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Ramky Infrastructure Ltd.

BSE: 533262 Sector: Infrastructure
NSE: RAMKY ISIN Code: INE874I01013
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NSE 00:00 | 15 Jan 49.10 -0.35
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OPEN 49.50
PREVIOUS CLOSE 50.05
VOLUME 4980
52-Week high 58.25
52-Week low 15.45
P/E
Mkt Cap.(Rs cr) 339
Buy Price 48.25
Buy Qty 343.00
Sell Price 48.95
Sell Qty 10.00
OPEN 49.50
CLOSE 50.05
VOLUME 4980
52-Week high 58.25
52-Week low 15.45
P/E
Mkt Cap.(Rs cr) 339
Buy Price 48.25
Buy Qty 343.00
Sell Price 48.95
Sell Qty 10.00

Ramky Infrastructure Ltd. (RAMKY) - Auditors Report

Company auditors report

To

The Members of Ramky Infrastructure Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of RamkyInfrastructure Limited ("the Company") which comprise the Balance Sheet as at31st March 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Cash Flows and the Statement of Changes in Equity for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the ‘Act') in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 its profit including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.

Basis of Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the standalone financial statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.

Emphasis of Matter

Attention is invited to a) N ote 47 to the Standalone Financial Statements in existenceof material uncertainties over the realisability of certain construction work in progressand trade receivables aggregating to Rs. 996.12 millions as at March 31 2019 which aresubject matters of arbitration proceedings / negotiations with the customers andcontractors due to foreclosure of contracts and other disputes. The management of theCompany keeping in view the status of negotiations and the outcome of arbitrationproceedings on the basis of which steps to recover these amounts are currently in processis confident of recovering the aforesaid dues. In view of pending billing of project WIP /slow progress / termination of these projects and lack of other alternate audit evidenceto corroborate management's assessment of recoverability of these balances we are unableto comment on the extent to which these balances are recoverable. b) N ote 52 to theFinancial Statements in respect of claim 3267.34 millions (excluding taxes) to SrinagarBanihal Expressway Limited (SBEL) raised during the quarter and year ended March 31 2019and accepted by SBEL and included under Revenue from Operations.

Our opinion is not qualified in respect of these matters.

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.

Key Audit Matter Auditors' response
Foreseeable losses Management estimates the costs to complete the unexecuted portion of the contract and where it is probable that those costs exceed the revenue to be earned from such contracts a provision for such probable loss is created. Evidence and historical information is considered to decide on the rationale and appropriateness of the estimates with respect to the costs to complete the project. The relevant covenants of the contract are verified to assess the unearned revenue from the project. Considering the historical information and evidence with respect to probability of incurring losses an appropriate provision is arrived.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe standalone financial statements consolidated financial statements and our auditor'sreport 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 ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. The Board's Report including itsannexures is expected to be made available to us after the date of this auditor's report.We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated inof section134(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 cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the accountingstandards specified under section 133 of the Act the Companies (Indian AccountingStandard) Rules 2015 as amended. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Rs. financial statements that give a trueand fair view and are free from material misstatement 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. Those Board of Directors are also responsible foroverseeing the Company's financial reporting 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 SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism 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 control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent 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 standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant deficiencies ininternal 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

1 A s required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2 A s 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;

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flows and the Statement of Changes in Equity dealt with bythis report are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act and the Companies (IndianAccounting Standard) Rules 2015 as amended;

e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act;

f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B";

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid / provided by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act; and

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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements (Refer Note 41 to the standalone financialstatements);

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; and

iii. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund other than one instance of delay of Rs. 0.33millions on account of unclaimed dividend.

For M V NARAYANA REDDY & CO.
Chartered Accountants
Firm Registration No. 002370S
Sd/-
M V Narayana Reddy
Place : H yderabad Partner
Date : 27-May-2019 Membership No. 028046

Annexure ‘A' to the Independent Auditors' Report

The Annexure referred to in Paragraph 1 under ‘Report on Other Legal andRegulatory Requirements' in our Independent Auditors' Report to the members of the Companyfor the year ended 31st March 2019:

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

(b) The fixed assets were physically verified during the year by the management inaccordance with a regular program of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. According to theinformation and explanations given to us the discrepancies noticed on such verificationwere not material.

(c) According to the information and explanations given to us the title deeds ofimmovable properties included in property plant and equipment are held in the name of theCompany.

ii) A ccording to the information and explanations given to the inventories werephysically verified during the year by the management at reasonable intervals and thediscrepancies noticed on physical verification of the inventory as compared to bookrecords were not material.

iii) The Company has granted unsecured loans to four companies (out of which the loansgranted to two companies are interest free) covered in the register maintained undersection 189 of the Act in respect of such loans;

(a) In our opinion the terms and conditions of the loans granted by the Company arenot prejudicial to the interest of the Company except in the case of interest freeunsecured loans granted to two subsidiary companies aggregating to Rs. 1807.82 millionsas at March 31 2019 having regard to the cost of funds to the Company which areprejudicial to the interest of the Company.

