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GMR Infrastructure Ltd.

BSE: 532754 Sector: Engineering
NSE: GMRINFRA ISIN Code: INE776C01039
BSE 00:00 | 27 Nov 26.80 0.95
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NSE 00:00 | 27 Nov 26.80 0.95
(3.68%)
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OPEN 25.75
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VOLUME 1704376
52-Week high 28.25
52-Week low 14.10
P/E
Mkt Cap.(Rs cr) 16,176
Buy Price 26.80
Buy Qty 30.00
Sell Price 26.80
Sell Qty 120.00
OPEN 25.75
CLOSE 25.85
VOLUME 1704376
52-Week high 28.25
52-Week low 14.10
P/E
Mkt Cap.(Rs cr) 16,176
Buy Price 26.80
Buy Qty 30.00
Sell Price 26.80
Sell Qty 120.00

GMR Infrastructure Ltd. (GMRINFRA) - Auditors Report

Company auditors report

To the Members of GMR Infrastructure Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Qualified Opinion

We have audited the accompanying standalone Ind AS financial statements of GMRInfrastructure Limited ("the Company") which comprise the Balance sheet as atMarch 31 2019 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information.

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 ‘Basisfor Qualified Opinion' section of our report the aforesaid standalone Ind AS financialstatements give the information required by the Companies Act 2013 as amended ("theAct") in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2019 its loss including other comprehensive income its cash flows andthe changes in equity for the year ended on that date.

Basis for Qualified Opinion

As detailed in note 5(5) to the accompanying standalone Ind AS financial statements forthe year ended March 31 2019 GMR Energy Limited (‘GEL') GMR Vemagiri PowerGeneration Limited (‘GVPGL') and GMR Rajahmundry Energy Limited (‘GREL') haveceased operations and have been incurring significant losses with a consequential erosionof net worth resulting from the continued unavailability of adequate supply of naturalgas. Further GREL has rescheduled the repayment of project loans due to implementation ofthe Strategic Debt Restructuring Scheme to convert part of the debt outstanding intoequity and has signed a Resolution Plan with the lenders to restructure its debtobligations during the year. The carrying value of the investments/ obligations in theseentities is significantly dependent on the achievement of key assumptions aroundavailability of natural gas future tariff and the outcome of the sale of the Bargemounted power plant. Accordingly we are unable to comment on the carrying value of theinvestments (including advances)/obligations in these entities as at March 31 2019. Inrespect of the above matter our audit report for the year ended March 31 2018 was alsosimilarly qualified.

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 qualified audit opinion on the standalone Ind AS financial statements.

Emphasis of Matter

We draw attention to the following matters in the notes to the accompanying standaloneInd AS financial statements for the year ended March 31 2019:

a) Note 5(10) and 5(11) with regard to the ongoing arbitration for compensation oflosses being incurred by GMR Ambala Chandigarh Expressways Private Limited (‘GACEPL')and GMR Hyderabad Vijayawada Expressways Private Limited (‘GHVEPL') subsidiaries ofthe Company since the commencement of commercial operations. Pending outcome of thearbitration proceedings finalisation of the proposed resolution plan with the lenders byGHVEPL and external legal opinion obtained by the management of GACEPL and GHVEPL themanagement of the Company is of the view that the carrying value of the investments(including loans and advances and other receivables)/ obligations as at March 31 2019 inGACEPL and GHVEPL is appropriate.

b) Note 5(9) regarding the cessation of construction of the 300 MW hydro based powerplant on Alaknanda river Uttarakhand which was being constructed by GMR Badrinath HydroPower Generation Private Limited (‘GBHPL') a joint venture of the Company. TheHon'ble Supreme Court of India (‘the Supreme Court') while hearing a civil appeal inthe matters of another hydro power company directed that no further construction workshall be undertaken until further orders. Based on a business plan and valuationassessment by an external expert during the year ended March 31 2019 management is of theview that the carrying value of the investments in GBHPL as at March 31 2019 isappropriate.

c) Note 5(7) and 5(8) in connection with certain claims receivables and counter claimsfrom customers of GMR Warora Energy Limited (‘GWEL') and GMR Kamalanga Energy Limited(‘GKEL') joint ventures of the Company pending settlement / realisation as at March31 2019. The management of the Group based on its internal assessment legal expertadvice and certain interim favourable regulatory orders has not made any adjustments inthe accompanying standalone Ind AS financial statements for the year ended March 31 2019.

