Mar 31, 2018
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS financial statements of Gammon Infrastructure Projects Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Cash Flow and Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as âStandalone Ind AS Financial Statementsâ).
Managementâs Responsibility for the Standalone Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) specified under Section 133 of the Act, read with relevant rules thereon.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the Standalone Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these Standalone Ind AS Financial Statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Standalone Ind AS Financial Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Standalone Ind AS Financial Statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the Standalone Ind AS Financial Statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Companyâs directors, as well as evaluating the overall presentation of the Standalone Ind AS Financial Statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Standalone Ind AS Financial Statements.
Basis of Qualified Opinion
a) Attention is invited to note 18(a) of the Standalone Ind AS Financial Statements relating to the excess managerial remuneration paid of Rs. 497.17 lacs for the period upto March 2017 for the reasons detailed in the aforesaid note. The Company had once again submitted its representation to the Ministry to reconsider its decision and allow the waiver of recovery of the excess remuneration paid aggregating to Rs. 388.45 lacs for the period upto March 2016. If the Companyâs representation is not accepted then the company would be required to recover the excess remuneration from the managerial personnel and to that extent the profit will be higher by an amount of Rs. 388.45 lacs. Pending the same no adjustments have been made to the financial results. Subject to the outcome of the representation made to the MCA, we are unable to ascertain the impact on profits on this account for the quarter and the year ended March 31, 2018. Similarly for the previous period ended March 31, 2017, the remuneration in excess of the limits computed under the provisions of Section 197 read with Schedule V to the Companies Act 2013 is Rs. 108.72 lacs for which the Company has made an application to the MCA for approval of the same. Pending these approvals, no adjustments have been made to the financial results for the remuneration of the said period. This matter was qualified in the auditorsâ report dated June 18, 2017 by the previous auditorsâ on the financial statements for the year ended March 31, 2017.
Attention is invited to Note no 29 of the Standalone Ind AS Financial Statements in respect of status of the Tolling Road Project in Andhra Pradesh where termination notice was received from NHAI on 26th August 2016 and consequently, NHAI took over possession of toll plaza. Based on the subsequent negotiation and discussion with NHAI, they agreed to revoke the termination notice vide its letter dated 16th January 2017, subject to completing of financial closure and fulfilling of other commitments specified in the letter within the stipulated timeframe. The Company could not fulfil the said conditions. Ultimately on 8th September 2017, the Company made an application to NHAI for mutual exit from the project. The decision of NHAI in response to the aforesaid letter of mutual exit is pending. In case the mutual exit proposal is accepted then the exposure of the Company is likely to be capped at Rs.7246.13 lacs as the Bank Guarantee would be released as requested by the Company in its letter dated 8th September 2017. In case the proposal is not accepted then the entire exposure of Rs. 15,666.13 lacs of the Company in the SPV needs to be tested for impairment. Accordingly, the decision of NHAI is more likely to have adverse impact on the Statement of Profit and Loss. No effects have been given in the financial statements of the SPV pending the decision of NHAI. The Auditors of the SPV have, in their audit report on the financial statements of the SPV for the year ended on 31st March 2018, carried a paragraph on Material Uncertainty related to Going Concern. The decision of the NHAI is awaited for determining the possible impairment and giving necessary effects. Pending the decision of NHAI we are unable to quantify the impairment that would be required in the matter and consequent impact on the Standalone Financial Statements.
b) Attention is invited to Note no. 30 to the Standalone Ind AS Financial Statements, where the Company has defaulted in fulfilling its obligation under the one time settlement (OTS) with IFCI Limited. The Company was required to pay the entire outstanding by September 30, 2017. The Company has been unable to discharge the liability and has not been able to get further extension for the payment of the outstanding although it is actively engaged with IFCI Limited for obtaining the extension and/or non-reversal of the benefits of the OTS. In terms of the original arrangement, the benefits received under the one time settlement were to be reversed. Although the management is hopeful of obtaining the extension and / or non-reversal of the benefits of the OTS, pending the acceptance by IFCI Limited we are unable to state whether the Company has to account for the reversal of benefits of Rs. 3,776.69 lacs in its financial statements. The company has however provided interest at the rate of 11.50% p.a. as per the agreement. The interest payable on the outstanding amount before reversal of the aforesaid benefit as on balance sheet date is Rs 158.13 lacs.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in Basis of Qualified Opinion paragraph , the aforesaid Standalone Ind AS Financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS under section 133, of the financial position of the Company as at March 31, 2018, its financial performance including other comprehensive income, its cash flows and the statement of changes in equity for the year ended on that date.
