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SREI Infrastructure Finance Ltd.

BSE: 523756 Sector: Financials
NSE: SREINFRA ISIN Code: INE872A01014
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5.35

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5.24

NSE 00:00 | 18 May 5.35 0.25
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5.35

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OPEN 5.29
PREVIOUS CLOSE 5.10
VOLUME 66986
52-Week high 18.39
52-Week low 3.47
P/E 1.38
Mkt Cap.(Rs cr) 268
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 5.29
CLOSE 5.10
VOLUME 66986
52-Week high 18.39
52-Week low 3.47
P/E 1.38
Mkt Cap.(Rs cr) 268
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SREI Infrastructure Finance Ltd. (SREINFRA) - Auditors Report

Company auditors report

To the Members of Srei Infrastructure Finance Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of Srei InfrastructureFinance Limited ("the Company") which comprise the Balance Sheet as at 31March 2021 the Statement of Profi t and Loss (including Other Comprehensive Income)Statement of Changes in Equity Statement of Cash Flows for the year then ended and notesto the Standalone Financial Statements including a summary of signifi cant accountingpolicies and other explanatory information (hereinafter referred to as "theStandalone Financial Statements").

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 and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2021 the loss and other comprehensive losschanges in equity and the cash fl ows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifi edunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India and the relevantprovisions of the Act and Rules thereunder and we have fulfi lled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is suffi cient and appropriate to provide a basisfor our opinion.

Emphasis of Matter

We draw attention to the following matters in the notes to the Standalone FinancialStatements:

1. Note 32 to the Standalone Financial Statements which explains that the Company hastransferred the business of lending interest-earning and leasing together with itsassociated employees and related assets and liabilities by way of slump exchange pursuantto a Business Transfer Agreement (BTA) with its subsidiary Srei Equipment Finance Limited(SEFL) with effect from 01 October 2019 after receiving the approval of the shareholdersdebenture trustees few lenders stock exchanges and in-principle approval from some ofthe domestic lenders including lead banks. One of the debenture holders of SEFL holdingdebentures amounting to Rs 75 crores have objected to the slump exchange. Theconsent or otherwise of other lenders is still awaited. Pending the approvals as statedabove the Company accounted BTA on 01 October 2019 as stated above. The Companyobtained expert legal and accounting opinions in relation to the accounting of BTA whichconfi rmed that the accounting treatment so given is in accordance with the relevant IndAS and the underlying guidance and framework. As stated in Note No. 32.1 to the Statementpending fi nal decision in the matter and further based on a legal opinion the Companyhas maintained status quo for BTA.

2. Note 44 to the Standalone Financial Statements which explains that the outbreak ofCOVID-19 pandemic and extended lockdown across the globe and in India has contributed to asignifi cant impact and volatility in global and Indian fi nancial markets with consequentslowdown in economic activities. The impact of COVID-19 pandemic (including the ongoingsecond wave) and the extent to which the pandemic may further impact the operations of theCompany and its subsidiaries depends on future developments which are stillunascertainable at this point in time.

3. Note 45 to the Standalone Financial Statements which explains that the investmentof the Company in its material subsidiary Srei Equipment Finance Limited("SEFL") has been impacted owing to COVID-19 pandemic. The collection of SEFLfrom the borrowers and the lessees were severely impacted during the year and which alsoadversely affected the cash fl ows of SEFL during the said period. Based on the overallassessment of fi nancial stress being faced by the borrowers and the lessees andconsidering the overall economic and business uncertainty due to pandemic as a prudentmeasure and out of abundant caution SEFL has done accelerated ECL provision which is overand above normal ECL provision. SEFL has incurred losses during the year ended 31 March2021 due to which its net worth has eroded.

Considering the above facts the Company has assessed the carrying amount of itsinvestment in SEFL in compliance to Ind AS and has made an impairment provision of Rs 310455Lacs during the quarter and year ended 31 March 2021 bringing down the book value of itsinvestment in SEFL to Re. 1 as a prudent measure.

