To The Members of
MBL INFRASTRUCTURES LTD
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of MBLInfrastructures Limited ("the Company") which comprise the standalonebalance sheet as at March 31 2021 and the standalone statement of profit and lossincluding other comprehensive income the standalone statement of changes in equity andthe standalone statement of cash flows for the year then ended and notes to thestandalone financial statements including a summary of the significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsprovided to us the aforesaid standalone financial statements give the informationrequired by the Companies Act 2013 as amended ("Act") in the manner so requiredand give a true and fair view in conformity with accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2021 its profitincluding other comprehensive income changes in equity and cash flows for the year endedon that date.
Basis of Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards of Auditing (SAs) as specified under Section 143(10) of the Act. Ourresponsibilities under those SAs are further described in the Auditor's Responsibilitiesfor the Audit of the Standalone Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the standalone financial statements under the provisions of the Act andthe Rules made thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis of our opinionon the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of themost significance in our audit of the standalone financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
Description of Key Audit Matters
|Measurement of Construction Revenue - Refer Note 3 (n) || |
|The Key Audit Matters ||How the matter was addressed in audit |
|Revenue from construction contracts represents significant portion of the total revenue from the operations of the Company. Revenue from these contracts is recognized on satisfaction of performance obligation over time in accordance with the requirements of relevant Indian accounting standards. ||Our audit procedures included: |
|The Company has contracts whose revenue recognition can be dependent on a high level of judgement over the percentage of completion. It is based on their best estimate of the costs to complete claims and ability to deliver the contract within the contractual time limit. || Obtaining an understanding and consideration of the appropriateness of the policies in respect of revenue recognition against the criteria in the Indian accounting standards. |
|The execution of construction contracts also requires assessment of execution risk resulting from uncertainty related to COVID 19 pandemic. || Evaluated the design and implementation and tested operating effectiveness of key controls (including IT controls) around the contract price estimation of costs to complete management's testing of these attributes. |
|The Company's current year revenue from construction contracts and amount of expenses incurred arise from transaction with related parties as well. These related parties are principally subsidiaries and JV (Enterprise- Participation) of the Company. || Understanding and documenting the contract and other related contractual provisions including contractually agreed deliverables termination rights penalties for delay etc to understand the nature and scope of the arrangements with the customer. |
|The Company uses an input method based on costs incurred to measure progress of the projects. Under this approach the Company recognises revenue based on the costs incurred to date relative to the estimated total costs to complete the performance obligation. || Assessing key judgements inherent in the estimation of significant construction contract projects. It includes comparing the stage-of- completion and costs of completion on significant projects. |
|Profit is not recognised until the outcome of the contract is fairly certain. || We assessed the estimated costs to complete variations in contract price and contract costs and underlying invoices signed contracts/ statements of work completed for all ongoing projects. |
|Revenues total estimated contract costs and profit recognition may deviate significantly from original estimates based on new knowledge about cost overruns and changes in project scope over the term of a construction contract. || We understood and documented the Company's process for identifying related parties and recording related party transactions. We have also assessed Company's key controls in relation to the assessment and approval of related party transactions and examined Company's disclosures in respect of the transactions. |
| || We tested on test check basis the approvals of the Audit Committee and Board of Directors for related party transactions. |
| || We tested samples of manual journals posted to revenue to identify unusual items. |
| || We checked adequacy of the disclosures made in note 45 to the Company's standalone financial statements are compliant with Ind AS -115. |
|Assessment of recoverability of investments in subsidiaries - Refer Note 4 (c) || |
|TheCompanyhassignificantinvestmentsinsubsidiaries which carry out road and other infrastructure projects. ||Our audit procedures included: |
|The carrying amount of the investments in subsidiaries held at cost less impairment as at 31 March 2021 is Rs. 30306.74 lakhs. || W e have evaluated the design and implementation and tested the operating effectiveness of key controls placed around the impairment assessment process of the recoverability of the investments made including the estimation of future cash flows forecasts the process by which they were produced and discount rates used. |
