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Capacite Infraprojects Ltd.

BSE: 540710 Sector: Infrastructure
NSE: CAPACITE ISIN Code: INE264T01014
BSE 00:00 | 03 Aug 243.95 1.20
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NSE 00:00 | 03 Aug 244.10 2.70
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HIGH

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OPEN 241.00
PREVIOUS CLOSE 242.75
VOLUME 71595
52-Week high 251.05
52-Week low 89.95
P/E 938.27
Mkt Cap.(Rs cr) 1,656
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 241.00
CLOSE 242.75
VOLUME 71595
52-Week high 251.05
52-Week low 89.95
P/E 938.27
Mkt Cap.(Rs cr) 1,656
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Capacite Infraprojects Ltd. (CAPACITE) - Auditors Report

Company auditors report

To the Members of

Capacit'e Infraprojects Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of Capacit'eInfraprojects Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss including Other Comprehensive Income theCash Flow Statement and the Statement of Changes in Equity for the year then ended andnotes to the standalone Ind AS financial statements including a summary of significantaccounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 as amended ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2020its profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the ‘Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the ‘Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements..

Emphasis of Matter

We draw attention to note 46 of the standalone Ind AS financial statements whichdescribes the management assessment of uncertainties related to Covid-19 and itsconsequential impact including the recoverability of its assets and operations of theCompany. Our opinion is not modified with respect to this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements for the financialyear ended March 31 2020. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. For each matter below ourdescription of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone Ind AS financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Key audit matters How our audit addressed the key audit matter
Revenue recognition for construction contracts (as described in Note 36 of the standalone Ind AS financial statements)
The Company's significant portion of business is undertaken through engineering procurement and construction contracts. • Our audit procedures included reading the Company's revenue recognition accounting policies and assessing compliance with the policies in terms of Ind AS 115 - Revenue from Contracts with Customers.
Revenue from these contracts are recognized over a period of time or at a point of time in accordance with the requirements of Ind AS 115 ‘Revenue from Contracts with Customers'. Due to the nature of the contracts revenue recognition involves usage of percentage of completion method which is determined based on survey of work done by the Company. This involves significant judgments identification of contractual obligations and the Company's rights to receive payments for performance obligation completed till date. Accuracy of revenues and determination of onerous obligations involves significant judgements and estimates which may impact the profits. Accordingly this is considered as a key audit matter. • We understood and tested on a sample basis the design and operating effectiveness of management control over revenue recognition with focus on determination of extent of completion.
• We performed test of details on a sample basis and read the underlying customer contracts for terms and conditions.
• We understood the management's process to recognize revenue over a period of time or at a point of time status of completion of projects and total cost to completion estimates.
• We tested contracts with low or negative margins to assess the level of provisioning required including for onerous obligations.
• We tested that the contractual positions and revenue for the year are presented and disclosed in compliance of Ind AS 115 in the financial statements.
• We read the disclosures made by management in compliance of Ind AS 115 tested the disclosures made with underlying transactions.
Trade receivables and contract assets (as described in Note 36 of the standalone Ind AS financial statements)
Trade receivables and contract assets amounting to RS 467.04 crores and RS 539.11 crores respectively represents approximately 42.57% of the total assets of the Company as at March 31 2020. In assessing the recoverability of the aforesaid balances and determination of allowance for expected credit loss management's judgement involves consideration of aging status historical payment records evaluation of litigations the likelihood of collection based on the terms of the contract and the credit information of its customer including the possible effect from the pandemic relating to COVID-19. Management estimation is required in the measurement of work completed during the period for recognition of unbilled revenue. We considered this as key audit matter due to the materiality of the amounts and significant estimates and judgements as stated above Our audit procedures amongst others included the following:
• We understood and tested on a sample basis the design and operating effectiveness of management control over assessing the recoverability of the trade receivables and contract assets.
• We performed test of details and tested relevant contracts documents and subsequent receipts for material trade receivable balances and amounts included in contract assets that are due on performance of future obligations.
• We tested the aging of trade receivables at year end.
• We performed test of details and tested relevant contracts and documents with focus on measurement of work completed during the period for material unbilled revenue balances included in contract asset.
• We performed additional procedures which include on test check basis read the communications to/ from customer physical site visits verification of last bills certified and subsequent client certifications.
• We assessed the allowance for expected credit loss made by management including the possible effect from the pandemic relating to COVID-19.

We have determined that there are no other key audit matters to communicate in ourreport.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe standalone Ind AS financial statements and our auditor's report thereon. The Annualreport is expected to be made available to us after the date of this auditor's report.

