The Unitholders of Brookfield India Real Estate Trust
REPORT ON THE AUDIT OF STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of Brookfield IndiaReal Estate Trust (the "REIT") which comprise the Standalone Balance Sheet asat March 31 2022 the Standalone Statement of Profit and Loss (including OtherComprehensive Income) the Standalone Statement of Cash Flows for the year ended March 312022 the Standalone Statement of Changes in Unitholders' Equity for the year ended March31
2022 Statement of Net Assets at fair value as at March 31 2022 Statement of TotalReturn at fair value for the year ended March 31 2022 and the Statement of NetDistributable Cash Flow for the year ended March 31 2022 as an additional disclosure inaccordance with Paragraph 6 of Annexure A to the Securities Exchange Board of India (SEBI)Circular No. CIR/IMD/DF/146/2016 dated December 29 2016 along with summary of thesignificant accounting policies and select explanatory notes (together hereinafterreferred as the "standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations2014 as amended from time to time including any guidelines and circulars issued thereunderread with SEBI Circular No. CIR/IMD/DF/146/2016 dated December 29 2016 (the "REITregulations") in the manner so required and give a true and fair view in conformitywith the Indian Accounting Standards as defined in Rule 2(1)(a) of the Companies (IndianAccounting Standards) Rules 2015 (as amended) and other accounting principles generallyaccepted
in India to the extent not inconsistent with the REIT Regulations of the state ofaffairs of the REIT as at March 31 2022 and its profit including other comprehensiveincome cash flows changes in unitholders' equity for the year ended March 31 2022 netassets at fair value as at March 31 2022 its total return at fair value for the yearended March 31 2022 and Statement of Net Distributable Cash Flow for the year ended March31 2022 and other information of the REIT.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing ("SA") issued by Institute of Chartered Accountants ofIndia (the "ICAI"). Our responsibilities under those Standards are furtherdescribed in the 'Auditor's Responsibility for the Audit of the Standalone FinancialStatements' section of our report. We are independent of the REIT in accordance with theCode of Ethics issued by the ICAI and have fulfilled our ethical responsibilities inaccordance with the ICAI's Code of Ethics. We believe that the audit evidence obtained byus is sufficient and appropriate to provide a basis for our audit opinion on thestandalone financial statements.
Emphasis of matter
We draw attention to Note 10(a)(i) of the standalone financial statements whichdescribes the presentation of "Unit Capital" as "Equity" to complywith REIT Regulations. Our opinion is not modified in respect of this matter.
Key Audit Matter
Key audit matter is the matter that in our professional judgment was of mostsignificance in our audit of the standalone financial statements of the current period.This matter was addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on this matter. We have determined the matter described below to be thekey audit matter to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|Fair Value of investments in subsidiaries: ||Principal Audit Procedures Performed: |
|In accordance with REIT Regulations the REIT discloses Statement of Net Assets at Fair Value and Statement of Total Return at Fair Value which requires fair valuation of assets and liabilities. As at March 31 2022 fair value of total assets was Rs 111905.55 million; out of which fair value of investment in subsidiaries is Rs 111102.45 million representing 98% of the fair value of total assets. ||Our audit procedures related to the forecasted market rent terminal capitalization rates and discount rate used to determine the fair value of investment property included the following among others: |
| || We obtained the independent valuer's valuation reports to obtain an understanding of the source of information used by the independent valuer in determining these assumptions. |
|The fair value of investments in subsidiaries is primarily determined basis the fair value of the underlying investment property as at March 31 2022. || |
|The fair value of investment property is determined by an independent valuer using discounted cash flow method. || We tested the reasonableness of inputs shared by management with the independent valuer by comparing it to source information used in preparing the inputs such as rent rolls. |
|While there are several assumptions that are required to determine the fair value of investment property; assumptions with the highest degree of estimate subjectivity and impact on fair values are forecasted market rent terminal capitalization rate and discount rate. Auditing these assumptions required a high degree of auditor judgement as the estimates made by the independent valuer contains significant measurement uncertainty. || We evaluated the reasonableness of management's forecasted market rent by comparing it with sample of lease agreements for ongoing rentals contractual lease escalations and other market information as applicable. |
|Refer Statement of Net assets at fair value and Statement of total return at fair value in the standalone financial statements. || With the assistance of our fair valuation specialist we evaluated the reasonableness of forecasted market rent terminal capitalization rates and discount rate by comparing it with market information such as recent market transactions for comparable properties market surveys by property consultants and broker quotes as applicable. |
INFORMATION OTHER THAN THE FINANCIAL
STATEMENTS AND AUDITOR'S REPORT THEREON
Brookprop Management Services Private Limited (the 'Investment Manager') actingin its capacity as an Investment Manager of REIT is responsible for the other information.The other information comprises the information included in the Annual Report but doesnot include the standalone financial statements consolidated financial statements and ourauditor's report thereon. The Annual Report is expected to be made available to us afterthe date of this auditor's report.
Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe standalone financial statements or our knowledge obtained during the course of ouraudit or otherwise appears to be materially misstated.
When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance as required under SA 720 'The Auditor's responsibilities Relating to OtherInformation'.
MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
The Board of Directors of the Investment Manager (the "Board") is responsiblefor the preparation of these standalone financial statements that give a true and fairview of the financial position financial performance including other comprehensiveincome cash flows changes in unitholders' equity net assets at fair value total returnat fair value of the REIT Net Distributable Cash Flow of the REIT and other financialinformation of the REIT in conformity with the REIT Regulations the Indian AccountingStandards as defined in Rule 2(1)(a) of the Companies (Indian Accounting Standards) Rules2015 (as amended) and other accounting principles generally accepted in India to theextent not inconsistent with REIT Regulations. This responsibility also includesmaintenance of adequate accounting records for safeguarding the assets of the REIT and forpreventing and detecting frauds
and other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statement that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the Board is responsible forassessing the REIT's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board either intends to liquidate the REIT or to cease operations or has no realisticalternative but to do so.
The Board is also responsible for overseeing the financial reporting process of REIT.
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 to provide a basis for ouropinion.
The risk of not detecting a material misstatement resulting from fraud is higher thanfor one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the
circumstances but not for the purpose of expressing an opinion on the effectiveness ofthe REIT's internal control.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the Board.
Conclude on the appropriateness of Board's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the REIT'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 REIT 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.
Obtain sufficient appropriate audit evidence regarding the standalone financialstatements of the REIT to express an opinion on the standalone financial statements.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified 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
Based on our audit and as required by REIT regulations we report that:
a) We have obtained all the information and
explanations which to the best of our knowledge and belief were necessary for thepurposes of our audit.
b) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flows Statement of Changes in Unitholders' EquityStatement of Net Assets at fair value Statement of Total Return at fair value and theStatement of Net Distributable Cash Flow dealt with by this Report are in agreement withthe relevant books of account of REIT.
c) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards as defined in Rule 2(1)(a) of the Companies (Indian AccountingStandards) Rules 2015 (as amended) and other accounting principles generally accepted inIndia to the extent not inconsistent with REIT Regulations.
| ||For DELOITTE HASKINS & SELLS |
| ||Chartered Accountants |
| ||(Firm's Reg. No. 015125N) |
| ||Anand Subramanian |
| ||Partner |
|Place: Bengaluru ||(Membership No. 110815) |
|Date: May 18 2022 ||(UDIN: 22110815AJEGQK5315) |