The Unit Holders of POWERGRID Infrastructure Investment Trust
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of POWERGRIDInfrastructure Investment Trust ("the Trust"/"PGInvIT") whichcomprise the Balance Sheet as at 31 March 2022 the Statement of Profit and Loss includingthe Other Comprehensive Income the statement of change in Unit Holders' equity theStatement of Cash Flows for the year then ended the Statement of Net Assets at fair valueas at 31 March 2022 the Statement of Total Returns at fair value the Statement of NetDistributable cash Flows ('NDCFs') for the year then ended and notes to the standalonefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").
In our opinion and to the best of our information and according to the explanationsgiven to us the standalone financial statements give the information required by theSecurities and Exchange Board of India (Infrastructure Investment Trusts) Regulations2014 as amended from time to time including any guidelines and circulars issued thereunderin the manner so required and give a true and fair view in conformity with IndianAccounting Standards (Ind AS) and/or any addendum thereto as defined in the Rule 2(1)(a)of the Companies (Indian Accounting Standards) Rule 2015 and other accounting
principles generally accepted in India of the state of affairs of the Trust as at 31March 2022 its profit and total comprehensive income change in unit holders' equityTrust and its cash flows for the year ended 31 March 2022 its net assets at fair value asat 31 March 2022 its total returns at fair value and the net distributable cash flows forthe year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) issued by Institute of Chartered Accountants of India("ICAI"). Our responsibilities under those Standards are further described inthe Auditor's Responsibility for the Audit of the Financial Statements section of ourreport. We are independent of the Trust in accordance with the Code of Ethics issued bythe ICAI and we have fulfilled our other ethical responsibilities in accordance with the'ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the standalone financialstatements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|S.No Key Audit Matters ||How our audit addressed the key audit matter |
|1 Assessing Impairment of investments in subsidiaries ||In making the assessment of the recoverable amount we relied on the valuation report issued by the independent valuer appointed by the Investment Manager in accordance with SEBI InvIT Regulations. |
|As at 31 March 2022 the carrying value of Trust's investment in subsidiaries amounted to Rs 42541.01 million. |
|Management reviews regularly whether there are any indicators of impairment of such investments by reference to the requirements under Ind AS. Management performs its impairment assessment by comparing the carrying value of these investments made to their recoverable amount to determine whether impairment needs to be recognized. || |
|For impairment testing value in use has been determined by forecasting and discounting future cash flows of subsidiaries. Further the value in use is highly sensitive to changes in critical variable used for forecasting the future cash flows including discounting rates. The determination of the recoverable amount from subsidiaries involves significant judgment and accordingly the evaluation of impairment of investments in subsidiaries has been determined as a key audit matter. || |
|2 Computation and disclosures as prescribed in the InvIT regulations relating to Statement of Net Assets at Fair Value and Total Returns at Fair Value ||Our audit procedures include the following: |
|As per the provisions of InvIT Regulations the Trust is required to disclose Statement of Net Assets at Fair Value and Statement of Total Returns at Fair Value which requires fair valuation of assets. For this purpose fair value is determined by forecasting and discounting future cash flows. The inputs to the valuation models are taken from observable markets where possible but where this is not feasible a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as WACC Tax rates Inflation rates etc. ||- Read the requirements of SEBI InvIT regulations for disclosures relating to Statement of Net Assets at Fair Value and Statement of Total Returns at Fair Value. |
|Accordingly the aforementioned computation and disclosures are determined to be a key audit matter in our audit of the standalone financial statements. ||- Reviewed and verified the disclosures in the standalone financial statements for compliance with the relevant requirements of InvIT Regulations. |
| ||- Relied on the valuation report issued by the independent valuer appointed by the Investment Manager in accordance with SEBI InvIT Regulations. |
|3 Related party transactions and disclosures ||Our audit procedures included the following: |
|The Trust has undertaken transactions with its related parties in the normal course of business. These include providing loans to SPVs interest on such loans fees for services provided by related parties to Trust etc. as disclosed in Note no. 25 of the standalone financial statements. ||- Obtained read and assessed the Trust's policies processes and procedures in respect of identifying related parties evaluating of arm's length obtaining necessary approvals recording and disclosure of related party transactions including compliance of transactions and disclosures in accordance with InvIT regulations. |
|We identified the accuracy and completeness of related party transactions and its disclosure as set out in respective notes to the standalone financial statements as a key audit matter due to the significance of transactions with related parties during the year ended 31 March 2022 and regulatory compliance thereon ||- We tested on a sample basis related party transactions with the underlying contracts and other supporting documents for appropriate authorization and approval for such transactions. |
| ||- We read minutes of Board and its relevant committee meetings in connection with transactions with related parties affected during the year and Trust's assessment of related party transactions being in the ordinary course of business at arm's length and in accordance with the InvIT regulations. |
| ||- Assessed and tested the disclosures made in accordance with the requirements of Ind AS and InvIT regulations. |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The management of POWERGRID Unchahar Transmission Limited ("InvestmentManager") is responsible for the preparation of the other information. The otherinformation comprises the information that may be included in the Management Discussionand Analysis Investment Manager's report including Annexures to Investment Manager'sReport and Investment Manager's Information but does not include the standalone financialstatements and our auditor's report thereon. The other information as identified above isexpected to be made available to us after the date of this Auditor's Report.
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 identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated.
When we read those documents including Annexures if any thereon if we conclude thatthere is a material misstatement therein we shall communicate the matter to those chargedwith the governance.
MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
The Management of POWERGRID Unchahar Transmission Limited ('Investment Manager') isresponsible for the preparation of these standalone financial statements that give a trueand fair view of the financial position as at 31 March 2022 financial performanceincluding other comprehensive income movement of the unit holders' equity and cash flowsfor the year ended 31 March 2022 its net assets at fair value as at 31 March 2022 itstotal returns at fair value and the net distributable cash flows of the Trust for the yearended 31 March 2022 in accordance with accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) and/or any addendum thereto as definedin Rule 2(1)(a) of the Companies (Indian Accounting Standards) Rules 2015 as amendedread with the Securities and Exchange Board of India (Infrastructure Investment Trusts)Regulations 2014 as amended from time to time including any guidelines and circularsissued thereunder (together referred to as the" InvIT Regulations")responsibility also includes maintenance of adequate accounting records in accordance withthe provisions of InvIT Regulations for safeguarding of the assets of the Trust and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; for ensuring the accuracy and completeness of the accounting records relevant tothe preparation and presentation of the financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Trust's ability to continue as going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Trust or to cease operations or has norealistic alternative but to do so.
The Investment Manager is also responsible for overseeing the Trust's financialreporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF STANDALONE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances but not forthe purpose of expressing an opinion on the effectiveness of such controls
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Trust'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 disclosure in thefinancial statement or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to date of our auditor's. Howeverfuture events or conditions may cause the Trust to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Based on our audit and as required by InvIT Regulations we report that:
a) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;
b) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Unit Holder's Equity and the Statement of Cash Flow dealtwith by this report are in agreement with the books of account of the Trust; and
c) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards (Ind AS) and/or any addendum thereto as defined in Rule 2(1) (a) ofthe Companies (Indian Accounting Standards) Rules 2015 as amended.
| ||For S.K.Mittal & Co. |
| ||Chartered Accountants |
| ||FRN: 001135N |
|Place: Gurugram ||(CA Gaurav Mittal) |
|UDIN: 22099387AJQQJE1034 ||Partner |
|Dated: 26 May 2022 ||Membership No.: 099387 |