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IL&FS Transportation Networks Ltd.

BSE: 533177 Sector: Engineering
NSE: IL&FSTRANS ISIN Code: INE975G01012
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VOLUME 74330
52-Week high 6.99
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Mkt Cap.(Rs cr) 133
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OPEN 4.06
CLOSE 3.87
VOLUME 74330
52-Week high 6.99
52-Week low 1.34
P/E
Mkt Cap.(Rs cr) 133
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

IL&FS Transportation Networks Ltd. (IL&FSTRANS) - Auditors Report

Company auditors report

To the Members of IL&FS Transportation Networks Limited

Report on audit of standalone Ind AS financial statements

Disclaimer of Opinion

We were engaged to audit the accompanying standalone Ind AS financial statements ofIL&FS Transportation Networks Limited (the "Company") which comprise thestandalone Balance Sheet as at March 31 2019 the standalone Statement of Profit and Lossincluding the Other Comprehensive Income the standalone Cash Flow Statement and thestandalone Statement of Changes in Equity for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information.

We do not express an opinion on the accompanying standalone Ind AS financial statementsof the Company. Because of the significance of the matters described in the Basis forDisclaimer of Opinion and Material Uncertainty Related to Going Concern sections of ourreport we have not been able to obtain sufficient appropriate audit evidence to provide abasis for an audit opinion on the accompanying standalone Ind AS financial statements.

Basis for Disclaimer of Opinion

The matters in Paragraphs 1 to 15 below should be read with Note 1.2 to theaccompanying standalone Ind AS financial statements which discusses certain key events ofthe year including reconstitution of the board of directors of the Company and Note 1.3 tothe accompanying standalone Ind AS financial statements regarding the resolution processfollowed by the board of directors in relation to the Company's operations as well as therelevant notes referred to here in below.

1. (a) As mentioned in Note 1.5 to the accompanying standalone Ind AS financialstatements on January 1 2019 the Company its Holding Company (Infrastructure Leasing& Financial Services Limited) and its fellow subsidiary (IL&FS Financial ServicesLimited) received orders from the National Company Law Tribunal for the reopening andrecasting of their accounts in respect of financial years 2013-14 to 2017-18 underSection 130 of the Companies Act 2013. Such process of reopening and recasting of prioryears' accounts is currently in progress.

(b) As mentioned in Note 1.6 to the accompanying standalone Ind AS financialstatements the Board of Directors of the Holding Company have initiated a third-partyforensic examination of various matters for the period April 2013 to September 2018 whichis currently ongoing.

(c) As mentioned in Note 1.7 to the accompanying standalone Ind AS financialstatements there are ongoing investigations by various regulatory authorities on theCompany including investigation in respect of borrowings obtained from the third partieshaving outstanding balance amounting to Rs. 1181.33 Crores as at March 31 2019 as fullydescribed in Note 1.19 to the accompanying standalone Ind AS financial statements.

(d) As mentioned in Note 1.8 to the accompanying standalone Ind AS financialstatements management is in the process of reconciling claims received with its books ofaccount.

Consequently the accompanying standalone Ind AS financial statements do not includeany possible adjustments arising from the aforesaid matters including to the extent thesemay affect prior period comparatives presented therein.

2. We draw attention to Note 1.12 and Note 1.13 to the accompanying standalone Ind ASfinancial statements which explains the uncertainties involved in determining therecoverable value considered for determining provision for impairment and expected creditloss on investments loans trade and other receivables respectively (collectivelyreferred to as "Receivable Balances") during the current year:

a) The recoverable amount is subject to finalisation of the claim management process ofsubsidiaries and joint ventures and their audited financial statements. Further thedistribution mechanism applied for determining recoverable amount is not in accordancewith distribution mechanism approved by National Company Law Appellate Tribunal(‘NCLAT') vide its order dated March 12 2020;