Material Uncertainty relating to Going Concern.
We invite attention to Note 31 of the Standalone Ind AS Financial Statements, wherein the Company has stated that as of that date the Companyâs current liabilities exceeded current assets resulting in continued mismatch despite the sale of some of the SPVs in the previous periods. There is therefore a continuing mismatch including defaults in payment of its financial obligations. The management is taking active steps to tide over the present situations for which based on detailed evaluation of the current situation plans are formulated and active discussions are underway with various stakeholders. These conditions, along with matters arising out of pending conclusions of decisions in respect of some of the SPVS set forth in the Note 32 of the Standalone Ind AS Financial Statements and the fact of the Auditorsâ Report of some of the SPV carrying a separate paragraph on Material Uncertainty related to Going Concern as mentioned in Note 31 of the Standalone Ind AS Financial Statements, indicate the existence of significant uncertainty over the cash flows expected and the Companyâs ability to continue as a going concern. Our report is not qualified on this matter.
Emphasis of Matter
Without qualifying our opinion, we draw attention to the following matters;
a) We invite attention to Note 32(a) of the Standalone Ind AS Financial Statements, regarding unilateral termination and closure of Concessions in a bridge project, which is subject to pending litigations/arbitrations at various forums, which may impact the carrying values of investments and loans and advances given to the subsidiary. The Companyâs exposure towards the said project (funded and non-funded) is Rs.2,856.96 lacs. Pending conclusion on these legal matters, no adjustments have been made in the financial statements.
b) We invite attention to Note 32(b) of the Standalone Ind AS Financial Statements, in relation to intention to exit one of the hydro power projects at Himachal Pradesh and seeking a claim of an amount against the amount spent on the project. The Companyâs subsidiary has cited reasons for non-continuance on account of reasons beyond its control. The subsidiary is negotiating with its client for an amicable settlement on beneficial terms and has also invoked arbitration. The Companyâs exposure towards the said project includes investment and loans and advances of Rs. 7,119.23 lacs. Pending conclusion between the parties, no adjustments have been made in the financial statements.
c) We invite attention to Note 32(c) of the Standalone Ind AS Financial Statements, in connection with an amount invested (including deposits and advances given) in the subsidiary of Rs. 13,831.00 lacs (funded and non-funded). As mentioned in the said note a draft supplementary agreement has been discussed between the parties under which the project would go for a re-bid and the SPV has a Right Of First Offer. The management is hopeful that it will successfully match the bid and win the concession and continue to operate the facility, which would be operationally viable under the revised terms. The management has during the year acquired further stake from the JV partner and has obtained control over the SPV and holds 74% of the equity of the SPV Company. The auditors of the SPV have included a separate paragraph on Material Uncertainty related to Going Concern. Pending execution of the supplementary agreement and the conclusion of the Rebid, no adjustments have been made in the financial statements.
d) We invite attention to Note 32(d) of the Standalone Ind AS Financial Statements, in respect of a tolling bridge project in Andhra Pradesh where the monthly toll collections are not sufficient to pay the interest and the resultant defaults in the loan repayment resulting in the facility being marked NPA. The SPV had earlier submitted a proposal under the Scheme for Sustainable Structuring of Stressed Assets (S4A) to the Lenders, which was cleared by the Lenders for approval of the Overseeing Committee (OC) set up by the Indian Banking Association (IBA), in consultation with the Reserve Bank of India (RBI). The SPV provided its response to the observations of the Lenders and the OC on the S4A proposal and was awaiting the OC/lendersâ approval. In the interim, RBI vide its circular dated 12th February 2018, discontinued with immediate effect all restructuring schemes for stressed assets (including S4A). As per this circular, all schemes, including S4A which have been invoked but not implemented, shall be governed by the new circular. Thus the restructuring proposal proposed by the Company is no longer being pursued by the Lenders. Subsequently the Company has issued a cure period notice to Andhra Pradesh Road Development Corporation (APRDC or the Client) on 26th February 2018 under clause 37.2.1 of the Concession Agreement to cure the breaches of APRDC which includes provision of Revenue shortfall loan along with other mentioned breaches. Pending receipt of the response to the notice for cure period, no adjustments have been made in the financial statements. The auditors of the SPV have included a separate paragraph on Material Uncertainty related to Going Concern on the matter. The Companyâs exposure towards the project/SPV is Rs. 95,578.24 lacs (funded and non-funded).
