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Rail Vikas Nigam Ltd.

BSE: 542649 Sector: Infrastructure
NSE: RVNL ISIN Code: INE415G01027
BSE 00:00 | 10 Aug 31.20 0.10
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NSE 00:00 | 10 Aug 31.20 0.10
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OPEN 31.30
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VOLUME 208700
52-Week high 44.75
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P/E 5.99
Mkt Cap.(Rs cr) 6,505
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OPEN 31.30
CLOSE 31.10
VOLUME 208700
52-Week high 44.75
52-Week low 27.50
P/E 5.99
Mkt Cap.(Rs cr) 6,505
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Rail Vikas Nigam Ltd. (RVNL) - Auditors Report

Company auditors report

To

The Members

Rail Vikas Nigam Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Ind AS Financial Statementsof Rail Vikas Nigam Limited ("the Company") which comprise the Balance Sheet asat March 312021 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year then endedand Notes to the Standalone Ind AS Financial Statements and a summary of the SignificantAccounting policies and other explanatory information (hereinafter referred to as"the Standalone Ind AS Financial Statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 ("the Act') in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 312021 the profit and totalcomprehensive income changes in equity and its cash flow for the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Ind AS Financial Statements inaccordance with the Standards on Auditing (SAs) specified under section 143 (10) of theCompanies Act 2013. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Financial Statements section ofour report. We are independent of the Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Companies Act 2013 and the Rules there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the standalone financial statements.

Emphasis of Matter (EOM)

We draw attention to the following matters to the Standalone Ind ASFinancial Statements :

1. Without qualifying our report attention is invited to note no. 10.1and 10.6 of Standalone Ind As financial statement regarding Trade Receivable. RVNLreceives advance payment from SPVs for incurring expenditures on their projects. Howeverin case of Krishnapatnam Railway Company Limited (KPRCL) RVNL is incurring projectexpenditures on regular basis but no amount is being received from Krishnapatnam RailwayCompany Limited as advance payment. During the financial year 202021 RVNL has incurredproject expenditures amounting to Rs. 31.46 crore on Krishnapatnam Railway Company Limited(KPRCL). KPRCL has not paid the amount dues due to some dispute and Trade Receivable fromKrishnapatnam Railway Company Limited as on 31st March 2021 is Rs. 863.82 crore andInterest Receivables amount of Rs. 415.99 crore i.e. total Receivable from KrishnapatnamRailways Company Limited amounting to Rs. 1279.81 crore.

2. Without qualifying our report attention is invited to note no. 12(a)of Standalone Ind As financial statement regarding Advance to Zonal Railways Advance toSleepers Utility Advances and Advances Released for Supply of Rail. No balanceconfirmation has been received relating to Advances to Zonal Railways Rs. 584.13 croresAdvance to Sleepers Rs. 133.64 crores Utility Advances Rs. 355.98 crores and AdvanceReleased for Supply of Rail Rs. 46.23 crores as on 31st March 2021.

3. Without qualifying our report attention is invited to note no. 44regarding the impact arising from the Covid-19 pandemic.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Standalone Ind AS Financial Statements ofthe current period. These matters were addressed in the context of our audit of theStandalone Ind AS Financial Statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. We have determined the mattersdescribed below to be the key audit matters to be communicated in our report.