|The Company has investments in subsidiaries which are considered to be associated with significant risk in respect of valuation of such investments. Changes in business environment could also have a significant impact on the valuation of these investments. These investments are carried at cost less any diminution in value of such investments. The investments are examined for impairment at each reporting date. || We have assessed Company's identification of CGU with reference to the guidance in the applicable Indian accounting standards. |
|These investments are unquoted and hence it is difficult to measure the realisable amount of these investments. || Assessed the net worth of subsidiaries on the basis of latest available financial statements. |
|The Company performs an annual assessment of it investments in subsidiaries at cash generating unit (CGU) level to identify any indicators of impairment. || We focused on the sensitivity in the difference between the estimated value and book values of the projects where change in assumptions could cause the carrying amount to exceed its estimated present value. |
|The recoverable amount of the CGUs which is based on the higher of the value in use or fair value less costs to sell has been derived from discounted forecast cash flow models. These variables used to determine the value in use are evolving especially in light of uncertainty related to the COVID 19 pandemic. ||We also assessed the historical accuracy of Company's estimates |
|These models use several key assumptions concerning estimates of future revenue growth concession period operations costs the discount rate and assessments of the status of the project and cost of complete balance work. ||- Comparing the carrying amount of investments with the relevant subsidiaries balance sheet to identify their net assets being an approximation of their minimum recoverable amount. Instances where the net assets are in excess of their carrying amount and assessed that those subsidiaries have historically been profit- making. |
| ||- For the investments where the carrying amount exceeded the net asset value comparing the carrying amount of the investment with the expected value of the business based discounted cash flow analysis. |
| || We focused on key assumptions which were most sensitive to the recoverable value of the intangible asset. We also assessed the key assumptions were plausible and appropriate in the light of the current environment of the COVID-19 pandemic. We also assessed the historical accuracy of Company's estimates. We reviewed and assessed the work performed by management's external valuation experts including the valuation methodology and the key assumptions used. We also assessed the competence capabilities and objectivity of the experts used by the management in the process of evaluating impairment model. |
|Disputed Tax Matters - Refer Note 3 (i) || |
|The Key Audit Matters ||How the matter was addressed in audit |
|Tax litigation exposures have been identified as a key audit matter due to: ||Our audit procedures include the following: |
| Significance of these amounts. || Ob tained understanding and assessed the internal control environment relating to the identification recognition and measurement of provisions for disputed tax matters. |
| Significant judgement and assumptions required by management in assessing the exposure of each case to evaluate whether there is a need to set up a provision and measurement of exposures as well as the disclosure of contingent liabilities. || Ob tained the summary of disputed tax matters from management and assessed management's position through discussions on both the probability of success in significant cases and the magnitude of any potential loss. |
|Additionally the treatment of tax litigation require significant judgement due to the complexity of the cases and timescales for resolution. || R ead evidence to corroborate management's assessment of the risk profile in respect of tax disputed matters. |
| || W e involved tax specialists to assist us in evaluating tax positions taken by management. |
| ||We assessed the disclosures relating to the disputed tax matters as mentioned in Note 42 of the Standalone Ind AS financial statements. |
The Company' Board of Directors are responsible for the other information. The otherinformation comprises the information included in the Company's annual report but does notinclude the standalone financial statements and our auditors' report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibility of the Management for the Standalone Financial Statements
The Company's Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flow of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and forpreventinganddetectingfraudsandotherirregularities;selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SA's will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of audit in accordance with SA's we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Iden tify and assess the risks of material the standalone financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Ob tain an understanding of internal control the audit in order to design auditprocedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Actwe are also responsible for expressing our opinion on whether the Company has adequateinternal financial controls with reference to financial statements in place and theoperating effectiveness of such controls.