e) We invite attention to Note 32(e) of the Standalone Ind AS Financial Statements, an annuity project of the Company where the SPV has accounted for the asset as a financial asset. The SPV will have cost overrun on account of issue beyond the scope of the SPV and attributable to the Grantor. This will not result in any changes in the Annuity from the grantor. However this amount would be treated separately as receivable from the Grantor based on certification of delay period attributable to the Grantor certified by the Independent Engineer. The SPV expects a sizeable claim on this amount and has obtained legal support for the validity of its claim from an Independent Expert on claim and litigation. The SPV had also separately applied to the lenders for Scheme for 5:25 Flexible Structuring Scheme for which sanction from two banks among consortium members had been received and sanction from rest bankers were expected in near future. However, in view of the RBI circular dated 12th February 2018, all restructuring schemes for stressed assets (including 5/25 Flexible Structuring Scheme) have been discontinued and the application became infructuous. The management contends that in view of the strong case it has on the claim matter as aforesaid there will be no impairment necessary towards the financial asset or towards the investment of the Company. The exposure of the Company in the SPV is Rs. 1,30,254.07 lacs including non-fund exposure. Pending conclusions no adjustments have been made in the financial statements.
f) We invite attention to Note no 32(f) of the Standalone Ind AS Financial Statements, relating to the Hydropower project in Sikkim. As detailed in the note there are various factors affecting the progress of the project. The management, as detailed in the note, is confident that it will be able to pursue the project viably and does not foresee any need for impairment. Considering the assertion of the management no adjustments have been made towards any possible impairment. The exposure of the Company in the SPV is Rs. 9,622.91 lacs.
g) We invite attention to Note 33 of the Standalone Ind AS Financial Statements, wherein during the year, Western Coalfields Limited (WCF) had encashed Bank Guarantee amounting Rs 1,514.01 lacs given in favour of Aparna Infraenergy India Private Limited (one of the SPVâs sold to BIF India Holding Pte ltd on February 29, 2016). Subsequent to encashment Company has filed an application for converting earlier injunction application to suit for recovery of damages. The management is hopeful of getting favourable decision on the matter and recovery of damages based on legal advice on the matter. Pending the outcome, the Company has shown guarantee encashment amount as receivable from Western Coal Fields and not debited the same to the statement of profit and loss for the year ended March 31, 2018.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) 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 the matters specified in paragraphs 3 and 4 of the said Order.
2. As required by section 143 (3) of the Act, we report that:
(a) we have sought and except for the possible effects of the matter described in Basis of Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion except for the possible effects of the matter described in Basis of Qualified Opinion paragraph , proper books of account as required by law have been 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 Other Comprehensive Income, the Cash Flow Statement and Statements of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion except for the possible effects of the matter described in Basis of Qualified Opinion paragraph, the aforesaid Standalone Ind AS Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with relevant rules thereon;
(e) The matters described in paragraphs under the Basis for Qualified Opinion and the Material Uncertainty related to Going Concern paragraph, in our opinion, may have an adverse effect on the functioning of the Company;
(f) On the basis of written representations received from the directors as on March 31, 2018 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of section 164(2) of the Act except Mr. Abhijit Rajan.
(g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in âAnnexure Bâ; and
(h) With respect to the other matters to be included in the Auditorâs 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 the explanations given to us:
i. The Standalone Ind AS Financial Statements disclose the impact of pending litigations on the financial position in its financial statements- Refer Note 28 to the Standalone Ind AS Financial Statements;
ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses on long term contracts. The Company has not entered into any derivative contracts.
iii. There are no amounts that are required to be transferred to the Investor Education and Protection Fund during the year
To the Independent Auditorsâ Report on the Standalone Ind AS Financial Statements Gammon Infrastructure Projects Limited
(i) ((a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of its Fixed Assets.
(b) Fixed Assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.
(c) There is no immovable property in the name of the company and hence clause 3(i)(c) of Companies (Auditors Report) Order 2016 is not applicable to the Company.
(ii) As the company does not hold any inventory during the year, clause 3(ii) of Companies (Auditors Report) Order 2016 is not applicable to the Company.
