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158.00

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NSE 09:20 | 26 Sep 158.00 -1.45
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159.95

HIGH

159.95

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OPEN 155.05
PREVIOUS CLOSE 159.50
VOLUME 27
52-Week high 187.90
52-Week low 96.03
P/E 46.29
Mkt Cap.(Rs cr) 454
Buy Price 155.65
Buy Qty 159.00
Sell Price 157.95
Sell Qty 60.00
OPEN 155.05
CLOSE 159.50
VOLUME 27
52-Week high 187.90
52-Week low 96.03
P/E 46.29
Mkt Cap.(Rs cr) 454
Buy Price 155.65
Buy Qty 159.00
Sell Price 157.95
Sell Qty 60.00

GPT Infraprojects Ltd. (GPTINFRA) - Auditors Report

Company auditors report

To the Members of

GPT Infraprojects Limited

Report on the Financial Statements

We have audited the accompanying standalone financial statements of GPTInfraprojects Limited ("the Company") which comprise the Balance Sheet asat March 31 2017 the Statement of Profit and Loss and Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation in which are incorporated the returns for the year ended on that dateaudited 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 Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance withaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014 and Companies (Accounting Standards) Amendment Rules 2016. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial control thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder. We conducted our audit inaccordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements. We believe that the audit evidence we have obtained issufficient 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 regardingunbilled revenue accrued price escalations and trade receivables all classified bymanagement as current on certain completed construction contracts aggregating Rs.3895.08 lacs which are yet to be billed / realised by the Company and that are largelyoutstanding for more than 3 years. Due to the uncertainties over the eventual billings /collections of the said amounts we are unable to comment on the appropriateness orotherwise of the aforesaid balances being carried forward or their classification ascurrent in these standalone financial statements including the extent of recoverability ofthe above asset balances the period over which these are expected to be recovered and anyother consequential impact that may arise in this regard.

Qualified opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2017 of its profit and its cash flows for the yearended on that date.

Emphasis of Matter

a) Attention is drawn to note no. 27(B) of the standalone financial statementsregarding discontinuation of execution of an EPC contract by the Company (such contractwas received from its subsidiary) pursuant to the termination of a concession agreementbetween the subsidiary and its customer and the uncertainty on recoverability of netassets aggregatingRs. 1971.95 lacs as at March 31 2017.

b) Attention is drawn to note no. 27(D) of the standalone financial statementsregarding the uncertainty on recoverability of Company's investment aggregating Rs. 687.13lacs in respect of a joint venture operation wherein the underlying projects is completedand as represented to us the management of the joint venture operation has initiatedarbitration proceedings for recovery of dues.

c) Attention is drawn to note no. 27(E) of the standalone financial statementsregarding the uncertainty on recoverability of Company's investment aggregating Rs.1117.71 lacs in respect of a joint venture operation wherein the underlying project iscompleted and as represented to us the management of the joint venture operation hasfiled a claim on the customer for recovery of its dues.

Our opinion is not qualified in respect of these matters.

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 ofthe Act we give in the "Annexure 1" a statement on the matters specified inparagraphs 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 matter described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;

(b) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion proper books of account as required by law have beenkept by the Company so far as appears from our examination of those books and properreturns adequate for the purposes of our audit has been received from branch not visitedby us;

(c) The report on the accounts of the branch office of the Company audited underSection 143 (8) of the Act by branch auditor has been sent to us and have been properlydealt by us in preparing this report;

(d) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account and with the returns receivedfrom branch not visited by us;

(e) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid standalone financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014 and the Companies (Accounting Standards) AmendmentRules 2016;

(f) The matters described in the Basis for Qualified Opinion paragraph and Emphasis ofMatter paragraphs above in our opinion may have an adverse effect on the functioning ofthe Company;

(g) On the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of Section 164 (2) ofthe Companies Act 2013;

(h) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above.