Key Audit Matter Auditor's Response
Recognition measurement estimation presentation and disclosures in respect of "Revenue from contracts with Customers" under ind AS 115 We assessed the company's internal process for adoption and evaluating the impact of this Ind AS. Our audit approach consisted design and testing of effectiveness of internal controls and procedures as follows:
The application of this Ind AS 115 involves certain key judgments estimation identification of distinct performance obligations determination of transaction price measurement of revenue recognition and disclosures including presentations of balances in the financial statements. Evaluated the process of implementation of this Ind AS on revenue recognition and effectiveness of controls over the preparation of information that are designed to ensure the completeness and accuracy.
Refer Note 34 to the standalone financial statements Selected a sample of existing continuing contracts and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price.
Tested the relevant information accounting systems and change relating to contracts and related information used in recording and disclosing revenue and presentation of contract balances and trade receivables in accordance with the Ind AS.
We have performed analytical procedure including comparison of the financial information and other related items considering materiality.
Assessment and recoverability of Trade Receivables and Contract Assets Principal Audit Procedures
The Company have trade receivables outstanding of Rs. 981.87 crore and unbilled contract assets of Rs. 3022.76 crore at the end of March 312021. These balances are related to revenue recognized in line with Ind AS 115 "Revenue from contracts with customers" for ongoing contracts and completed contracts. The assessment of its recoverability is a key audit matters in the audit due to its size and high level of management judgment We have assessed the Company's internal process to recognize the revenue and review mechanism of trade receivables and contract assets. Our audit approach consisted testing of the design and operating effectiveness of internal controls and procedures as follows:
Refer Notes 10.1 12(b) to the standalone financial statements. • Evaluated the process of invoicing verifications and reconciliations with customers.
• Obtained the list of project wise outstanding details and its review mechanism by the management.
• Reviewed the guidelines and policies of the Company on impairment of trade receivables and contract assets.
• Tested the accuracy of aging of trade receivables and contract assets at the year end on sample basis.
• Performed analytical procedures and test of details for reasonableness recoverability and other related material items.
Ind As 116 Our audit procedures with respect to Ind As 116 include:
As described in Note 3.2 to the Standalone financial statements the Company has followed Ind AS 116 Leases (Ind AS 116). • Assessed and tested processes and controls in respect of the lease accounting standard (Ind As 116);
The application of this accounting standard is complex and is an area of focus in our audit since the Company has a number of leases with different contractual terms. • Assessed the company's evaluation on the identification of leases based on the contractual agreements and our knowledge of the business;
Ind AS 116 introduces a new lease accounting model wherein lessees are required to recognize a right-of-use (ROU) asset and a lease liability arising from a lease on the balance sheet. The lease liabilities are initially measured by discounting future lease payments during the lease term as per the contract/ arrangement. Ind AS 116 involves significant judgments and estimates including determination of the discount rates and the lease term. • Involved our specialist to evaluate the reasonableness of the discount rate applied in determining the lease liabilities;
Refer Note no. 3.2 and Note no. 45 to the Standalone financial statements. • On a statistical sample we performed the following procedures;
• Assessed the key terms and conditions of each lease with the underlying lease contracts; and
• Evaluated computation of lease liabilities an challenged the key estimated such as discount rates and the lease term.
• Assessed and tested the presentation and disclosures relating to Ind As 116.

Information Other than the Standalone Ind AS Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for thepreparation of other information. The other information comprises the information includedin management analysis company performance report but does not include the Standalone IndAS Financial Statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Ind AS FinancialStatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the Standalone Ind ASFinancial Statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information; we are required to report that fact. Wehave nothing to report in this regard.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these Standalone Ind AS Financial Statements that give a true and fairview of the financial position financial performance including other comprehensive incomeand changes in equity (reserves) & cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standards (IndAS) prescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia.

This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of thecompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Ind AS Financial Statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

In preparing the Standalone Ind AS Financial Statements management andBoard Directors is responsible for assessing the company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate thecompany or to cease operations or has no realistic alternative but to do so.

That Board of Directors are also responsible for overseeing thecompany's financial reporting process. Auditor's Responsibilities for the Auditof the Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether theStandalone Ind AS Financial Statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Ind AS FinancialStatements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of theStandalone Ind AS Financial Statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial control system in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the Ind AS financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of theStandalone Ind AS Financial Statements including the disclosures and whether theStandalone Ind AS Financial Statements represent the underlying transactions and events ina manner that achieves fair presentation.