The Company feels that with gradual improvement in the economy SEFL will recoversignifi cant part of the loan given to its borrowers resulting in reversal of provisionmade in the books by SEFL in the current year. Accordingly the impairment on investmentwill be reviewed in future.

Our opinion is not modifi ed in respect of these matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignifi cance 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:

No. Key Audit Matters Auditor's Response
1 Impairment of Investment Principal Audit Procedures:
Refer Note no. 7 to the Standalone Financial Statements. -Obtained an understanding of Management's processes and controls with regard to testing the impairment of unquoted equity instruments.
The impairment review of unquoted equity instruments is considered to be a key audit matter due to the size of the balances as well as the judgmental nature of key assumptions which may be subject to management override. -Reviewed the Financial performance of the company during the year 2020-21.
The estimated recoverable amount is subjective due to the inherent uncertainty involved in forecasting and discounting future cash fl ows -Performed a sensitivity analysis in relation to key assumptions
2 Valuation of unquoted fi nancial assets held at fair value Principal Audit Procedures:
Refer Note no. 7 to the Standalone Financial Statements. We have performed the following audit procedures in order to obtain suffi cient audit evidence:
The valuation of the Company's unquoted fi nancial assets held at fair value is a key audit matter due to the signifi cance of the amount and complexity involved in the valuation process. Management makes signifi cant judgements because of the complexity of the techniques and assumptions used in valuing some of the level 3 investment securities given the limited external evidence and unobservable market data available to support the Company's valuations. The valuation of the level 3 investment securities are dependent on market conditions and key assumptions made. The determination of these assumptions is complex and requires the exercise of management judgement. -Assessed the valuation methodologies including evaluation of independent external valuers' competence capability and objectivity.
-Assessed the reasonableness of key assumptions based on our knowledge of the business and industry.
-Checked on a sample basis the accuracy and relevance of the input data used
3 Related Party Transactions Principal Audit Procedures:
Refer Note no. 39 to the Standalone Financial Statements. We identifi ed the accuracy and completeness of disclosure of related party transactions as set out in respective notes to the Standalone Financial Statements as a key audit matter due to: Obtaining an understanding of the Company's policies and procedures in respect of the capturing of related party transactions and how management ensures all transactions and balances with related parties have been disclosed in the Standalone Financial Statements.
• the signifi cance of transactions with related parties during the year ended 31 March 2021. -Obtaining an understanding of the Company's policies and procedures in respect of evaluating arms-length pricing and approval process by the audit committee and the board of directors.
• compliance with applicable laws and Regulatory directives
• the fact that Related party transactions are subject to the compliance requirement under the Companies Act 2013 and SEBI (LODR) 2015. -Designing and performing audit procedures in accordance with the guidelines laid down by ICAI in the Standard on Auditing (SA 550) to identify assess and respond to the risks of material misstatement arising from the entity's failure to appropriately account for or disclose material related party transactions which includes obtaining necessary approvals at appropriate stages of such transactions as mandated by applicable laws and regulations.
-Assessing management evaluation of compliance with the provisions of Section 177 and Section 188 of the Act and SEBI (LODR) 2015.
-Evaluating the disclosures through reading of statutory information books and records and other documents obtained during the course of our audit. Our examination has showed that the Related Party Transactions have been evaluated and disclosed appropriately.
4 Considerations on account of COVID-19 Principal Audit Procedures:
Refer Note no. 44 to the Standalone Financial Statements. Considering the evolving nature of the COVID-19 pandemic which has continued to impact the Company's business operations. Given the unique nature of the pandemic and the extent of its economic impact which depends on future developments including governmental and regulatory measures and the Company's responses thereto the actual loss can be different than that being estimated. Tested assumptions used by the Management in determining the overlay for macro-economic factors for COVID-19 pandemic.

Other Matter

The Standalone Financial Statements for the year ended 31 March 2020 were audited bythe then Statutory auditors of the Company who have expressed an unmodifi ed opinion onthose Statements vide their report dated 28 July 2020 and we have relied on the same.

Our opinion is not modifi ed in respect of this matter.

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

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Report on Corporate Governance andShareholder's Information but does not include the Standalone Financial Statements andour auditor's report thereon. The above-mentioned other information are expected to bemade available to us after the date of this auditor's report.