b) Recoverable amount considered in case of certain Receivable Balances is based onbinding financial proposals approved by the Board of Directors and are subject torequisite approvals and acceptance of the Letter of Intent by the successful bidder;

c) Recoverable amount for certain Receivable Balances is based on Fair Valuation whichis subject to various internal and external factors including significant assumptions /estimates / judgments as at September 30 2018 and does not consider any adjustment tothe present value of the cash flows / working capital upto March 31 2019;

d) As further explained in Note 1.12 to the accompanying standalone Ind AS financialstatements the recoverable amount for certain Receivable Balances does not consider therequirement of the relevant Ind AS standards due to non-availability of the necessaryand/or complete information in respect thereof.

Further recoverable amount in respect of under construction projects is subject tofinalisation / acceptance / disbursement of settlement amount by the respectiveauthorities.

e) As mentioned in the note 1.12 to the accompanying standalone Ind AS financialstatements during the previous year the Company had not considered latest traffic studyreport for impairment assessment of a project and in the current year the impairmentprovision has been recognised basis the said latest traffic study report. In the absenceof the revised impairment assessment basis the latest traffic study report including itsconsequential impact on other significant assumptions we are unable to comment on theimpairment provision required in the previous year for the said project and itsconsequential impact accounted in the current year if any.

In view of the above uncertainties involved and absence of sufficient appropriate auditevidence to support the assumptions / estimates / judgements used in determination ofrecoverable amount for computing the impairment / expected credit loss we are unable tocomment on the possible effects of changes on account of aforesaid factors on thesestandalone Ind AS financial statements.

3. As mentioned in Note 1.11 of the accompanying standalone Ind AS financialstatements the Company is in the process of reconciling the completeness and status offinancial guarantees performance guarantees letter of awareness letter of comfortletter of assurance sponsor guarantees other arrangements and corporate guaranteesextended by it to / on behalf of its group (including overseas subsidiaries) / thirdparties in the period prior to September 30 2018 pending which the Company has notrecognised any resultant liabilities if any in the accompanying standalone Ind ASfinancial statements. Consequently the accompanying standalone Ind AS financialstatements do not include any possible adjustments in this regard.

4. With respect to following transactions we are unable to obtain sufficient andappropriate evidence about the underlying commercial substance and rationale of suchtransactions and consequential impact on the accompanying standalone Ind AS financialstatements:

a) Amounts paid during the year to certain related parties which are classified asloans amounting to Rs.

7.50 Crores have been fully impaired during the year as fully described in Note 5 (c)to the accompanying standalone Ind AS financial statements.

b) Construction cost and other direct expenses incurred/debited to statements of profitand loss during the year verified by us on a test check basis amounting to Rs. 52.26Crores as fully described in Note 24.1 to the accompanying standalone Ind AS financialstatements and in respect Miscellaneous expenses amounting to Rs. 3.50 Crores as fullydescribed in Note 29 (c).

5. As fully described in the Note 4 (i) to the accompanying standalone Ind AS financialstatements the Company has invested Rs. 172.60 Crores in the units of Real Estate AssetsPerformance Fund – I a SEBI registered Fund measured at fair value amounting to Rs.63.73 Crores as at March 31 2019. We have not been provided with the commercial substanceand rationale of the said investment including related expenses and the audited financialstatements of the said Fund as at March 31 2019. Hence we are unable to comment on thefair value of the said investment and other impact on the standalone Ind AS financialstatements if any.

6. As fully described in the note 1.5 to the accompanying standalone Ind AS financialstatements and further noted in paragraph 1 of our report stated above the followingtransactions/matters will be considered by management along with the process of reopening/ recasting of accounts in respect of financial years 2013-14 to 2017-18 pending which thecomparative information has not been restated:

a) Sale of equity shares of Moradabad Barely Expressway Limited (MBEL) and Gujarat RoadInfrastructure Company Limited (GRICL) which had resulted in gain amounting to Rs. 126Crores in the previous year and subsequently during the current year these investmentswere acquired by Real Estate Assets Performance Fund and the investment was made by theCompany in units of the said Fund as fully described in Note 4(i) to the accompanyingstandalone Ind AS financial statements.

b) Transfer of equity shares of wholly owned subsidiary Rajasthan Land Holdings Limited(RLHL) to Pario Developers Private Limited (‘Pario') (which was treated as anassociate) in exchange for preference shares issued by Pario which had resulted in gainamounting to Rs. 147.50 Crores in the previous year as fully described in Note 4(j) to theaccompanying standalone Ind AS financial statements.