Materiality is the magnitude of misstatement in the Standalone Ind ASFinancial Statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonable knowledgeable user of the Ind AS financial statementsmay be influenced. We consider quantitative materiality and qualitative factors in (i)Planning the scope of our audit work in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the Ind AS financial statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the Standalone IndAS Financial Statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication

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 of the Act we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

(2) As required by Section 143 (3) of the Act based on our audit wereport that:

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) In our opinion proper books of account as required by law havebeen kept by the company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss including othercomprehensive income and the Statement of Changes in Equity (reserves) & Statement ofCash Flow dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Indian Accounting Standards prescribed under Section 133 of theAct read with Companies (Indian Accounting Standards) Rules 2015.

(e) Being a Government Company Section 164(2) of the Companies Act2013 regarding ‘whether any director is disqualified from being appointed as adirector' is not applicable to the Company in view of Notification no. G.S.R. 463(E)dated. 05-06-2015 issued by Ministry of Corporate Affairs.

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B" and

(g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. The company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS Financial Statements. Refer Note 37 A. and 37B. to the financial statements.

ii. The company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.

iii. Compliance in respect of transfer to Investor Education andProtection fund required to be transferred in accordance with relevant statutes therewere no amount which were required to be transferred to the Investor Education andProtection Fund by the company.

(3) As required by section 143(5) of the Act we have considered thedirections issued by the Comptroller and Auditor General of India the action takenthereon and its impact on the accounts and financial statements of the company - Refer"Annexure C" attached.

"Annexure A"

To Independent Auditors' Report

(Referred to in Paragraph 1 under the heading "Report on OtherLegal and Regulatory Requirements" of our report of even date on the accounts of RailVikas Nigam Limited for the year ended March 31 2021we report that :

i) (a) The company has maintained proper records showing fullparticulars including quantitative details and situation of its fixed assets

(b) The fixed assets have been physically verified by the managementduring the year at reasonable interval. No material discrepancies were noticed on suchverification.

According to the information and explanations given to us physicalverification of property plant & equipment is being conducted in a phased manner bythe management including intangible assets over a period of three years which in ouropinion is reasonable having regard to the size of the company and nature of its businessand no material discrepancies were noticed on such verification to the extent verificationwas made during the year.

(c) According to the information and explanations given to us therecords examined by us and based on the examination of the Conveyance Deeds provided tous we report that the Lease Deed comprising all the immovable properties of land &buildings which are leasehold are held in the name of the company as at the balance sheetdate. The company does not own any freehold land or building.

ii) The company is in business of implementing railway infrastructureprojects and the inventory primarily consists of project work in progress. The inventoriesare physically verified during the year and the same is recorded in the measurement book.Keeping in view the nature of business and inventory the frequency of physicalverification in our opinion is reasonable.

iii) I n our opinion and according to the information &explanations given to us the company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Therefore clauses (iii) (a)(iii) (b) and (iii)(c) of Paragraph 3 of the Order are not applicable to the company.

iv) In our opinion and according to the information and explanationsgiven to us the company has complied with the provisions of the section 185 and 186 ofthe Companies Act 2013 in respect of loans and investments made.

v) According to the information and explanations given to us thecompany has not accepted any deposits from public during the year within the meaning ofsections 73 to 76 or any other relevant provisions of the Companies Act 2013 and theCompanies (Acceptance of Deposits) Rules 2014 and rules framed there under as applicable.

vi) According to the information and explanation given to us as regardsreviewing the books of accounts and records maintained by the company pursuant to the rulemade by the Central Government for the maintenance of cost records under section 148 (1)of the Companies Act 2013 is not applicable since the company is not a manufacturingconcern.

vii) (a) According to the information and explanations given to us andon the basis of our examination of the books of accounts and records the company hasbeen regular in depositing with appropriate authorities undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax ServiceTax duty of Customs duty of Excise Value Added Tax Goods & Service Tax Cess andany other material statutory dues as applicable to it.

