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Bharat Road Network Ltd.

BSE: 540700 Sector: Infrastructure
NSE: BRNL ISIN Code: INE727S01012
BSE 12:29 | 02 Jul 37.35 1.80
(5.06%)
OPEN

36.80

HIGH

37.35

LOW

36.80

NSE 12:26 | 02 Jul 37.00 1.05
(2.92%)
OPEN

36.70

HIGH

37.15

LOW

36.20

OPEN 36.80
PREVIOUS CLOSE 35.55
VOLUME 1401
52-Week high 93.25
52-Week low 29.00
P/E 16.45
Mkt Cap.(Rs cr) 314
Buy Price 36.50
Buy Qty 60.00
Sell Price 37.05
Sell Qty 20.00
OPEN 36.80
CLOSE 35.55
VOLUME 1401
52-Week high 93.25
52-Week low 29.00
P/E 16.45
Mkt Cap.(Rs cr) 314
Buy Price 36.50
Buy Qty 60.00
Sell Price 37.05
Sell Qty 20.00

Bharat Road Network Ltd. (BRNL) - Auditors Report

Company auditors report

To

The Members of

Bharat Road Network Limited

Report On the Standalone Financial Statements

Qualified opinion

We have audited the accompanying standalone financial statements of Bharat Road NetworkLimited ('the Company1) which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe standalone financial statements including a summary of the significant accountingpolicies and other explanatory information (herein after referred to as "standalonefinancial statements”).

In our opinion and to the best of our information and according to the explanationsgiven to us except for the impact of the matter as described in the basis forqualified opinion paragraph the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act”) in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS”) and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 312019the profit and total comprehensive income changes in equity and its cash flows for theyear ended on that date.

Basis for Qualified Opinion

We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act (SAs). Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI)together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our qualified opinion.

We refer note - 14 (ii) of the standalone financial statements where the Company hasnot recognized interest on Rs. 5000 lakhs for the year ended March 31 2019 which is notin compliance of Ind AS 1 Presentation of Financial statements'read with Ind AS 109'Financial Instruments'. Due to this profit before tax of the Company for the year endedMarch 31 2019 has been overstated by Rs.311.64 lakhs and the current liabilities has beenunderstated by the same amount.

Key Audit Matters

Key audit matters (KAM) are those matters that in our professional judgment were ofmost significance in our audit of the standalone financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Following are the Key Audit Matters (KAM) -

Key Audit Matter Auditor's Response
1 The Company has entered into a Share Purchase Agreement (SPA) dated May 4 2019 with a Purchaser for sale of its entire stake in Ghaziabad Aligarh Expressway Pvt Ltd (GAEPL) an "associate" of the Company. The proposed transaction is subject to prior permission of SEBI interms of ad-interim order dated March 14 2019 and other applicable regulatory and other approvals and certain conditions more specifically laid down in the SPA. The Equity value of the proposed transaction is subject to adjustments of debt and other capital and operational costs at closing date and hence net consideration receivable is not ascertainable at this stage. Based on the SPA the said transaction is subject to various regulatory approvals which is pending as on date. The impact of the said transaction on the financials of the Company is not ascertainable as on date and will be adjusted on the closure of the transaction.
The valuation date for sale as per the SPA is December 31 2018. Impact if any on profit/loss wrt sale of its stake in GAEPL will be adjusted on closure of the transaction.
Refer Note- 32 of the standalone financial statement.
2 Investments in Optionally Convertible Debentures and Share warrant of subsidiaries and associates amounting to Rs. 38019.75 lakhs considered as financial assets. We have reviewed the projections and related information and explanations and additionally considered the valuation report of a registered valuer appointed by the company.
Refer Note - 4 of the standalone financial statement.

Emphasis of Matter

Attention is invited to Note 27.4 of the standalone financial statements regardinginvestments in Special Purpose Vehicles formed as per concession agreement and guidelineof respective government authority and treatment of such investments as Qualifying assetwhich is based on the legal opinion and capitalization of directly attributable borrowingcosts incurred in respect thereof.

Our opinion is not modified in respect of the said 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 otherinformation comprises the information included in the Director's Report includingannexures to Director's Report but does not include the standalone financial statementsand our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. Based on therecords information and explanation provided we have nothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatements whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)0) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonable knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative and qualitative factors in (i) planning the scope of our audit workand in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 Section 143(11) of the Act andaccording to the information and explanations given to us and also on the basis of suchchecks as we considered appropriate we give in the "Annexure A” a statement onthe 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 obtained all the information and explanations which to the bestof 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 forqualified opinion paragraph in our opinion proper books of accounts as required bylaw have been kept by the Company so far as it appears from our examination of thosebooks;

c) The Balance Sheet the Statement of Profit and Loss (Including other comprehensiveIncome) Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;

d) In our opinion except for the effects of the matters described in the basis forqualified opinion paragraph the aforesaid standalone financial statements comply withthe Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read withrelevant Rules issued thereunder;

e) On the basis of the written representations received from the directors as on March312019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164(2) of theAct;

f) 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 B”.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

As per the information and explanation given to us and on the basis of our examinationof the records the managerial remuneration has been paid or provided in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Act.

h) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. To the best of our information and according to the explanation given to us there isno pending litigations (Other than those already recognised in the accounts) havingmaterial impact on the financial position of the Company. (Refer Note- 27.5 of thestandalone financial statements)

ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses;

iii. There was no amount required to be transferred to the Investor Education andProtection Fund by the Company.