(i) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;

(j) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its financial statements – Refer Note 27(A) and 27(B) to the standalonefinancial statements;

ii. Except for the possible effects of the matter described in the Basis of QualifiedOpinion paragraph the Company has made provision as required under the applicable law oraccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts;

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in Note 43 to these standalonefinancial statements as to the holding of Specified Bank Notes on November 8 2016 andDecember 30 2016 as well as dealings in Specified Bank Notes during the period fromNovember 8 2016 to December 30 2016. However we are unable to obtain sufficient andappropriate audit evidence to report on whether the disclosures are in accordance withbooks of account maintained by the Company and as produced to us by the management.

Other Matter

We did not audit financial statements of the Company's joint ventures whose financialstatements reflect the Company's share of Rs. 352.51 lacs in the net profit of the jointventures for the year ended March 31 2017. Those financial statements and other financialinformation have been audited by other auditors whose report has been furnished to us. Ouropinion in so far as it relates to the share of profit of these joint ventures is basedsolely on the reports of other auditors. Our opinion is not qualified in respect of thismatter.

For S.R. Batliboi & CO. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Bhaswar Sarkar
Place of Signature: Kolkata Partner
Date: May 23 2017 Membership Number: 055596

Annexure 1

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF GPT INFRAPROJECTS LIMTED

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in fixed assets are held in the name of thecompany.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.

(iii) (a) The Company has granted loans to two bodies corporate covered in the registermaintained under Section 189 of the Companies Act 2013. In our opinion and according tothe information and explanations given to us the terms and conditions of the grant ofsuch loans are not prejudicial to the company's interest.

(b) The Company has granted loans to two bodies corporate covered in the registermaintained under Section 189 of the Companies Act 2013. The schedule of repayment ofprincipal and payment of interest has been stipulated for the loans granted. However asinformed such principal / interest has not fallen due during the year.

(c) There are no amounts of loans granted to companies firms or other parties listedin the register maintained under Section 189 of the Companies Act 2013 which are overduefor more than ninety days.

(iv) In our opinion and according to the information and explanations given to us andbased on legal opinion obtained by the Company provisions of Sections 185 and 186 of theCompanies Act 2013 in respect of loans to directors including entities in which they areinterested and in respect of loans and advances given investments made and guaranteesand securities given have been complied with by the company.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records underSection 148(1) of the Companies Act 2013 and are of the opinion that prima facie thespecified accounts and records have been made and maintained. We have not however made adetailed examination of the same.

(vii) (a) Undisputed statutory dues in respect of sales tax wealth tax customs dutyand value added tax have generally been regularly deposited with the appropriateauthorities. However dues for provident fund employees' state insurance income-taxservice tax excise duty and other material statutory dues have not been regularlydeposited with the appropriate authorities and there have been serious delays in largenumber of cases.

(b) According to the information and explanations given to us undisputed dues inrespect of provident fund employees' state insurance income-tax service tax sales taxcustom duty excise duty value added tax cess and other material statutory dues whichwere outstanding at the year end for a period of more than six months from the date theybecame payable are as follows:

Name of the Statute Nature of Dues Amount (Rs. in lacs) Period to which the amount relates Due date Date of Payment
Income Tax Act 1961 Income tax deducted at source 0.10 April'16 – August'16 May'16 – September'16 Not yet paid
Income Tax Act 1961 Dividend Distribution Tax 66.09 February'16 – August'16 February'16 – August'16 Not yet paid
Finance Act 1994 Service Tax 33.24 July'16 – August'16 August'16 – September'16 6th April 2017

(c) According to the records of the Company the dues outstanding of income-taxsales-tax service tax duty on custom duty of excise and value added tax on account ofany dispute are as follows:

Name of the Statute Nature of Dues Amount (Rs. in lacs) Period to which the amount relates Forum where dispute is pending
Finance Act 1994 Service tax levied on Goods Transport Agency services 0.72 2008-09 Commissioner of Central Excise (Appeal) Kolkata
Central Excise Act 1944 Modvat Credit disallowed for subsequent endorsement of third party invoice in favour of the Company 92.16 1991 - 92 Customs Excise and Service Tax Appellate Tribunal Kolkata
Central Excise Act 1944 Claim of excess refund granted towards descalation in prices of sleeper 6.35 2008-09 and 2009-10 Customs Excise and Service Tax Appellate Tribunal Kolkata
Central Excise Act 1944 Penalty against short payment of excise duty 1.63 2011-12 Commissioner of Central Excise (Appeal) Kolkata
Central Excise Act 1944 Cenvat Credit disallowed 5.73 2011-12 Commissioner of Central Excise (Appeal) Kolkata
Central Excise Act 1944 Disallowance of Input Credit on Consumption of Welding Electrodes 3.19 2008-09 to 2013-14 Commissioner of Central Excise (Appeal) Kolkata
West Bengal Value Added Tax Act 2003 Various disallowances of labour supervision charges payments to subcontractors works contract tax etc. from Taxable Contractual Transfer Price and part disallowance of input tax credit export sales and late fees. 1132.85 2009-10 to 2013-14 West Bengal Appellate Forum Kolkata and West Bengal Commercial Taxes Appellate & Revisional Board Kolkata
Central Sales Tax Act 1956 Central sale tax levied on reimbursement of inspection and freight charges and on pending C forms. 4.35 2011-12 West Bengal Commercial Taxes Appellate & Revisional Board Kolkata
Central Sales Tax Act 1956 Central sale tax levied on stock transfer to branch 75.16 2012-13 and 2013-14 West Bengal Commercial Taxes Appellate & Revisional Board Kolkata

(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of dues to banks. The Company didnot have any outstanding debentures or dues in respect of a financial institution or togovernment during the year.

(ix) In our opinion and according to the information and explanations given by themanagement the Company has utilised the monies raised by way of term loans for thepurpose for which they were raised. The Company has not raised any money by way of initialpublic offer / further public offer / debt instruments.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no material fraud onthe Company by the officers and employees of the Company has been noticed or reportedduring the year.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with Sections 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon.

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons or personsconnected with him as referred to in Section 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us the provisions ofSection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S.R. Batliboi & CO. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Bhaswar Sarkar
Place of Signature: Kolkata Partner
Date: May 23 2017 Membership Number: 055596

Annexure 2

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF GPT INFRAPROJECTS LIMTED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of GPTInfraprojects Limited ("the Company") as of March 31 2017 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

An audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the internal financial controls overfinancial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at March 31 2017:

a) The Company's internal financial controls for evaluation of recoverability ofunbilled revenue accrued price escalations and trade receivables on significantlycompleted construction contracts were not operating effectively as on March 31 2017which could potentially result in the Company not recognising appropriate provision in thefinancial statements in respect of receivables that are doubtful of recovery.

b) The Company's internal financial controls for classification of unbilled revenueaccrued price escalations and trade receivables on significantly completed constructioncontracts as current were not operating effectively as on March 31 2017 which couldpotentially result in the Company not appropriately classifying the above receivables asnon-current.

A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

In our opinion the Company has maintained in all material respects adequate internalfinancial controls over financial reporting and except for the possible effects of thematerial weaknesses described above on the achievement of the objectives of the controlcriteria such internal financial controls over financial reporting were operatingeffectively as of March 31 2017 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.

Explanatory paragraph

We also have audited in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under Section 143(10) of theAct the standalone financial statements of GPT Infraprojects Limited which comprise theBalance Sheet as at March 31 2017 and the related Statement of Profit and Loss and CashFlow Statement for the year then ended and a summary of significant accounting policiesand other explanatory information. This material weakness was considered in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2017standalone financial statements of GPT Infraprojects Limited and this report does notaffect our report dated May 23 2017 which expressed a qualified opinion on thosefinancial statements.

For S.R. Batliboi & CO. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Bhaswar Sarkar
Place of Signature: Kolkata Partner
Date: May 23 2017 Membership Number: 055596