d) Note 5(6) as regards the process of ‘change of control' of GMR ChhattisgarhEnergy Limited (‘GCEL') an associate of the Company initiated by Consortium oflenders' of GCEL who are also the majority shareholders. The Company has accounted forinvestments in GCEL at fair value and is of the view that no consequential liability wouldarise pertaining to (a) settlement of dues to the EPC contractor (b) exposure relating todeposits and guarantees given by the Company along with its subsidiaries and (c) surrenderof coal mines and transmission lines and other matters for reasons as detailed in theaforesaid note.

Our opinion is not qualified in respect of the aforesaid matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the standalone Ind AS financial statements for the financialyear ended March 31 2019. 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. In addition to the matter describedin the ‘Basis for Qualified Opinion' section we have determined the matters describedbelow to be the key audit matters to be communicated in our report. For each matter belowour description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor's responsibilities forthe audit of the standalone Ind AS financial statements section of our report includingin relation to these matters. Accordingly our audit included the performance ofprocedures designed to respond to our assessment of the risks of material misstatement ofthe standalone Ind AS financial statements. The results of our audit procedures includingthe procedures performed to address the matters below provide the basis for our auditopinion on the accompanying standalone Ind AS financial statements.

Key audit matters How our audit addressed the key audit matter
Fair value measurement of investments in equity shares (including other equity)
During the year ended March 31 2019 the Company has voluntarily changed its accounting policy to measure its equity investments in subsidiaries associates and joint ventures from cost as per Ind AS 27 "Separate Financial Statements" to fair value as per Ind AS 109 "Financial instruments" with retrospective effect. The Company has total non-current investment of Rs.18419.03 crore as at March 31 2019. Our audit procedures to assess the reasonableness of fair valuation of equity investments included the following:
The determination of recoverable amounts of the Company's investments in subsidiaries associates and joint ventures relies on management's estimates of future cash flows and their judgment with respect to conclusion of tariff rates operational performance of the plants and coal mines life extension plans availability and market prices of gas coal and other fuels restructuring of loans etc. in case of investments in entities in the energy business estimation of passenger and vehicle traffic and rates and favourable outcomes of litigations etc. in the airport and expressway business. Fair value of investment in SEZ sector is determined based on available data for similar immovable property/investment or observable market prices less increamental cost for disposing off the immovable properties/investments. Significant judgements are required to determine the aforesaid assumptions used in the discounted cash flow models. Due to the uncertainty of forecasting and discounting future cash flows being inherently subjective the level of management's judgement involved and the significance of the Company's investment as at March 31 2019 we have considered this as a key audit matter. We have carried out assessment of forecasts of future cash flows prepared by the management evaluating the assumptions and comparing the estimates to externally available industry economic and financial data;
We have evaluated the Company's valuation methodology in determining the fair value of the investment. In making this assessment we also assessed the professional competence objectivity and capabilities of the valuation specialist engaged by the management;
We also assessed the key assumptions adopted in the cash flow forecasts with the support of our in-house valuation experts and performed sensitivity analysis on aforesaid key assumptions;
We have carried out discussions with management on the performance of the Company's investments as compared to previous year in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable;
We tested the arithmetical accuracy of the models
We have reviewed the related disclosures in the standalone Ind AS financial statements as required by the relevant accounting standards;
Revenue recognition and measurement of upfront losses on Long-term construction contracts
For the year ended March 31 2019 the Company recognized revenue from Engineering procurement and construction (EPC) contracts of Rs. 763.04 Crore and has made provisions for upfront losses amounting to Rs. 148.06 crore as at March 31 2019. Our audit procedures included the following:
Revenue from these contracts is recognized over a period 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 proportion of contract costs incurred to date compared to estimated total contract costs which involves significant judgments identification of contractual obligations and the Company's rights to receive payments for performance completed till date changes in scope and consequential revised contract price and recognition of the liability for loss making contracts/onerous obligations. We evaluated the Company's accounting policies pertaining to revenue recognition and assessed compliance with the policies in terms of Ind AS 115- Revenue from Contracts with Customers.
Accuracy of revenues onerous obligations and profits/loss may deviate significantly on account of change in judgements and estimates. For this reason we identified revenue recognition and provision for upfront losses from EPC contracts as a key audit matter. We identified and tested controls related to revenue recognition and our audit procedure focused on determination of progress of completion recording of costs incurred and estimation of costs to complete the remaining contract obligations through inspection of evidence of performance of these controls.
