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RPP Infra Projects Ltd.

BSE: 533284 Sector: Infrastructure
NSE: RPPINFRA ISIN Code: INE324L01013
BSE 00:00 | 09 Jul 63.10 -1.70
(-2.62%)
OPEN

64.80

HIGH

65.00

LOW

61.15

NSE 00:00 | 09 Jul 63.40 -1.00
(-1.55%)
OPEN

66.00

HIGH

66.00

LOW

62.55

OPEN 64.80
PREVIOUS CLOSE 64.80
VOLUME 1370
52-Week high 115.75
52-Week low 27.25
P/E 7.39
Mkt Cap.(Rs cr) 143
Buy Price 63.10
Buy Qty 500.00
Sell Price 66.80
Sell Qty 2096.00
OPEN 64.80
CLOSE 64.80
VOLUME 1370
52-Week high 115.75
52-Week low 27.25
P/E 7.39
Mkt Cap.(Rs cr) 143
Buy Price 63.10
Buy Qty 500.00
Sell Price 66.80
Sell Qty 2096.00

RPP Infra Projects Ltd. (RPPINFRA) - Auditors Report

Company auditors report

To

The Members of

R.P.P. Infra Projects Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of RPP INFRA PROJECTSLIMITED ("the Company") which comprise the balance sheet as at 31st March 2019and the statement of Profit and Loss the statement of changes in equity and the statementof cash flows for the year ended on that date and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory informationfor the year ended which includes two branches.

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 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 31 2019 the profit changes in equityand it's cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by The Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

We have determined the matters described below to be the key audit matters to becommunicated in our report.

S.No Key Audit Matter Auditor's Response
1. Revenue recognition in accordance with Ind AS 115 "Revenue from Contracts with Customers" Our audit procedures on revenue recognized from fixed price development contracts include
The Company inter alia engages in Fixed-price development contracts where revenue is recognized using the percentage of completion computed based on management's estimate of contract costs. (Refer Note No.27 to the Standalone Financial Statements) • Understanding of the systems processes and controls implemented by management for recording and calculating revenue and work-in-progress/ contract assets.
• On selected samples of contracts we tested that the revenue recognized is in accordance with the accounting standard by-
We identified revenue recognition of fixed price development contracts as a KAM considering - Evaluating the performance obligation;
Testing management's calculation of the estimation of contract cost and onerous obligation if any. We:
• There is an inherent risk around the accuracy of revenues given the customised and flexible nature of these contracts in terms of tenure of the projects. Observed that the estimates of cost to complete were reviewed and approved by appropriate levels of management;
• Application of revenue recognition accounting standard is complex and involves a number of key judgments and estimates including estimating the future cost-to-completion of these contracts which is used to determine the percentage of completion of the relevant performance obligation; Performed a retrospective review of costs incurred with estimated costs to identify significant variations and verify whether those variations have been considered in estimating the remaining costs to complete the contract; and

 

S.No Key Audit Matter Auditor's Response
• These contracts may involve onerous obligations on the Company that require critical estimates to be made by management; and Assessed the appropriateness of work in progress (contract assets) in balance sheet by evaluating the underlying documentation to identify possible delays in achieving milestones which may require change in estimated costs to complete the remaining performance obligations.
• At year-end a significant amount of work in progress (Contract assets and Liability) related to these contracts is recognised in the balance sheet.
2 Interest income
Accrued Interest on Fixed Deposits was reckoned on an estimated basis. (Refer Note No.28 to the Standalone Financial Statements) Our Audit procedure for estimating the accrued interest included reviewing the list of fixed Deposits and applying the estimated rate of interest for period of such deposits calculated on pro-rata basis.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the 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.

Other Matter

We did not audit the financial statements of two branches included in the stand alonefinancial statements of the Company whose financial statements reflect total assets ofRs.23.05 Crores as at 31st March 2019 and the total revenue of Rs 30.44 Crores for theyear ended on that date as considered in the standalone financial statements of thesebranches have been audited by the branch auditors whose reports have not been furnished tous and our opinion in so far as it relates to the amounts and disclosures included inrespect of branches is based solely on such unaudited financial statements.

Emphasis of Matter

We draw your attention to:

The loan taken by the company to the tune of Rs.1.00 Crore for which the provisions ofsec. 73 to sec. 76 of the Companies Act 2013 and along with The Companies (Acceptance ofDeposits) Rules 2014 were not complied with (Please refer to note no.18 of the notes toaccounts). Our Opinion is not modified in respect of this matter.

The mobilisation advance received by the Company from certain departments and theproportionate amount which has to be classified as GST liability has been shown asmobilisation advance liability to the extent of Rs 3.06 Crores (Refer Note No. 24) OurOpinion is not modified in respect of this matter.

The search operation conducted by the Income tax department u/s 132 of the Income TaxAct on 24.03.2016. Subsequently the Company has filed an application with Income TaxSettlement Commission and remitted a total amount of Rs.17.96 Crores including interestof Rs.8.83 crore on certain amounts admitted as bogus expenses and bogus purchasespertaining to the seven years from 01.04.2009 to 31.03.2016. Final order from the IncomeTax Settlement commission is awaited (Refer Note No. 35). This falls within the meaning ofFraud as per explanation to section 447 of Companies Act 2013. Our Opinion is notmodified in respect of this matter since this pertains to earlier years.

Report on Other Legal and Regulatory Requirements

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

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) We have not audited the branch offices situated in Srilanka and Bangladesh. We havenot received any audit report for the same.

(c) We have not received any reports on the accounts of the branch of the offices ofthe company audited under section 143(8) of the Act by branch auditors.

(d) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of accounts.

(e) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(f) 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 aredisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.

(g) 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 A".

(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 on its financialposition in its financial statements - Refer Note.39 to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For SUNDARAM & NARAYANAN
Chartered Accountants
Firm Reg. No: 004204S
CA .P.KAILASAM
Place: Erode Partner
Date: 29th May 2019 Membership No: 222363

Annexure 'A' To The Independent Auditors' Report

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 RPP InfraProjects Limited as of March 31 2019 in conjunction with our audit of the standalone IndAS 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 and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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 on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.

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 judgement 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 except relating to the branches in Srilanka and Bangladesh.

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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

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 with reference to standalone financial statements and suchinternal financial controls with reference to standalone financial statements wereoperating effectively as at 31 March 2019 except relating to the branches in Srilanka andBangladesh which have neither been audited by us nor have received an IndependentAuditor's report.

For SUNDARAM & NARAYANAN
Chartered Accountants
Firm Reg. No: 004204S
CA .P.KAILASAM
Place: Erode Partner
Date: 29th May 2019 Membership No: 222363