(b) The receipt of principal amount and interest stipulated is regular other than anamount disclosed in (c) below. Further in case of interest free loan granted to twosubsidiary companies where the schedule of repayment of the principal and payment ofinterest has not been stipulated we are unable to comment as to whether repayments areregular.

(c) In case of loans carrying interest there is an overdue interest amounting to Rs.168.23 millions for more than 90 days. As per the information and explanations given tous the Company has made reasonable steps to recover overdue interest portion. Further incase of interest free unsecured loans granted to two subsidiary companies as the scheduleof repayment has not been stipulated we are unable to comment whether any amount isoverdue and whether any steps for recovery of the principal is required.

According to the information and explanations given to us apart from the above theCompany has not granted loans secured or unsecured to firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. iv) A ccording to information and explanations given to us and thelegal opinion obtained by the Company that it is engaged in the business of providinginfrastructure facilities in terms of Section 186 the Company has complied with theprovisions of section 185 and 186 of the Companies Act 2013 in respect of grant ofloans making investments and providing guarantees and security as applicable.

v) A ccording to the information and explanations given to us the sCompany has notaccepted any deposits during the year within the meaning of section 73 to 76 of the Actand the Rules framed there under to the extent notified.

vi) We have broadly reviewed the cost records maintained by the Company pursuant to theRules made by the Central Government under section 148 (1) of the Companies Act 2013 andare of the opinion that prima facie the prescribed accounts and records have been made andmaintained. We have however not made detailed examination of the records with a view todetermining whether they are accurate or complete.

vii) A ccording to the information and explanations given to us in respect ofstatutory dues:

(a) According to information and explanations given to us and records of the Companyexamined by us amounts deducted/ accrued in the books of accounts in respect ofundisputed to us statutory dues including provident fund employees state insuranceincome tax sales tax service tax value added tax goods and services tax cess andother material statutory dues as applicable have been actually/regularly deposited withthe appropriate authorities and there have been delays in number of cases during the year.As per information and explanations given to us the Company did not have any dues on theaccount of excise duty and customs duty. Details of undisputed dues in respect of salestax works contract tax value added tax and goods and services tax that were in arrearsfor a period of more than six months from the date they become payable are provided in Appendix– I.

(b) According to the information and explanations given to us and records of theCompany examined by us particulars of dues outstanding in respect of provident fundincome-tax sales tax service tax and value added tax which have not been deposited onaccount of any dispute are given in Appendix – wherever II to thisreport.

viii) In our opinion and according to the information and explanations given to us theCompany has defaulted in the repayment of certain dues to financial institutions andbanks. The details of such default are set out in Appendix – III to thereport. There are no loans or borrowings payable to Government and debenture holders.

ix) According to the information and explanations given to us the Company has notraised moneys by way of initial public offer or further public offer (including debtinstruments) and term loans. Accordingly the provisions of clause 3 (ix) of the Order arenot applicable to the Company and hence not commented upon.

x) Based upon the audit procedures performed and the information and explanations givento us we report that no fraud by the Company or no material fraud on the Company by itsofficers or employees has been noticed or reported during the year.

xi) According to the information and explanations given to us the managerialremuneration has been paid / provided in accordance with the requisite approvals mandatedby the 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. Hence the provisions of clause 3 (xii) of the Order arenot applicable to the Company.

xiii) In our opinion and according to the information and explanations provided to ustransactions with the related parties are in compliance with section 177 and 188 of theCompanies Act 2013 to the extent applicable. The details of related party transactionsas required by the applicable accounting standards have been disclosed in the notes tofinancial statements.

xiv) A ccording to the information and explanations given to us Company has madepreferential allotment of equity shares by way of conversion of share warrants during theyear and the requirements of section 42 of the Companies Act 2013 have been compliedwith. The amounts raised have been used for the purpose for which they were raised. TheCompany has not made any preferential allotment or private placement of fully or partlyconvertible debentures during the year.

xv) A ccording to the information and explanations given to us Company has not enteredinto any non-cash transactions with directors or persons connected with him. Accordinglythe provisions of clause 3 (xv) of the order are not applicable to the Company and hencenot commented upon.

xvi) In our opinion and according to the information and explanation given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934 and accordingly the the provisions of clause 3 (xvi) of the Order are notapplicable to the Company and hence not commented upon.

For M V NARAYANA REDDY & CO.
Chartered Accountants
Firm Registration No. 002370S
Sd/-
M V Narayana Reddy
the Place : H yderabad Partner
Date : 27-May-2019 Membership No. 028046

Annexure B" to the Independent Auditor's Report of even date on the standalonefinancial statements of Ramky Infrastructure Limited.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of RamkyInfrastructure Limited ("the Company") as of March 31 2019 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting("the Guidance Note") issued by the Institute of Chartered Accountants of India.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by the Institute of CharteredAccountants of India and deemed to be prescribed under section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply wiThethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether 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 systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

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

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India. However the Company needs to improve its systems with respect torealisation of receivables including retention monies work-in-progress etc.

For M V NARAYANA REDDY & CO.
Chartered Accountants
Firm Registration No. 002370S
Sd/-
M V Narayana Reddy
Place : H yderabad Partner
Date : 27-May-2019 Membership No. 028046

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