Our opinion on the Standalone Financial Statements does not cover the other informationand accordingly we do not express any form of assurance conclusion thereon. In connectionwith our audit of the Standalone Financial Statements our responsibility is to read theother information identifi ed above when it becomes available and in doing so considerwhether the other information is materially inconsistent with the Standalone FinancialStatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated. When we read the other information if we conclude that thereis a material misstatement therein we are required to communicate the matter to thosecharged with governance.

Responsibility for Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the fi nancial position fi nancial performance changesin equity and cash fl ows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards specifi ed undersection 133 of the Act read with relevant rules issued thereunder. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 the designimplementation and maintenance of adequate internal fi nancial controls with reference tofi nancial statements that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Financial Statements that give a true and fair view and are free frommaterial 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. The Board of Directors is also responsible foroverseeing the Company's fi nancial 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 infl uence the economic decisions of userstaken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism 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 suffi cient and appropriateto provide 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the companyhas adequate internal fi nancial controls system with reference to fi nancial statementsin place and the operating effectiveness 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 signifi cant 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.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and signifi cant audit fi ndings including anysignifi cant defi ciencies 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 signifi cance in the audit of the Standalone FinancialStatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefi ts of suchcommunication.

Report on Other Legal and Regulatory Requirements

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

2. As required by Section 143(3) of the Act we report that: a. We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b. In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; c. The Standalone Balance Sheet the Standalone Statement ofProfi t and Loss (including Other Comprehensive Income) the Standalone Statement ofChanges in Equity and the Standalone Statement of Cash Flows dealt with by this Report arein agreement with the books of account; d. In our opinion the aforesaid StandaloneFinancial Statements comply with the Indian Accounting Standards specifi ed under Section133 of the Act read with relevant rules issued thereunder; e. The matters described underthe Emphasis of Matter paragraph above in our opinion may have an adverse effect on thefunctioning of the Company; f. On the basis of the written representations received fromthe directors as on 31 March 2021 and taken on record by the Board of Directors none ofthe directors is disqualifi ed as on 31 March 2021 from being appointed as a director interms of Section 164 (2) of the Act; g. With respect to the adequacy of the internal financial controls with reference to fi nancial statements of the

Company and the operating effectiveness of such controls refer to our separate Reportin "Annexure B";

h. With respect to the other matters to be included in the Auditors 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 fi nancialposition in its Standalone Financial Statements- Refer Note no.31 to the StandaloneFinancial 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 during the year ended 31stMarch 2021.

3. With respect to the other matter to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act: According to theinformation and explanations given to us and the records of the Company examined by usthe managerial remuneration paid or provided by the Company to its Chairman during theyear is in excess of the prescribed limits mandated by the provisions of Section 197 readwith Schedule V of the Act and the Company has taken approval from shareholders through aSpecial Resolution in the last Annual General Meeting held on 19 September 2020 for thefi nancial years 2020-21 and 2021-22.

For D. K. Chhajer& Co.
Chartered Accountants
FRN: 304138E
Niraj K Jhunjhunwala
Partner
Membership No: 057170
UDIN: 21057170AAAADR2751
Place: Kolkata
Date: 30 June 2021

Annexure A to the Independent Auditors' Report

[Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section in the Independent Auditor's Report of even date to the members ofSrei Infrastructure Finance Limited on the Standalone Financial Statements for the yearended 31 March 2021]

Based on the audit procedures performed for the purpose of reporting a true and fairview on the Standalone Financial Statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit we report that:

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

(b) The Company has a program of physical verifi cation of fi xed assets to cover allthe items in a phased manner over a period of 3 years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the program certain fi xed assets were physically verifi ed by the management duringthe year and no material discrepancies were noticed on such verifi cation.