(b) According to the information and explanations given to us noundisputed amounts payable in respect of statutory dues were outstanding as at 31st March2021 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us thereare disputed dues of income tax amounting to Rs. 24.31 crores. No dues of Sales Tax orWealth Tax or Service Tax or Custom Duty or Excise Duty or Value Added Tax or Cess orGoods & Services Tax which have not been deposited on account of dispute. The detailsof unpaid disputed income tax liability are as under:

Assessment Year Amounts (Rs. In crores) Amounts paid / adjusted from Refund (Rs. in crores) Forum where pending
2014-2015 to 2018-19 0.02 0.02 CPC u/s 143(3)
2019-20 24.29 10.11 CPC u/s 115O
Total 24.31 10.13

viii) According to the records of the company examined by us and theinformation and explanations given to us the company has not defaulted in repayment ofdues to financial institutions banks governments or debenture holders.

ix) In our opinion and according to the information and explanationgiven by the management the company has not raised any money by way of Initial PublicOffer or Further Public Offer (including debt instruments) and term loan during the year.Accordingly clause (ix) of paragraph of the Companies (Auditor's Report) Order 2016is not applicable to the company.

x) During the course of our examination of the books and records of thecompany carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us by the management nofraud by the company or any fraud on the company by its officers or employees has beennoticed or reported during the year that causes the financial statements to be materiallymisstated.

xi) Being a Government Company provision of clause no. (xi) regardingsection 197 of the Companies Act 2013 relating to managerial remuneration is notapplicable to the company in view of Notification no. G.S.R. 463(E) dtd. 05-06-2015.

xii) Provisions of clause no. (xii) of the order regarding NidhiCompany is not applicable to the company.

xiii) In our opinion and according to the information and explanationsgiven to us the transactions with related parties are in compliance with the provisionsof section 177 & 188 of the Companies Act 2013 as applicable and adequate disclosureshave been made in the standalone financial statements as required by the applicableaccounting standards.

xiv) The company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.

xv) In our opinion and according to the information and explanationsgiven to us the company has not entered into any non-cash transactions with directors orpersons connected with them under the provisions of section192 of the Companies Act 2013.

xvi) In our opinion and according to the information and explanationgiven to us the company is not required to be registered under section 45-IA of theReserve Bank of India. Act 1934.

"ANNEXURE B"

TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONEIND AS FINANCIAL STATEMENTS OF ‘RAIL VIKAS NIGAM LIMITED'

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financialreporting of RAIL VIKAS NIGAM LIMITED as of March 312021 in conjunction with our audit ofthe standalone Ind AS Financial Statements of the company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants 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 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.

Auditors' Responsibility

Our responsibility is to express an opinion on the company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting isa process 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 controlover financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the Ind As financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 312021 based onthe internal control over financial reporting criteria established by the companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

"Annexure C" to Independent Auditors' Report

Directions issued by the Comptroller & Auditor General of Indiaunder Section 143(5) of the Companies Act 2013 indicating the areas to be examined by theStatutory Auditors during the course of audit of annual accounts of Rail Vikas NigamLimited (Standalone) for the year 2020-21

Areas Examined Suggested Replies
1 Whether the company has system in place to process all the accounting transactions through IT system. If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. Yes the Company has system in place to process all the accounting transactions through IT system.
2 Whether there is any restructuring of an existing loan or cases of waiver / write off of debts / loans / interest etc. made by a lender due to the company's inability to repay the loan? If yes the financial impact may be stated. According to the information and explanations given to us and based on our examination of the records of the company there has been no restructuring/ waiver/ write off of debts/ loans/interest etc. made by a lender due to the company's inability to repay the loan
3 Whether fund received / receivable for specific schemes from Central / State agencies were properly accounted for / utilized as per its term and conditions? List the cases of deviation. Fund received / receivable for specific schemes from Central / State agencies were properly accounted for /utilized as per its term and conditions
For M/S Raj Har Gopal & Co.
Chartered Accountants
Firm Registration No.002074N
Sd/-
Shrey Gupta
Partner
Membership No.522315
Place: New Delhi
Date: June 29 2021