Consequently during the year ended March 31 2019 the Company has recorded charge onaccount of impairment/fair valuation of aforementioned investment in units and preferenceshares amounting to Rs. 223.54 Crores.

7. As mentioned in Note 5 (d) to the accompanying standalone Ind AS financialstatements the Company had assigned Loans given to its subsidiaries and joint venture toa Bank on a Recourse basis and derecognized the said financial asset from the balancesheet amounting to Rs. 1000 Crores which is not in accordance with Ind AS 109.Accordingly financial assets and financial liabilities included in these financialstatements for the current year and previous year are understated by the said amount.

8. We have not received audit evidence as follows:

a) Reconciliation of differences with banks mentioned in Note 1.17 to the accompanyingstandalone Ind AS financial statements aggregating Rs 426.34 Crores which managementbelieves represents unauthorised adjustments made by the bank in the Company's bankaccount and unreconciled differences in bank reconciliation statements including directdebits by banks aggregating Rs 420.13 Crores for which the management is not aware of itsnature and the same are in the process of being reconciled by the Company (included inNote 13 to the accompanying standalone Ind AS financial statements).

b) Reconciliation with vendors/ sub-contractors as mentioned in Note 24.3 to theaccompanying standalone Ind AS financial statements.

Accordingly we are unable to comment on the consequential effects of the above on theaccompanying standalone Ind AS financial statements.

9. As mentioned in Note 24.1 of the accompanying standalone Ind AS financialstatements a third-party forensic audit in respect of construction cost and otheroperating expenses incurred in respect of various projects is currently ongoing. Hence weare unable to comment on any possible impact on the construction cost and other operatingexpenses and other consequential impact on the accompanying standalone Ind AS financialstatements if any.

10. As mentioned in Note 1.18 of the accompanying standalone Ind AS financialstatements as at March 31 2019 the Company has not carried out analysis fordetermination of recoverable value as per Ind AS 36 ‘Impairment of assets' and netrealisable value as per Ind AS 2 ‘Inventories' of its Property plant and equipmentand Inventories respectively. Further no physical verification for inventories has beencarried out. Consequently the accompanying standalone Ind AS financial statements do notinclude any possible adjustments in this regard.

11. As mentioned in Note 3 (c) of the accompanying standalone Ind AS financialstatements as at March 31 2019 the Company has valued its investment property as perReady Reckoner rate as notified by the Maharashtra State Government and which is not inaccordance with relevant Ind AS.

12. As mentioned in Note 1.10 to the accompanying standalone Ind AS financialstatements pending management's determination of the financial and other consequences ofthe litigations stated in the said note no adjustments have been made to the accompanyingstandalone Ind AS financial statements in this regard.

13. As mentioned in Note 1.9 to the accompanying standalone Ind AS financialstatements the Company is not in compliance with certain requirements / provisions ofapplicable laws and regulations as more fully stated in that note. Pending finaldetermination by management of the financial and other consequences arising from suchnon-compliances no adjustments have been made to the accompanying standalone Ind ASfinancial statements.

14. As mentioned in Note 1.14 to the accompanying standalone Ind AS financialstatements pending completion of audit of financial statements of various subsidiariesassociates and joint ventures as at and for the year ended March 31 2019 / December 312018 and/or the related completion of the inter-company balances reconciliation processwe are unable to comment on the adjustments that may be required and the consequentialeffects on the standalone Ind AS financial statements and disclosures of related partytransactions and balances in Note 41 to the accompanying standalone Ind AS financialstatements.