The measurement of revenue recognition requires management's estimates in respect of revenue budgeted costs as well as the percentage of completion for construction works. In our testing of the revenue recognition and provision for upfront losses for the reporting period we selected EPC contracts on a sample basis and:
discussed with management and the respective project teams about the progress of the projects;
reviewed the management's evaluation process to recognize revenue over a period of time the status of completion for projects and total cost estimates.
assessed management's estimates of the impact to revenue and budgeted costs arising from scope changes made to the original contracts claims disputes and liquidation damages with reference to supporting documents including variation orders and correspondence between the Company and the customers.
tested on a sample basis the actual costs incurred on construction works during the reporting period;
recalculated the revised percentage of completion based on the latest budgeted final costs and the total actual costs incurred;
recalculated the revenue recognised based on the revised percentage of completion.
We have reviewed the related disclosures in the standalone Ind AS financial statements as required by the relevant accounting standards;
Assessment of going concern basis - (as described in note 2.1 of the financial statements)
As at March 31 2019 the Company along with its subsidiaries associates and joint ventures (‘the Group') have incurred losses with a consequent erosion of its networth lower credit ratings for some of its borrowings and has net current liabilities of Rs. 2408.26 crore. Our audit procedures included the following:
As disclosed in the assessment of liquidity risk in note 38 to the standalone Ind AS financial statements the Company has financial liabilities of Rs.3978.12 crore to be settled within one year from March 31 2019. Further the Company has commitments towards funding support to its Group Companies and Cor- porate guarantees issued to lenders / outsiders on behalf of its Group Compa- nies as detailed in Note 37. We have obtained an understanding of the process of management assessment of going concern and also assessed the same.
The Company has prepared cash flow forecast for next twelve months which involves judgement and estimation around sources of funds to meet the financial obligations and cash flow requirements over the next twelve months. We read the management assesment in Note 2.1 which states:
Considering the above we have identified the assessment of going concern assumption as a key audit matter considering that the Company has net cur- rent liabilities. Management is taking various initiatives including monetisation of assets sale of stake in certain assets raising finances from finan- cial institutions and strategic investors refinancing of existing debt and other strategic initiatives for reduction of debt. Pursuant to such initiatives the Group had successfully divested its stake in cer- tain assets in the highway sector airport sector and energy sector in last few years. Further as detailed in note 5(2) the management has signed a binding term sheet with certain investors to divest equity stake in GMR Airport Limited (GAL) on a fully diluted basis for a consideration of Rs. 8000 crore. The divestment is subject to obtaining requisite approvals as stated in the aforesaid note and once successfully completed will enable the Group to meet their financial obligations and cash flow requirements.
We have obtained the future cash flows of the Company which are largely based on the expected proceeds upon successful closure of divestment of equity stake in GAL for which a binding term sheet has already been signed. We have considered the same for our assessment of the Company's capability to meet its financial obligation falling due within next twelve months.
We have reviewed the binding term sheet to divest stake in GAL as detailed in note 5(2) to the financial statement to meet the cash flow requirement of the Company.
We have assessed the disclosures made by the Company in relation to this matter.

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 otherinformation is expected to be made available to us after the date of this auditor'sreport.

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 financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

Responsibilities of the Management for the Standalone Ind AS 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 Board of Directors are also responsible for overseeing the Company's financialreporting 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 judgement 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 Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies 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 2019 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 Order") issued bythe Central Government of India in terms of subsection (11) of section 143 of the Act wegive in the "Annexure I" 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 except for the matter described in the for Qualified Opinionparagraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit;

(b) Except for the matter described in the Basis for Qualified Opinion paragraph inour opinion proper books of account as required by law have been kept by the Company sofar as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;

(d) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion the aforesaid Ind AS financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;

(e) The matter described in the Basis for Qualified Opinion paragraph Emphasis ofMatter paragraph and Qualified Opinion paragraph of ‘Annexure II' to this report inour opinion may have an adverse effect on the functioning of the Company;

(f) On the basis of the written representations received from the directors as on March31 2019 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;

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

(h) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to ("the these standalone Ind AS financialstatements and the operating effectiveness of such controls refer to our separate Reportin "Annexure II" to this report;

(i) In our opinion the managerial remuneration for the year ended March 31 2019 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act.