(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a), 3(iii) (b) and 3(iii) (c) of the Order are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 with respect to loans, investments, guarantees and security given by the Company.
(v) The Company has not accepted any deposit from the public pursuant to sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and rules framed thereunder. As informed to us, there is no order that has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in respect of the said sections. Accordingly the provision of clause 3(v) is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148(1) of the Companies Act, 2013, related to infrastructure developers business, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii) (a) The Company is generally regular in depositing undisputed statutory dues including Provident fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Cess, Work Contract Tax, Goods and Service Tax and other statutory dues with the appropriate authorities during the year. According to the information and explanations given to us, no undisputed amount payable in respect of the aforesaid dues were outstanding as at March 31, 2018 for a period of more than six months from the date of becoming payable. .
(b) According to the information and explanations given to us, there are no dues of Income Tax or Sales Tax or Wealth Tax or Service Tax or duty of Customs or duty of Excise or Value Added Tax or Cess which have not been deposited on account of any dispute except as given herein below.
Name of the Statute |
Nature of dues |
Rs. in lacs |
Period for which it relates |
Forum where dispute is pending |
Income Tax Act, 1961 |
Demand under u/s 153A |
310.10 |
A.Y. 2007-08 to A.Y. 2011-12 |
Commissioner of Income-Tax |
Demand of Penalty u/s 271(1)(c) |
1,715.40 |
A.Y. 2007-08 to A.Y. 2011-12 |
(Appeals) |
(viii) According to the information and explanations given to us and based on the documents and records produced to us, the company has defaulted in repayment of dues to Bank of India aggregating to Rs. 17.46 lacs for Interest., the details of default have been disclosed in the IND AS Standalone Financial Statement vide note 12(e). The company has not borrowed any fund from financial institutions and by way of debenture.
(ix) The company has not raised any money by way of public issue / follow-on offer (including debt instruments) during the year. The Company has also not raised any term loans during the year. Therefore the clause 3(ix) of the Companies (Auditors Report) Order 2016 is not applicable to the Company.
(x) According to the information and explanations given to us and to the best of our knowledge and belief no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
(xi) As regards the Managerial remuneration the Company has paid excess managerial remuneration paid of Rs. 497.17 lacs for the period upto March 2017 for the reasons detailed in the aforesaid note. The Company had once again submitted its representation to the Ministry to reconsider its decision and allow the waiver of recovery of the excess remuneration paid aggregating to Rs. 388.45 lacs for the period upto March 2016. If the Companyâs representation is not accepted then the company would be required to recover the excess remuneration from the managerial personnel and to that extent the profit will be higher by an amount of Rs. 388.45 lacs. Pending the same no adjustments have been made to the financial results. Subject to the outcome of the representation made to the MCA, we are unable to ascertain the impact on profits on this account for the quarter and the year ended March 31, 2018. Similarly for the previous period ended March 31, 2017, the remuneration in excess of the limits computed under the provisions of Section 197 read with Schedule V to the Companies Act 2013 is Rs. 108.72 lacs for which the Company has made an application to the MCA for approval of the same. Pending these approvals, no adjustments have been made to the financial results for the remuneration of the said period. This matter was qualified in the auditorsâ report dated June 18, 2017 by the previous auditorsâ on the financial statements for the year ended March 31, 2017.
(xii) The Company is not a Nidhi Company hence clause 3(xii) of Companies (Auditors Report) Order 2016 is not applicable to the Company.
(xiii) All transactions with the related parties are in compliance with sections 177 and 188 of the Companies Act, 2013 in so far as our examination of the proceedings of the meetings of the Audit Committee and Board of Directors are concerned. The details of related party transactions have been disclosed in the Standalone Ind AS Financial Statements as required by the applicable Accounting Standard.
(xiv) The company has not made any preferential allotment / private placement of shares or fully or partly convertible debentures during the year under review and hence the clause 3(xiv) of the Companies (Auditors Report) Order, 2016 is not applicable to the Company.
(xv) The company has not entered into any non-cash transactions with directors or persons connected with him and hence the clause 3(xv) of the Companies (Auditors Report) Order, 2016 is not applicable to the Company.
(xvi) The nature of business and the activities of the Company are such that the Company is not required to obtain registration under section 45-IA of the Reserve Bank of India Act 1934.