15. We have not received responses to our request for direct balance confirmationstowards borrowings of Rs.4489 Crores Bank balances of Rs. 62 Crores certain Tradereceivable balances aggregating to Rs. 180 Crores certain loans and advances aggregatingto Rs. 306 Crores and certain trade payables of Rs. 980 Crores and confirmation from banks/ financial institutions in respect of details of securities lien collateralsguarantees etc.

Material Uncertainty Related to Going Concern

We refer to Note 1.15 to the accompanying standalone Ind AS financial statements. TheCompany has incurred a loss (including other comprehensive income) of Rs 16956.12 Croresfor the year ended March 31 2019 and has net liabilities of Rs 13884.41 Crores as atMarch 31 2019. The Company has also suffered consistent downgrades in its credit ratingssince September 2018 as a result of which the Company's ability to raise funds has beensubstantially impaired with normal business operations being substantially curtailed.These conditions along with other matters set forth in that note indicate the existenceof a material uncertainty that may cast significant doubt about the Company's ability tocontinue as a going concern.

Emphasis of matter

As stated in Note 1.16 to the accompanying Ind AS financial statements the Company hasnot accounted for contractual interest income from its subsidiaries associates jointventures and third parties of Rs. 322 Crores on a gross basis and contractually payablefinance costs on borrowings of Rs.745 Crores (excluding penal / other interest andcharges) for the period from October 16 2018 to March 31 2019 pursuant to an orderpassed by NCLAT specifying October 15 2018 as cut-off date for initiation of resolutionprocess. This treatment is different from the applicable accounting standards specifiedunder section 133 of the Act.

Our opinion is not modified in respect of this matter.

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 the accompanying standalone Ind ASfinancial statements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the accompanying standalone Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

In preparing the accompanying standalone Ind AS financial statements the Board ofDirectors is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic 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 responsibility is to conduct an audit of the Company's standalone Ind AS financialstatements in accordance with Standards on Auditing and to issue an auditor's report.However because of the matters described in the Basis for Disclaimer of Opinion andMaterial Uncertainty Related to Going Concern sections of our report we were not able toobtain sufficient appropriate audit evidence to provide a basis for an audit opinion onthe accompanying standalone Ind AS financial statements.

We are independent of the Company in accordance with the ethical requirements that arerelevant to our audit of the financial statements and we have fulfilled our other ethicalresponsibilities in accordance with these requirements.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 (the "Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure 1" a statement on the matters specified inparagraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act we report that:

(a) We have sought all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of audit but to the extent describedin the Basis of Disclaimer of Opinion section above were unable to obtain suchinformation;

(b) Proper books of accounts as required by law have been kept by the Company so far asit appears from our examination of those books except to the extent stated in the Basisof Disclaimer of Opinion section above;

(c) Read with the matters stated in the Basis for Disclaimer of Opinion section of ourreport the standalone Balance Sheet the standalone Statement of Profit and Loss(including the Other Comprehensive Income) the standalone Cash Flow Statement andstandalone Statement of Changes in Equity dealt with by this report are in agreement withthe books of account;

(d) Due to the possible effects of the matters described in the Basis for Disclaimer ofOpinion section above we are unable to state whether the aforesaid standalone Ind ASfinancial statements comply with the Accounting Standards specified under Section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended;

(e) The matters described in the Basis for Disclaimer of Opinion and MaterialUncertainty Related to Going Concern sections above in our opinion may have an adverseeffect on the functioning of the Company;

(f) In pursuance of the National Company Law Appellate Tribunal (NCLT) order datedOctober 5 2018 read with Note 1.3 to the accompanying standalone Ind AS financialstatements directors proposed by the Union of India and appointed by NCLT shall notattract disqualification under section 164 of the Act.

Accordingly reporting requirement as per section 143 (3) (g) of the Act is notapplicable to the Company.