(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 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 has made provision as required the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company

For S.R. BATLIBOI & ASSOCIATES LLP

ICAI Firm Registration Number: 101049W/E300004

Chartered Accountants

per Sandeep Karnani

Partner under

Membership number: 061207

Place: New Delhi

Date: May 29 2019

Annexure I referred to in clause 1 of paragraph on the report on other legal andregulatory requirements of our report of even date

Re: GMR Infrastructure Limited

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment;

(b) All pr operty plant and equipment have not been verified by the management of theCompany during the year but there is a regular programme of verification which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

(c) A ccording to the information and explanations given to the management of theCompany the title deeds of immovable properties included in property plant and equipmentare held in the name of the Company.

(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 ccording to the information and explanations given to us management of theCompany the Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Accordingly the provisions of clause 3(iii) (a) (b) and (c) ofthe Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us bythe management of the Company there are no loans guarantees and securities granted inrespect of which provisions of sections 185 and 186 of the Act are applicable and hencenot commented upon. In our opinion and according to the information and explanations givento us by the management of the Company the provisions of section 186 of the Companies Act2013 in respect of investments made has been complied with by the Company.

(v) The C ompany has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of physicallyDeposits) 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 Act related to the construction activities and are of the opinionthat us by prima facie the specified accounts and records have been made and maintained.We have not however made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including employees' state insurance income-taxsales-tax service-tax duty of customs duty of excise value added tax goods andservice tax cess and other material statutory dues as applicable to the Company havegenerally been regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us by the management of theCompany no undisputed amounts payable in respect of provident fund employees' stateinsurance income-tax service tax sales-tax duty of customs duty of excise valueadded tax goods and service tax cess and other material statutory dues as applicable tothe Company were outstanding at the year end for a period of more than six months fromthe date they became payable.

(c) A ccording to the records of the Company the dues outstanding of income-taxsales-tax service tax duty of customs duty of excise value added tax goods andservice tax and cess on account of any dispute are as follows:

Name of the statute Nature of the dues Amount

Period for which amounts relates to

Forum where dispute is pending
( Rs. in crore)
Finance Act 1994 Service tax 41.53 October 2007 to March 2014 Commissioner of Service Tax Bangalore
Finance Act 1994 Service tax 0.80 FY 2012-13 to 2014-15 Joint Commissioner of Central Tax Bangalore
Finance Act 1994 Service tax 0.17 FY 2015-16 to 2017-18 Assistant Commissioner of Central Tax Bangalore
Central Excise Act 1944 Central excise duty (including penal charges and excluding interest) 1.03 March 2011 to December 2012 Office of the Commissioner of Customs Central Excise and Service Tax Hyderabad-III Commissionerate
Odisha Value Added Tax Act 2004 Value Added Tax 2.40 November 2012 to March 2015 Additional Commissioner of Sales Tax Bhubaneswar
Income Tax Act 1961 Income Taxes* 215.20 FY 2007-08 to 2015-16 Income Tax Appellate Tribunal

* Net of Rs. 29.12 crore paid by the Company.

(viii) In our opinion and according to the information and given to us by themanagement of the Company the Company has not defaulted in repayment of loans orborrowing to a financial institution as at March 31 2019. According to the informationand explanations given by the management the Company has delayed in repayment of loans orborrowings to banks and dues to debenture holders during the year the details of whichare provided as below (Refer Note 16 (39):

Particulars Amount (in crore) Period of Default (No. of Days)
Principal repayment to a bank 25.74 0-30
Principal/ Premium repayment/pay- ment on non-convertible debentures 59.24 0-30
Interest payment on Foreign Currency Convertible Bonds 159.15 0-120

The Company did not have any outstanding loans or borrowings dues in respect ofgovernment.