For S. S. KOTHARI MEHTA & CO.
Chartered Accountants
Firm Registration No. 000756N
Neeraj Bansal
Partner
Membership No.095960
Place: Kolkata
Date: May 282019

ANNEXURE - "A" TO THE INDEPENDENT AUDITOR'S REPORT

To

The Members of

Bharat Road Network Limited

Report on the matters specified in paragraph 3 of the Companies (Auditor's Report)Order 2016 ("the Order') issued by the Central Government of India in terms ofsection 143 (11) of the Companies Act 2013 ("the Act") as referred to inparagraph 1 of 'Report on Other Legal and Regulatory Requirements' section

(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) These fixed assets have been physically verified by the management according to aphased programme designed to cover all the items during the year which in our opinion isreasonable having regard to the size of the company and nature of its assets. Inaccordance with this programme fixed assets were physically verified by the managementduring the reporting period and no discrepancies were noticed on such verification;

(c) As the Company has no immovable property provisions of clause (i) (c) of para 3 ofthe said order is not applicable to the Company.

(ii) As the Company has no inventory provisions of clause (ii) of para 3 of the saidorder is not applicable to the company.

(iii) The Company has granted unsecured loan/advances to companies covered in registermaintained under section 189 of the Act. With respect to the said loan/advances we haveto state that;

a) In our opinion the terms and conditions of the grant of such loan/advances are notprejudicial to the interest of the company.

b) These unsecured loans/advances are repayable on demand. These loans/advances carryinterest in the form of yield and are receivable as and when due as per the terms of theagreement.

c) The total amount overdue for more than 90 days is nil.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

(v) The Company has not accepted any deposits and hence the directives issued by theReserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovisions of the Act and the rules framed hereunder are not applicable.

(vi) The provisions regarding maintenance of cost records under section 148 (1) of theAct are not applicable to the Company.

(vii) (a) According to information and explanations given to us and the records of thecompany examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including provident fund employees' state insuranceincome-tax sales-tax service tax duty of customs duty of excise value added taxgoods and service tax cess and any other statutory dues except tax deducted at sourceon Interest on certain loans taken from financial institutions to the appropriateauthorities. There are no arrears of outstanding undisputed statutory dues as on the lastday of the financial year concerned for a period of more than six months from the datethey became payable.

(b) According to information and explanations given to us and the records of thecompany examined by us there is no dues outstanding in respect of income tax sales taxservice tax duty of customs duty of excise goods and service tax and cess as at March312019 on account of disputes.

(viii) The Company has defaulted in repayment of principal amount and interest sinceDecember 14 2017 to one of the financial institution (NBFC) of principal amounting to Rs5000/- lakhs and interest up to September 30 2018 amounting to Rs. 448.46 lakhs. FurtherCompany has neither provided nor paid interest of Rs. 311.64 lakhs for the period October1 2018 to March31 2019. Refer Note 14 (ii)of the notes to the Standalone FinancialStatements.

Also the Company has also defaulted in payment of interest to another financialinstitution (NBFC) amounting to Rs. 647.49 lakhs.

(ix) No money has been raised by way of initial public offer or further public offer(including debt instruments). Further the term loans raised by the Company during theyear were applied for the purpose for which they were obtained.

(x) To the best of our knowledge and according to information and explanations given tous no fraud by the Company or no fraud on the Company by its officers or employees hasbeen noticed or reported during the year.

(xi) The managerial remuneration has been paid or provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.

(xii) The Company is not a Nidhi Company hence clause (xii) of the Order is notapplicable to the Company.

(xiii) According to the information and explanation given to us and on the basis ofour examination of the records the company has transacted with the related parties whichare in compliance with sections 177 and 188 of the Act and the details have been disclosedin the financial statements - Refer Note 28.1 to the standalone financial statements.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year and hence paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) The Company has not entered into non-cash transactions with directors or personsconnected with the directors and therefore provisions section 192 of Act is notapplicable.

(xvi) Based on the information and explanation the Company is required to beregistered under section 45-IA of the Reserve Bank of India Act 1934. The Company hasmade an application to the Reserve Bank of India to grant Certificate of Registration tocommence the business of a Non-Deposit taking Systematically Important Core InvestmentCompany (NDSI - CIC) on March 28 2019 along with the audited Financials as at December312018. The Reserve Bank of India has asked to apply afresh on the basis of the auditedfinancial statement of the company and all its group companies as on March 312019.

For S. S. Kothari Mehta & Co.
Chartered Accountants
Firm Registration No. 000756N
Neeraj Bansal
Partner
Membership No.095960
Place: Kolkata
Date: May 28 2019

Annexure "B" to The Independent Auditor's Report

To

The Members of

Bharat Road Network Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") as referred to in paragraph 2(f) of'Report on Other Legal and Regulatory Requirements' section.

We have audited the internal financial controls over financial reporting of Bharat RoadNetwork Limited ("the Company”) as of March 312019 in conjunction with ouraudit 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 responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 Act.

Auditors' 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 accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our 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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the standalone 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 audit opinion on the Company's internal financial controls systemover financial 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 standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that:

a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

b) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of Management and directors of the Company; and

c) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the standalone 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were generally operating effectively as at March 31 2019 basedon "the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India”

For S. S. Kothari Mehta & Co.
Chartered Accountants
Firm Registration No. 000756N
Neeraj Bansal
Partner
Membership No.095960
Place: Kolkata
Date: May 28 2019