(g) The reservations relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Disclaimer of Opinion section above;

(h) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to the accompanying standalone Ind AS financialstatements and the operating effectiveness of such controls refer to our separate reportin "Annexure 2" to this report. That report expresses a disclaimer of opinion onthe Company's internal controls over financial reporting for the reasons stated therein;

(i) Due to the possible effects of the matters described in the Basis for Disclaimer ofOpinion section of our auditor's report on the standalone Ind AS financial statements weare unable to comment on whether the managerial remuneration paid to its erstwhilemanagerial personnel for the year ended March 31 2019 has been paid / provided inaccordance with the provisions of section 197 of the Act read with Schedule V thereto.

(j) Except for the possible effects of the matters described in the Basis forDisclaimer of Opinion section above with respect to the other matters to be included inthe Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements – Refer Note 37 and Note 1.10to the accompanying standalone 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 are no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

Sd/-

per

Suresh Yadav

Partner Membership No.: 119878

UDIN: 20119878AAAACI5955

Place of Signature: Mumbai

Date: June 4 2020

Annexure 1 referred to in paragraph 1 under the heading "Report on other legal andregulatory requirements" of our report of even date

Re: IL&FS Transportation Networks Limited (the "Company") (i)

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

(b) All the fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. As mentioned inNote 2 to the accompanying standalone Ind AS financial statements material discrepanciesnoted on such physical verification has been dealt appropriately in the books of accountto the extent reconciled with books of account however management is in the process ofreconciling the balance items. Accordingly we are unable to comment whether alldiscrepancies have been properly dealt with in the books of account.

(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 except one immovable property having carrying amount of Rs. 7.83Crores as at March 31 2019 for which title deed were not available with the Company andhence we are unable to comment on the same.

Nature of Immovable Property

As at March 31 2019 (Rs. In Crores)

Gross Block Net Block
Building Located at Ahmedabad Gujarat 8.08 7.83

(ii) The management has not conducted physical verification of its inventories duringthe year. Hence we are unable to comment on discrepancies between physical and bookrecords.

(iii) According to the information and explanations given to us the Company hasgranted loans secured or unsecured to companies covered in the register maintained undersection 189 of the Companies Act 2013.

Pending the outcome of the investigations stated in paragraphs 1(b) and 1(c) of theBasis of Disclaimer of Opinion section of our auditor's report on the financial statementsand having regard to the matters mentioned in Note 1.6 and Note 1.7 to the accompanyingstandalone Ind AS financial statements we are unable to comment whether the terms andconditions of the loans are not prejudicial to the interest of the Company as required byclause 3 (iii) (a) of the Order. Further we are unable to comment on payment of principaland payment of interest and overdue balance as required by the provisions of clause 3(iii) (b) and (c) of the Order.

(iv) In our opinion and according to the information and explanations given by themanagement the Company has not granted any loans covered under section 185 of theCompanies Act 2013. Further based on the information and explanation given to us theCompany is in the business of providing infrastructural facilities and hence provisions ofsection 186 of the Companies Act 2013 do not apply to the Company however the Companyis in compliance of section 186(1) of Companies Act 2013.

(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 to the Company.

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

(vii)(a) Undisputed statutory dues including provident fund employees' stateinsurance Goods and Service tax cess tax deducted at source service tax value addedtax duty of customs and other statutory dues applicable to the Company have not beendeposited regularly with the appropriate authorities there have been serious delays inlarge number of cases. The provisions relating to sales tax and duty of excise are notapplicable to the Company.