(c) The title deeds of immovable properties recorded as fi xed assets (Property Plantand Equipment) in the books of accounts of the Company are held in the name of Companyexcept for the details given below:

Land/ Building Total numbers of cases Leasehold/ Freehold Gross Block as on 31st March 2021 Net Block as on 31st March 2021 Remarks
Building 1 Freehold 8747.34 8017.07 Conveyance is pending

ii. The Company does not have any inventory and hence reporting under clause 3(ii) isnot applicable to the company. iii. The Company has not granted any loans secured orunsecured to companies limited liability partnerships fi rms or other parties coveredin the register maintained under Section 189 of the Act. Accordingly Clause 3(iii) of thesaid Order is not applicable to the Company. iv. The Company has complied with theprovisions of sections 185 and 186 of the Act in respect of grant of loans makinginvestments and providing guarantees and securities as applicable. v. In our opinion theCompany has complied with the directives issued by Reserve Bank of India the provisionsof sections 73 to 76 of the Act and the rules framed thereunder with regard to theacceptance of deposits. Further as informed no Order has been passed by the Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any Court or any otherTribunal on the Company in respect of the aforesaid deposits.

vi. The Central Government has not prescribed the maintenance of cost records for anyof the products of the Company under sub-section (1) of section 148 of the Act and therules framed there under. vii. (a) The Company is generally regular in depositing withappropriate authorities amounts deducted/accrued in the books of account in respect ofundisputed statutory dues including provident fund employees' state insurance incometax goods and services tax (GST) customs duty cess and any other material statutorydues applicable to it except that there have been slight delay in few cases. Noundisputed amounts payable in respect of aforesaid dues were outstanding at the yearend for a period of more than six months from the date they became payable. (b) There areno dues with respect to value added tax GST Custom duty and duty of excise which havenot been deposited on account of any dispute.The dues outstanding as at 31 March 2021 withrespect to income tax service tax and sales tax on account of any dispute are as follows:

Name of Statute Nature of dues Amount (Rs in Lacs)* Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income tax 471 FY 2005-06 And FY 2006-07 Supreme Court of India
Income Tax Act 1961 Income tax 125 FY 2006-07 And FY 2007-08 CIT (Appeals) Kolkata
Income Tax Act 1961 Income tax 529 FY 2007-08 and FY 2010-11 Appeal in the process of being fi led before Calcutta High Court
Income Tax Act 1961 Income tax 76 FY 2007-08 Assessing Offi cer
Income Tax Act 1961 Income tax 1809 FY 2008-09 Supreme Court of India
Income Tax Act 1961 Income tax 1938 FY 2011-12 CIT (Appeals) Kolkata
Income Tax Act 1961 Income tax 1283 FY 2013-14 CIT (Appeals) Kolkata
Income Tax Act 1961 Income tax 1427 FY 2014-15 CIT (Appeals) Kolkata
Income Tax Act 1961 Income tax 97 FY 2015-16 CIT (Appeals) Kolkata
Income Tax Act 1961 Income tax on fringe benefi ts 226 FY 2005-06 to FY 2008-09 Calcutta High court
Finance Act 1964 Service Tax 302 FY 2008-09 to 2009-10 CustomsExcise and Service Tax Appellate Tribunal (CESTAT) Kolkata
Finance Act 1964 Service Tax 80 FY 2011-12 to FY 2014-15 CGST & CX Commissioner Appeal -1 Commissionerate of Kolkata
Finance Act 1964 Central sales tax 4263 FY 2015-16 CGST & CX Commissioner North Commissionerate Kolkata
Central Sales Tax Act 1956 Central Sales Tax Act 211 FY 2010-11 West Bengal Tax Appellate and Revisional Board Kolkata

*In terms of Business Transfer Agreement (‘BTA') ( Refer Note No. 32 to theStandalone Financial Statements ) entered by the Company with its wholly owned SubsidiarySrei Equipment Finance Limited (‘SEFL') the Company is holding all the aforesaiddues on behalf of SEFL. In case of any future liability arising on the company in relationto the aforesaid dues the Company will recover the same from SEFL as per the terms ofBTA.

viii. During the year the Company has not defaulted in repayment of loans or borrowingsto banks fi nancial Instituitions Government or dues to debenture holder except overdueinterest of Rs.23.86 crores which was due on 31 March 2021 to wholly owned subsidiarycompany Srei Equipment Finance Limited (SEFL) due to the restrictions imposed by thebankers on Related Party Payments.