(ix) A ccording to the information and explanations given to us by management of theCompany the Company has not raised any money by way of initial public offer / furtherpublic offer / debt instruments except term loans during the year. In our opinion andaccording to the information and explanations given to us by the management of theCompany the Company has utilized the monies raised by way of term loans during the yearfor the purposes for which they were raised.

(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 to us by the management of the Company we report that no fraud by the Company or nofraud on the Company by the officers and employees of the Company has been noticed orreported during the year.

(xi) A ccording to the information and explanations given to us by management of theCompany the managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.

(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) A ccording to the information and explanations given to us by the management ofthe Company transactions with the related parties are in compliance with section 177 and188 of the Act where applicable and the details have been disclosed in the notes to thestandalone Ind AS financial statements as required by the applicable accountingstandards.

(xiv) A ccording 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 hence not commented upon.

(xv) A ccording to the information and explanations given to us by the management ofthe Company the Company has not entered into any the non-cash transactions with directorsor persons connected with him as referred to in section 192 of the Act.

(xvi) A ccording to the information and explanations given to us and based on a legalopinion obtained by the management of the Company the provisions of section 45-IA of theReserve Bank of India Act 1934 are not applicable to the Company.

For S.R. BATLIBOI & ASSOCIATES LLP

ICAI Firm Registration Number: 101049W/E300004

Chartered Accountants

per Sandeep Karnani

Partner

Membership number: 061207

Place: New Delhi

Date: May 29 2019

Annexure II to the Independent auditor's report of even date on the Standalone Ind ASfinancial statements of GMR Infrastructure Limited

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 GMRInfrastructure Limited (‘the Company') as of March 31 2019 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the yearended on 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 Reporting (the ‘Guidance Note') issued by the Institute of Chartered Accountants of India(‘ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to the Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required 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 Noteand the Standards on Auditing as specified under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls and both issuedby the ICAI. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting with reference to thesestandalone Ind AS financial statements was established and maintained and if such controlsoperated effectively in all material respects.

An 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 standalone Ind AS financialstatements 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 Company's internal financialcontrols over financial reporting with reference to these standalone Ind AS financialstatements.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to theseStandalone Ind AS Financial 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 of thestandalone Ind AS financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting with reference to these standalone Ind AS financial statements includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the standalone Ind AS 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing material weakness has been identified in the operating effectiveness of theCompany's internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements as at March 31 2019:

(a) The Company's internal financial control with regard to assessment of carryingvalue of investments in certain subsidiaries joint ventures and associates as more fullyexplained in note 5(5) to the standalone Ind AS financial statements were not operatingeffectively and could potentially result in the Company not providing for adjustments thatmay be required to be made to the carrying value of such investments.

A ‘ material weakness' is a deficiency or a combination of in internal financialcontrol over financial reporting such that there is a reasonable possibility that amaterial misstatement of the company's annual or interim financial statements will not beprevented or detected on a timely basis.

In our opinion the Company has in all material respects maintained adequate internalfinancial controls over financial reporting with reference to these standalone Ind ASfinancial statements as of March 31 2019 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI and except for thepossible effects of the material weakness described above on the achievement of theobjectives of the control criteria the Company's internal financial controls overfinancial reporting with reference to these standalone Ind AS financial statements wereoperating effectively as of March 31 2019.

Explanatory Paragraph

We also have audited in accordance with the Standards on Auditing issued by the ICAIas specified under Section 143(10) of the Act the standalone Ind AS financial statementsof the Company which comprise the Balance Sheet as at March 31 2019 and the relatedStatement of Profit and Loss Statement of changes in equity and Cash Flow Statement forthe year then ended and a summary of significant accounting policies and otherexplanatory information. The material weakness referred to in the Qualified opinionparagraph above was considered in determining the nature timing and extent of audittests applied in our audit of the March 31 2019 standalone Ind AS financial statements ofthe Company and this report affects our report dated May 29 2019 which expressed aqualified opinion on those standalone Ind AS financial statements.

For S.R. BATLIBOI & ASSOCIATES LLP

ICAI Firm Registration Number: 101049W/E300004

Chartered Accountants

per Sandeep Karnani

Partner

Membership number: 061207

Place: New Delhi

Date: May 29 2019

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