Our opinion on the standalone Ind AS 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 Ind AS financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether such other information is materially inconsistent withthe standalone Ind AS financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.

When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Standalone IndAS 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 Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone Ind AS 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 charged with governance are also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial 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 Ind AS 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 standalone Ind ASfinancial 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Companyhas adequate internal financial controls with reference to financial statements in placeand the operating effectiveness 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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 Ind AS financialstatements for the financial year ended March 31 2020 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits 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 sub-section (11) of section 143 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 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 purposes of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

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

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 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 with reference to these standalone Ind AS financial statementsand the operating effectiveness of such controls refer to our separate Report in Annexure2 to this report;

(g) In our opinion the managerial remuneration for the year ended March 31 2020 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the 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. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements – Refer Note 37 to thestandalone Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and

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

ANNEXURE 1 REFERRED TO IN PARAGRAPRS 1 UNDER THE HEADING "REPORT ON OTHER LEGALAND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE

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

(b) Fixed Assets [other than site establishment assets (Gross Block of RS 33395.89lakhs; Net Block of Accuracy of revenues and determination of onerous obligationsinvolves significant judgements and estimates which may impact the profits. Accordinglythis is considered as a key audit matter.RS 19405.35 lakhs referred to in Note 4 to thestandalone Ind AS financial statements) which is charged absorbed / charged off to thestatement of profit and loss as per the life of the project] have been physically verifiedby the management during the year and no material discrepancies were identified on suchverification.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipment are held in thename of the company.

(ii) Management has conducted the physical verification of inventory at reasonableintervals during the year. The discrepancies noted on physical verification of inventoryas compared to book records were not material.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees and securities given in respect of whichprovisions of section 185 and 186 of the Companies Act 2013 are applicable and hence notcommented upon.

(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 related to the construction and infrastructuraldevelopment and are of the opinion that prima facie the specified accounts and recordshave been made and maintained. We have not however made a detailed examination of thesame.

(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom value added tax goods andservices tax cess and other statutory dues have generally been regularly deposited withthe appropriate authorities though there has been a slight delay in a few cases. Theprovisions of the duty of excise are not applicable to the company.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom value added tax goods and services tax cess and otherstatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable. The provisions of the duty of excise are not applicableto the company.

(c) According to the information and explanations given to us there are no dues ofincome tax sales-tax service tax customs duty value added tax goods and services taxand cess which have not been deposited on account of any dispute. The provisions of theduty of excise are not applicable to the company.

(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowing to afinancial institution bank or government. The Company did not have any outstanding duesto debenture holders during the year.

(ix) In our opinion and according to information and explanations given by themanagement monies raised by the company by way of initial public offer and term loanswere applied for the purpose for which they were raised though idle/surplus funds whichwere not required for immediate utilization have been gainfully invested in liquidinvestments payable on demand. The maximum amount of idle/surplus funds invested duringthe year was RS 5722.80 lakhs of which NIL was outstanding at the end of the year.

(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 fraud on the companyby the officers and employees of the Company has been noticed or reported during 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 section 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 connected withhim 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.

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE IND ASFINANCIAL STATEMENTS OF CAPACIT'E 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 Capacit'eInfraprojects Limited ("the Company") as of March 31 2020 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon that date.

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 with reference to these standalone Ind AS financialstatements based on our audit. We conducted our audit in accordance with the Guidance Noteon Audit of Internal Financial Controls Over Financial Reporting (the "GuidanceNote") and the Standards on Auditing as specified under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to thesestandalone Ind AS financial statements and their operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting with reference to these standaloneInd AS financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue 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 internal financial controls over financialreporting with reference to these standalone Ind AS financial statements.

Meaning of Internal Financial Controls Over Financial Reporting with Reference to theseFinancial Statements

A company's internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingwith reference to these standalone Ind AS financial statements includes those policies andprocedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) 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

(3) 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 financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting withReference to these Standalone Ind AS Financial Statements

Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone Ind AS financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone Ind AS financial statements to future periods are subject to the riskthat the internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements and such internal financial controls over financial reporting with reference tothese standalone Ind AS financial statements were operating effectively as at March 312020 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India

For S R B C & CO LLP
Chartered Accountants ICAI Firm Registration Number: 324982E/E300003
Per Jayesh Gandhi
Partner Membership Number: 037924 UDIN: 20037924AAAADS8751
Place of Signature: Mumbai
Date: June 18 2020

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