ix. The Company did not raise any money by way of initial public offer / further publicoffer (including debt instruments) and term loans during the year hence reporting underclause 3(ix) is not applicable to the Company.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or any fraud on the Company by its offi cers oremployees noticed or reported during the year nor have we been informed of any suchinstance by the management. xi. The Company has paid/provided the managerial remunerationto the Chairman which is not in accordance with the requisite approvals mandated by theprovisions of section 197 read with schedule V of the Act (i.e. the managerial remuretionpaid/provided as aforesaid is in excess of the prescribed limits) and the Company hastaken approval from shareholders through a Special Resolution in the last Annual GeneralMeeting held on 19 September 2020 for the fi nancial years 2020-21 and 2021-22.

xii. The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theOrder is not applicable to the Company.

xiii. All transactions entered into by the Company with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and the details havebeen disclosed in the Standalone Financial Statements as required by the applicableaccounting standards.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Therefore clause 3(xiv) of theOrder is not applicable to the Company.

xv. The Company has not entered into any non-cash transactions with directors orpersons connected with them during the year and hence provisions of Section 192 of the Actare not applicable.

xvi. The Company is required to be registered under Section 45-IA of the Reserve Bankof India Act 1934 and the registration has been obtained by the Company.

For D. K. Chhajer& Co.
Chartered Accountants
FRN: 304138E
Niraj K Jhunjhunwala
Partner
Membership No: 057170
UDIN: 21057170AAAADR2751
Place: Kolkata
Date: 30 June 2021

Annexure - B to the Independent Auditors' Report

[Referred to in paragraph 2(g) under ‘Report on Other Legal and RegulatoryRequirements' section in our Independent Auditor's Report of even date to the members ofSrei Infrastructure Finance Limited on the Standalone Financial Statements for the yearended 31 March 2021]

Report on the Internal Financial Controls with reference to Standalone FinancialStatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act")

We have audited the internal fi nancial controls with reference to fi nancialstatements of Srei Infrastructure Finance Limited ("the Company") as of 31March 2021 in conjunction with our audit of the Standalone Financial Statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control with reference to fi nancial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India (‘ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal fi nancial controls that were operating effectively forensuring the orderly and effi cient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable fi nancial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal fi nancialcontrols with reference to fi nancial statements based on our audit. We conducted ouraudit in accordance with the Guidance Note and the Standards on Auditing specifi ed undersection 143(10) of the Act to the extent applicable to an audit of internal fi nancialcontrols both issued by the ICAI. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal fi nancial controls with reference to fi nancialstatements was established and maintained and if such controls operated effectively in allmaterial respects. Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal fi nancial controls with reference to fi nancial statementsand their operating effectiveness. Our audit of internal fi nancial controls withreference to fi nancial statements included obtaining an understanding of internal financial controls with reference to fi nancial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Financial Statements whether due to fraud or error.

We believe that the audit evidence we have obtained is suffi cient and appropriate toprovide a basis for our audit opinion on the Company's internal fi nancial controls withreference to fi nancial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A Company's internal fi nancial control with reference to fi nancial statements is aprocess designed to provide reasonable assurance regarding the reliability of fi nancialreporting and the preparation of Financial Statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal fi nancial controlwith reference to fi nancial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyrefl ect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofFinancial Statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorisations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on the FinancialStatements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

Because of the inherent limitations of internal fi nancial controls with reference tofi nancial statements 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 fi nancial controls withreference to fi nancial statements to future periods are subject to the risk that theinternal fi nancial control with reference to fi nancial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internal financial controls with reference to fi nancial statements and such internal fi nancialcontrols with reference to fi nancial statements were operating effectively as at 31March 2021 based on the internal control with reference to fi nancial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note issued by the ICAI.

For D. K. Chhajer& Co.
Chartered Accountants
FRN: 304138E
Niraj K Jhunjhunwala
Partner
Membership No: 057170
UDIN: 21057170AAAADR2751
Place: Kolkata
Date: 30 June 2021

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