To the Independent Auditorsâ Report on the Standalone IND AS Financial Statements of Gammon Infrastructure Projects Limited
Report on the Internal Financial Controls with reference to financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting with reference to financial statements of Gammon Infrastructure Projects Limited (âthe Companyâ) as of March 31, 2018 in conjunction with our audit of the Standalone Ind AS Financial Statement of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over with reference to Financial Statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (âICAIâ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to Financial Statements was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to Financial Statements and their operating effectiveness. Our audit of internal financial controls with reference to Financial Statements included obtaining an understanding of internal financial controls with reference to Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system with reference to Financial Statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A companyâs internal financial control with reference to Financial Statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control with reference to Financial Statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to Financial Statements
Because of the inherent limitations of internal financial controls with reference to Financial Statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control with reference to Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system with reference to Financial Statements and such internal financial controls with reference to Financial Statements were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For Nayan Parikh & Co.
Chartered Accountants
Firm Registration No.107023W
K N Padmanabhan
Partner
Membership No. 36410
Mumbai, Dated: June 13, 2018
Sep 30, 2014
We have audited the accompanying Consolidated Financial Statements of
Gammon Infrastructure Projects Limited (''GIPL'' or ''the Company'') and
its Subsidiaries, Joint Venture Companies and Associates (GIPL Group),
which comprise the Consolidated Balance Sheet as at September 30, 2014,
the Consolidated Statement of profit and Loss and the Consolidated Cash
Flow Statement for the period then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation of these Consolidated
Financial Statements that give a true and fair view of the consolidated
financial position, consolidated financial performance and consolidated
cash flows of the Company in accordance with accounting principles
generally accepted in India. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the Consolidated Financial Statements
that give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these Consolidated
Financial Statements based on our audit. We conducted our audit in
accordance with the Standards on Auditing issued by the Institute of
Chartered Accountants of India. Those Standards require that we comply
with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the Consolidated Financial
Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the Consolidated Financial Statements.
The procedures selected depend on the auditor''s judgement, including
the assessment of the risks of material misstatement of the
Consolidated Financial Statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control
relevant to the Company''s preparation and presentation of the
Consolidated Financial Statements that give a true and fair view in
order to design audit procedures that are appropriate in the
circumstances but not for the purpose of expressing an opinion on the
efectiveness of the entity''s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by management, as well
as evaluating the overall presentation of the Consolidated Financial
Statements. We believe that the audit evidence we have obtained is
sufcient and appropriate to provide a basis for our audit opinion.
Basis for qualified Opinion
As detailed in note 36 and note 37 to the Consolidated Financial
Statements, with respect to two projects where the authorities have
unilaterally terminated the Concession Agreement against which these
projects are taking steps to claim compensation/relief as per the
Concession Agreement. The GIPL Group''s exposure to these projects is Rs.
812,718,363/-. As the outcome of these matters is uncertain, we are
unable to determine the recoverability of said amounts and its
consequential impact on the Consolidated Financial Statements.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible efects of the matter
described in the Basis for qualified Opinion paragraph, the Consolidated
Financial Statements give a true and fair view in conformity with the
accounting principles generally accepted in India:
(a) in the case of the Consolidated Balance Sheet, of the state of
afairs of the GIPL Group as at September 30, 2014;
(b) in the case of the Consolidated Statement of profit and Loss, of the
loss of the GIPL Group for the period ended on that date; and
(c) in the case of the Consolidated Cash Flow Statement, of the cash
flows of the GIPL Group for the period ended on that date.
Emphasis of Matter:
Without qualifying our opinion, we report that:
a. The GIPL Group has incurred a net loss after tax of Rs. 402,514,954/-
for the nine month period ended September 30, 2014 and as of that date
the GIPL Group''s current liabilities exceeded current assets by Rs.
6,273,378,209/-. These conditions, along with other matters as set
forth in Note 40 of the Consolidated Financial Statements, indicate the
existence of an uncertainty as to timing and realisation of cash fow.
This matter was also referred to our earlier reports issued for the
quarter ended March 31, 2014, June 30, 2014, and for the nine months
period ended December 31, 2013.
b. We invite attention to Note 39 of the Consolidated Financial
Statements, regarding unilateral termination and closure of Concession
in a project, which is subject to pending litigations/arbitrations at
various forums which may impact the carrying value of assets of the
project assets. The GIPL Group''s exposure towards the said project is
of Rs. 178,712,578/- and a corporate guarantee of Rs. 79,661,810/-. Pending
conclusion on this legal matters, no adjustments have been made in the
Consolidated Financial Statements.
c. We invite attention to Note 35 of the Consolidated Financial
Statements, in relation to intention to exit one of the hydro power
projects at Himachal Pradesh and seeking a claim of an amount against
the amount spent on the project. The GIPL Group''s project has cited
reasons for non-continuance on account of reasons beyond its control.