E valuate the appropriateness of accounting policies and the reasonableness ofaccounting estimates and related disclosures in the standalone financial statements madeby the Management.
Conclude on the appropriateness of management's is use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
E valuate the overall presentation structure and of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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. of From the matters communicatedwith those charged with governance we determine those matters that were of mostsignificance in the audit of the standalone financial statements of the current period andare therefore the key audit matters. We describe these matters in our auditors' reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequencesto of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
Emphasis of Matter
We draw attention to the following matters in the notes to the accompanying StandaloneFinancial Statement:
useda. No te 3(a) regarding the Resolution Plan of the Company under the Insolvency& Bankruptcy Code 2016 (IBC 2016) was approved by the Hon'ble National Company LawTribunal ("NCLT") Kolkata by its order dated April 18 2018. The appeals filedby some of the banks were dismissed by the Hon'ble National Company Law Appellate Tribunal("NCLAT") by its order dated August 16 2019 and the Resolution Plan was upheld.One of the dissenting financial creditors with 4.01% of voting share has filed a civilappeal with the Hon'ble Supreme Court against the order of the Hon'ble NCLAT which ispending. The Company has taken necessary steps for the implementation of the ResolutionPlan under IBC 2016 on its approval by order dated April 18 2018 by the Hon'ble NCLTKolkata. Stay was not granted by the Hon'ble NCLAT on implementation of the ResolutionPlan during pendency of appeals before the Hon'ble NCLAT. The Resolution Plan has not beenimplemented by the financial creditors first on the plea of pending appeals before theHon'ble NCLAT and thereafter on the plea of pending civil appeal before the Hon'bleSupreme Court against the Hon'ble NCLAT order dated August 16 2019. The financial resultshave been prepared on going concern basis. In an unlikely event of ultimate rejection ofthe Resolution Plan the Company may go under liquidation and not remain a going concern.Consequently the financial results may have to be restated.
The Financial Statements have been prepared on going concern basis considering theHon'ble NCLAT order dated April 18 2018 approving resolution plan. b. No te 6.3 regardingthe Company has as at March
(i) Non-Current Investment amounting to Rs. 1000.00 lakhs (March 31 2020; Rs.1000.00 lakhs) in MBL
(MP) Road Nirman Company Limited;
(ii) Non-Current Investment amounting to Rs. 1200.00 lakhs (March 31 2020; Rs.1200.00 lakhs) in AAP Infrastructure Limited;
(iii) Non- Current Investment amounting to Rs. 5110.00 lakhs (March 31 2020; Rs.5110.00 lakhs) in MBL Highway Development Company Limited. All the above entities arewholly owned by the Company along with its wholly owned subsidiary Company MBL ProjectsLtd and have incurred losses due to cancellation/termination of the projects and net worthof above entities as at March 31 2021 have been fully eroded. The net worth of thesesubsidiaries does not represent true market value of the underlying investment/ assets.Claims have been filed against the cancellation/ termination of the projects. These claimsare based on the terms & conditions implicit in the contract in respect of thecancelled/terminated projects. Considering the contractual tenability; legal adviceobtained and progress of arbitration/ litigation the management is confident of recoveryof these claims. In view of this the management is confident that the realisable amountis higher than the carrying value of the investments and therefore has considered theinvestment in above subsidiaries as good and recoverable.
c. No te 6.4 regarding Non-Current Investment as at 31 2021 amounting to Rs. 2984.25lakhs (March 31 2020; Rs. 2984.25 lakhs) holds 100% shares in MBL Projects Ltd. the networth of the subsidiary which does not represent true market value. The subsidiary holdsshares in downstream SPVs in which projects were cancelled. Claims have been filed againstcancellation of projects. These claims are based on the terms & conditions implicit inthe contract in respect of cancelled projects. Considering the contractual tenabilitylegal advice obtained and progress of arbitration/ litigation the management is confidentof recovery in these claims. In view of this the management is confident that therealisable amount is higher than the carrying value of non-current assets and thereforeconsidering the investment in above subsidiary as good and recoverable.