(b) According to the information and explanations given to us and except for thepossible effects of the matter stated in paragraph 13 of the Basis for Disclaimer ofOpinion section of our auditor's report on the financial statements undisputed dues inrespect of provident fund employees' state insurance income-tax service tax sales-taxduty of custom duty of excise value added tax goods and service tax cess and otherstatutory dues which were outstanding as per the Company's books of account at the yearend for a period of more than six months from the date they became payable are asfollows:

Name of the Statute Nature of the Dues Amount (Rs. In Period to which the amount relates Due Date
Crores)
Goods and service tax Goods and service tax liability 98.91 April 2018 to Sep 2018 Various dates
Income Tax (TDS) Tax Deducted at Source 18.42 Aug 2018 to Sep 2018 Various dates
Labour Welfare Fund Act LWF payment 11.16 Sep 2017 to Sep 2018 Various dates

* excluding interest liability on non-payment of dues.

Note: With respect to Goods and Service tax in the absence of sufficient informationmade available to us we are unable to determine the amount outstanding for a period ofmore than 6 months.

(c) According to the records of the Company and except for the possible effects of thematter stated in paragraph 13 of the Basis for Disclaimer of Opinion section of ourauditor's report on the financial statements the dues of income-tax sales-tax servicetax duty of custom duty of excise value added tax and cess on account of any dispute asper the Company's books of account are as follows:

Name of the statute Nature of the dues Unpaid Amount Period to which the amount relates Forum where the dispute is pending
(Rs.in Crore)
Income Tax Act 1961 Income Tax 6.65 2013-14 Commissioner of Income Tax (Appeals)- Mumbai
Finance Act 1994 Service Tax 0.60 2012-13 CESTAT
Madhya Pradesh VAT Act 2002 Value Added Tax 0.09 2012-13 MP Commercial Tax Appellate Board
Madhya Pradesh VAT Act 2002 Value Added Tax and Entry Tax 0.08 2013-14 MP Commercial Tax Appellate Board / 1st Appellate authority
Madhya Pradesh VAT Act 2002 Value Added Tax Entry tax and CST 0.07 2014-15 Additional Commissioner
Madhya Pradesh VAT Act 2002 Value Added Tax and Entry tax 0.03 2015-16 Deputy Commissioner of commercial Tax
Punjab VAT Act 2005 Value Added Tax 0.20 2013-14 Deputy Excise and Taxation Commissioner(A)
Maharashtra VAT Act 2002 Value Added Tax 10.36 2010-11 Deputy Commissioner

(viii) According to the information and explanations given by the management theCompany has delayed in repayment of loans or borrowings to the financial institutionsbanks or government and dues to the debenture holders during the year. Further pendingthe outcome of the investigations and other matters stated in paragraphs 1 (b) 1 (c) and1 (d) of the Basis of Disclaimer of Opinion section of our auditor's report on thefinancial statements we are unable to comment on the amount and period of default.

(ix) In our opinion and according to the information and explanations given by themanagement the Company has utilized the monies raised by way of debt instruments in thenature of Debentures and term loans for the purposes for which they were raised.

(x) As a consequence of the various matters resulting in the change in operationalstatus of the Company as more fully described in Note 1.2 and Note 1.3 to theaccompanying standalone Ind-AS financial statements and having regard to and pendingfinal outcome of the various matters described in the Basis for Disclaimer of Opinionsection above based upon the audit procedures performed by us and according to theinformation and explanations given by the management we are unable to report on fraud bythe Company or on the Company by the officers and employees of the Company during theyear.

(xi) Due to the possible effects of the matters described in the Basis for Disclaimerof Opinion section of our auditor's report on the financial statements we are unable tocomment on whether the managerial remuneration paid to its erstwhile managerial personnelhas been paid / provided in accordance with the provisions of section 197 of the Act readwith Schedule V thereto.

(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 commentedupon.