Management Reply to the observations of Statutory Auditor on theStandalone Financial Statements of the Company for the F.Y.2020-21

Emphasis of Matter Management Reply
1 Without qualifying our report attention is invited to note no. 10.1 and 10.6 of Standalone Ind As financial statement regarding Trade Receivable. RVNL receives advance payment from SPVs for incurring expenditures on their projects. However in case of Krishnapatnam Railway Company Limited (KPRCL) RVNL is incurring project expenditures on regular basis but no amount is being received from Krishnapatnam Railway Company Limited as advance payment. During the financial year 2020-21 RVNL has incurred project expenditures amounting to Rs. 31.46 crore on Krishnapatnam Railway Company Limited (KPRCL). KPRCL has not paid the amount dues due to some dispute and Trade Receivable from Krishnapatnam Railway Company Limited as on 31st March 2021 is Rs. 863.82 crore and Interest Receivables amount of Rs. 415.99 crore i.e. total Receivable from Krishnapatnam Railways Company Limited amounting to Rs. 1279.81 crore. M/s Krishnapatnam Railways Company Limited (KPRCL) is a Special Purpose Vehicle created especially for providing rail connectivity to Krishnapatnam Port in Andhra Pradesh. It was promoted by Railway Vikas Nigam Limited with equity share of 49.47% percent. The work is executed in two phases. The execution of the construction work was undertaken by RVNL. As per the construction agreement KPRCL will pay an advance to RVNL for execution of the work. But due to financial crunch in KPRCL they were not able to generate enough revenue to finance the construction work through RVNL. But as the contracts had already been awarded by RVNL commitments had to be met out of its own source.
As the second phase of the project is already opened for traffic and traffic is also now picking up after the decline in the impact of COVID -19 it is expected that sufficient revenue will be generated and KPRCL will be paying back the balance due to RVNL along with interest as per the construction agreement.
Authorities of KPRCL are being pursued for arranging payments to RVNL.
2 Without qualifying our report attention is invited to note no. 12(a) of Standalone Ind As financial statement regarding Advance to Zonal Railways Advance to Sleepers Utility Advances and Advances Released for Supply of Rail. No balance confirmation has been received relating to Advances to Zonal Railways Rs. 584.13 crores Advance to Sleepers Rs. 133.64 crores Utility Advances Rs. 355.98 crores and Advance Released for Supply of Rail Rs. 46.23 crores as on 31st March 2021. These are the advances to Zonal Railways given either for execution of works on behalf of RVNL or supply of sleepers and rails for utilisation in RVNL projects which is a regular process. Zonal Railways are advised to give accountal of the advance given but confirmations of outstanding balances from some Zonal Railways were not received in spite of repeated requests. The advance was given to Electricity Companies for either power supplies or for shifting of cables in connection with the projects. The accountal will only be received on completion of the work.
3 Without qualifying our report attention is invited to note no. 44 regarding the impact arising from the Covid-19 pandemic. Disclosure in this regard has already been made in the note 52 of notes to accounts. However brief extracts are as under:
Despite continuation of pandemic COVID-19 globally and in India Company has been able to registered a growth of 6% in turnover. In view of the Management assessment likely impact on the business of the Company is only for short term and no medium to long term risks is perceived which will have an impact on Company's ability to continue as a going concern. In FY 2020-21 there was no significant impact on financial performance of the Company. Based on the internal and external information upto the date of approval of these financial statements the company expects to recover the carrying amount of its assets investments trade receivables contract assets . The Company has assessed the impact of COVID-19 on financial and physical performance in 2021-22 which may be due to (i) provision of inadequate funds (ii) unavailability of labourers and goods during lock down period (iii) impact of restrictions on transportation etc. impact so assessed is not much significant. Further considering the Company's business plans and the assurance of the Ministry of Railways to provide adequate funds for project execution in 202122 the Management do not foresee any uncertainty in continuing its business operations. However Company will continue to monitor developments to identify significant uncertainties relating to business operations in future periods.

.