d. No te 6.5 regarding Non-Current Investment as at 31 2021 amounting to Rs. 18505.23lakhs (March 31 2020; Rs. 18505.23 lakhs) holds 100% shares in Suratgarh Bikaner TollRoad Company Private Limited which has started toll operations effective February 172019. The net worth of the subsidiary does not represent true market value as the value ofunderlying investments/ assets. Based on TEV study report certain estimates like futurebusiness plan growth prospects and other factors the management is confident
2021that the realisable amount is higher than the carrying value of non-current assetsand therefore considering the investment in above subsidiary as good and recoverable.
e. No te 46.1 regarding the Company has conservatively recognised deferred tax assets(net) as at March 31 2021 amounting to Rs. 9466.04 lakhs (March 31 2020 Rs. 12442.34lakhs) corresponding to unused brought forward income tax losses pursuant to theprovisions of Ind AS 12 "Income Taxes" for which it has convincing evidencesviz. opportunities available in area of its core competence bidding/pre-qualificationlimit conducive government policies and market conditions recovery of pending claimsTEV study and approved Resolution Plan etc. based on which it is inferred that sufficienttaxable profit will be available against which unused tax losses can be utilised by theCompany.
f. No te 42.2 regarding judgments of the Hon'ble Supreme Court the Resolution Planapproved under IBC is binding on all creditors including Central Government StateGovernment any Local Authority under section 31(1) of IBC 2016 and any amount notclaimed by the operational creditors stand extinguished. These claims are subject toreconciliation and rights and remedies available with the Company and are not acknowledgedas debt.
March g. No te 52 regarding the management's assessment of the financial impact of theoutbreak of Coronavirus (Covid-19) pandemic situation for which a definitive assessmentof the impact in the subsequent period is dependent upon the circumstances as they evolve.
Our opinion is not modified in respect of above matters.
Report on Other Legal and Regulatory Requirements
1. As r equired by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2.(A) 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;
( Thec) standalone balance sheet the standalone statement of profit and loss(including other comprehensive income) the standalone statement of changes in equity andthe standalone statement of cash flows dealt with by this Report are in agreement with thebooks of account;
( Ind)our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act;
( One) the basis of the written representations received from the directors as on March31 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 from being appointed as a director in terms of Section164 (2) of the Act; and
(f) With respect to the adequacy of the internal financial controls with reference tothe standalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate report in "Annexure B".
(g) In our opinion the managerial remuneration for the year ended March 31 2021 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 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at March 31 2021 onits financial position in its standalone financial statements - Refer Note 42.1 to thestandalone financial statement;
ii. The Company has made provision as required under 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 to theInvestor Education and Protection Fund by the Company during the year ended March 312021.
ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of MBL Infrastructures Limited of evendate)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b The Company has a program of verification to cover all the items of fixed assets ina phased ) manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations provided to us no material discrepancies were noticed on such verification.
( According to the information and explanations provided to us the records examined byus and based on the examinationc) of the conveyance deeds provided to us we report thatthe title deeds comprising all the immovable properties of land and buildings which arefreehold are held in the name of the Company as at the balance sheet date.
(ii) A ccording to the information and explanations provided to us the inventory hasbeen physically verified at reasonable intervals during the year by the management. In ouropinion and according to the information and explanations provided to us the interval ofsuch physical verification is reasonable having regard to size of the Company and natureof its business and according to the information and explanations provided to us nomaterial discrepancies were noticed on such verification.
(iii) A ccording 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 theAct. Accordingly paragraph 3 (iii) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations provided to usthe Company has complied with the provisions of Sections 185 and 186 of the Companies Act 2013 in respect of loans and advances given investments made and guarantees andsecurities.
(v) The Company has not accepted any deposits within the meaning of section 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of Clause 3(v) of the Order are not applicable to the Company.