(xiii) As discussed in paragraph 14 of the Basis for Disclaimer of Opinion section ofour auditor's report on the accompanying standalone Ind-AS financial statements pendingcompletion of audit of financial statements of various subsidiaries associates and jointventures as at and for the year ended March 31 2019 and/or the related completion of theinter-company balances reconciliation processes the Company has not recorded anyadjustments that may be required in this regard. Accordingly (a) we are unable to commentif the transactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 in respect of the period from April 1 2018 to September 30 2018; and(b) with respect of the period from October 1 2018 to March 31 2019 except for thepossible effects of the matter stated in paragraph 15 of the Basis for Disclaimer ofOpinion section of our auditors' report on the financial statements we report that thetransactions with the related parties are in compliance with Section 177 and Section 188of the Companies Act 2013; (c) we are unable to comment as to whether details disclosed inthe notes to the accompanying standalone Ind-AS financial statements as required by theapplicable accounting standards are adequate in respect of the transactions from April 12018 to September 30 2018 and as a consequence on the balance as of March 31 2019.

(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 not commented upon.

(xv) Due to the possible effects of the matters described in the Basis for Disclaimerof Opinion section of our auditor's report on the accompanying standalone Ind-AS financialstatements. we are unable to comment on whether the Company has not entered into anynon-cash transactions with directors or persons connected with him as referred to insection 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 became applicable to the Company asthe Company satis es the ‘principal business test' as at March 31 2019. The Companyis in the process of taking necessary action as required under section 45-IA of theReserve Bank of India Act 1934.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

Sd/-per Suresh Yadav

Partner

Membership No.: 119878

UDIN: 20119878AAAACI5955

Place of Signature: Mumbai

Date: June 4 2020

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF IL&FS TRANSPORTATION NETWORKS LIMITED

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

We were engaged to audit the internal financial controls over financial reporting ofIL&FS Transportation Networks Limited (the "Company") as of March 31 2019in conjunction with our audit of the accompanying standalone Ind AS financial statementsof the Company for the year ended 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 Reportingissued by the Institute of Chartered Accountants of India ("ICAI"). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation 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 the standalone Ind AS financialstatements based on our audit. We were engaged to audit in accordance with the GuidanceNote on 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 controlsboth issued by the ICAI.

Because of the matter described in Disclaimer of Opinion paragraph below we were notable to obtain sufficient appropriate audit evidence to provide a basis for an auditopinion on internal financial controls over financial reporting with reference to thesestandalone Ind AS financial statements of the Company.

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

Disclaimer of Opinion

Consequent to the various matters mentioned in Note 1.2 to the accompanying standaloneInd AS financial statements which have inter alia resulted in the matters stated in theBasis for Disclaimer of Opinion section of our auditor's report on the accompanyingstandalone Ind AS financial statements the normal business operations of the Company asthey existed until September 30 2018 have ceased since and the New Board has undertakencertain steps as mentioned in that note to continue the current operations of theCompany.

However in view of the material and pervasive nature of the matters described in ourBasis for Disclaimer of Opinion section of our auditor's report on the accompanyingstandalone Ind AS financial statements of the Company we are unable to determine if theCompany has established adequate internal financial control over financial reporting andwhether such internal financial controls were operating effectively as at March 31 2019.Accordingly we do not express an opinion on Internal Financial Controls Over FinancialReporting with reference to the accompanying standalone Ind AS financial statements.

Explanatory paragraph

We were engaged to audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under Section 143(10) of theAct the accompanying standalone Ind AS financial statements of IL&FS TransportationNetworks Limited which comprise the standalone Balance Sheet as at March 31 2019 thestandalone Statement of Profit and Loss including the statement of Other ComprehensiveIncome the standalone Cash Flow Statement and the standalone Statement of Changes inEquity for the year then ended and a summary of significant accounting policies and otherexplanatory information. We have considered the disclaimer of opinion reported above indetermining the nature timing and extent of audit tests applied in our audit of theMarch 31 2019 standalone Ind AS financial statements of IL&FS Transportation NetworksLimited and this report affects our report dated June 4 2020 which expresses a disclaimerof opinion on those standalone Ind AS financial statements.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

Sd/-

per Suresh Yadav

Partner

Membership No.: 119878

UDIN: 20119878AAAACI5955

Place of Signature: Mumbai

Date: June 4 2020

.