(vi) W e 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 under sub section (1) of Section 148 ofthe Companies Act 2013 in respect of Company's products/services and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained.However we have not made a detailed examination of the same.
(vii) A ccording to the information and explanations provided to us and in respect ofstatutory dues:
(a) Undisputed statutory dues including provident fund employee state insuranceincome tax sales tax service tax custom duty excise duty value added tax goods andservice tax (GST) cess and other material statutory dues as applicable have beenregularly deposited with the appropriate authorities. There are no undisputed amountspayable in respect thereof which were outstanding at the year-end for a period of morethan six months from the date they became payable except the amount payable at the time ofapproval of resolution plan and not claimed by the respective authorities. The same havenot been acknowledged as debt by the Company on the basis of recent judgements.
(b According to the record of the Company there are no dues of income tax sales taxservice tax customs duty excise) duty value added tax goods and service tax (GST) andcess on account of dispute except the dues payable at the time of approval of resolutionplan and not claimed by the respective authorities. The same have not been acknowledged asdebt by the Company on the basis of recent judgements.
(viii) The Company was under Corporate Insolvency Resolution Process under Insolvencyand Bankruptcy code 2016. The Resolution Plan of the Company was approved by Hon'bleNational Company Law Tribunal (NCLT) Kolkata Bench vide its Order dated April 18 2018.The Resolution plan has not been implemented by the Bankers till now and therefore theCompany is of the view that no amount is payable and due to Banks till the date ofimplementation of Resolution Plan.
(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) or term loans and hence reporting under clause 3(ix) of theOrder is not applicable to the Company.
(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 explanationsprovided by the management we report that no fraud by the Company or no fraud on theCompany by the officers and employees of the Company has been noticed or reported duringthe year.
(xi) A ccording to the information and explanations given to us managerialremuneration has been paid/ provided in accordance with the requisite approvals mandatedby provisions of section 197 read with schedule V to the Companies Act 2013.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company and hence reporting under clause 3(xii) of the Order is notapplicable to the Company.
(xiii) A ccording to the information and explanations given by the managementtransactions with the related parties are in compliance with Section 177 and 188 of theCompanies Act 2013 where applicable and the details have been disclosed in the notes tofinancial statements as required by the applicable accounting standards.
(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) of the Order are notapplicable to the Company.
(xv) A ccording to the information and explanations provided by the management theCompany has not entered any non-cash transactions with directors or persons connected withhim as referred to in section 192 of the Companies Act 2013. Accordingly clause 3(xv) ofthe Order is not applicable to the Company.
(xvi) A ccording to the information and explanations provided to us the provisions ofsection 45-IA of the Reserve Bank of India Act
1934 are not applicable to the Company. Accordingly the Clause 3(xvi) of the Order isnot applicable to the Company.
To the Independent Auditors Report on Standalone Financial Statements of MBLInfrastructures Limited for the year ended March 31 2021
Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 (hereinafter referred to as "the Act")
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the internal financial controls with reference to the standalonefinancial statements of MBL Infrastructures Limited ("the Company") as of March31 2021 in conjunction with our audit of the standalone financial statements of theCompany 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountant of India. 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 company's policies the safeguarding ofits 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 Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone financial statements. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to standalone financial statements were established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal controls based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to the standalone financial statements.
Meaning of Internal Financial controls with reference to the Financial Statements
A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial controls with Reference to the StandaloneFinancial Statements
Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to standalone financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to the standalone financial statements and such internalfinancial controls were operating effectively as at March 31 2021 based on the internalfinancial controls with reference to standalone financial statements criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note issued by the Institute of Chartered Accountants of India.
For S A R C & Associates
Chartered Accountants Firm Registration No.: 006085N
| ||Kamal Aggarwal |
| ||Partner |
|Place: New Delhi ||Membership No.: 090129 |
|Date: June 23 2021 ||UDIN: 21090129AAAADR9072 |