The GIPL Group is negotiating with its client for an amicable
settlement on beneficial terms. The GIPL Group''s exposure towards the
said project is of Rs. 673,145,933/-. Pending conclusion between the
parties, no adjustments have been made in the Consolidated Financial
Statements.
d. We invite attention to Note 41 of the Consolidated Financial
Statements, which states that the one of its joint ventures companies
has incurred a net loss of Rs. 30,393,909/- during the nine month period
ended September 30, 2014 and, as of that date, JV has also defaulted in
repayment of its debt obligations to the lenders. These conditions,
along with other matters as set forth in Note 41, indicate the
existence of a material uncertainty that may cast significant doubt
about JV''s ability to continue as a going concern.
e. We invite attention to Note 42 of the Financial Statements,
regarding the excess remuneration to the extent of Rs. 20,855,390 paid to
the managerial persons beyond the limits specified in schedule XIII to
the Companies Act, 1956 / Schedule V to the Companies Act 2013. The
said amount has been charged to statement of profit and loss for the
period. The excess amount is subject to approval from the Central
Government.
Other Matter
We did not audit the financial statements of:
a. certain subsidiaries, whose financial statements refect total assets
(net) of Rs. 16,035,539,629/- as at September 30, 2014, total revenues of
Rs. 1,006,567,973/- and net cash outflows amounting to Rs. 3,316,552 for the
period then ended.
b. certain associates, whose financial statements refect total profits
(net) of Rs. 1,792,039/- for the period ended September 30, 2014, the
GIPL Group''s share in the profits of such associates being Rs. 546,926/-.
The above mentioned financial statements have been audited by other
auditors whose reports have been furnished to us by the Management, and
our opinion is based solely on the reports of the other auditors. Our
opinion is not qualified in respect of this matter.
We did not audit the financial statements of:
a. certain joint venture companies, whose financial statements refect
total assets (net) of Rs. 1,353,741/- as at September 30, 2014 and net
cash outflows amounting to Rs. 50,562/- for the period then ended. The
GIPL Group''s share of such total assets (net) and total net cash
outflows being Rs. 170,850/- and Rs. 19,214/-, respectively.
b. One associate, whose financial statements refect total loss of Rs.
36,982/- for the period ended September 30, 2014, the GIPL Group''s
share in the losses of such associate being Rs. 18,121/-.
The above mentioned financial statements are based on unaudited financial
statements certified as approved by the respective Boards of Directors
of these companies have been furnished to us by the Management and our
report in so far as it relates to the amounts included in respect of
the joint venture companies and associate is based solely on such
approved unaudited financial statements. Our opinion is not qualified in
respect of this matter.
In respect of the other subsidiaries and joint venture companies, the
audit has been conducted by either of us and the audit of GIPL has been
conducted by us jointly.
For Natvarlal Vepari & Co. For S.R. Batliboi & Co. LLP
Firm Registration Number:106971W ICAI Firm Registration Number:301003E
Chartered Accountants Chartered Accountants
N Jayendran per Jayesh Gandhi
Partner Partner
M. No. 40441 M. No. 37924
Mumbai, Dated : November 18, 2014 Mumbai, Dated: November 18, 2014
Dec 31, 2013
We have audited the accompanying Financial Statements of Gammon
Infrastructure Projects Limited ("the Company"), which comprises the
Balance sheet as at December 31, 2013 and the Statement of Profit and
Loss and the Cash Flow Statement for the period April 1, 2013 to
December 31, 2013 ("Period"), and a summary of significant accounting
policies and other explanatory notes.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
accounting principles generally accepted in India, including the
Accounting Standards notified under the Companies Act, 1956 read with
General Circular 15/2013 dated September 13, 2013, issued by the
Ministry of Corporate Affairs, in respect of Section 133 of the
Companies Act, 2013. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances but not for the
purpose of expressing an opinion on the effectiveness of the entity''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
reasonable basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at December 31, 2013;
(b) in the case of the Statement of Profit and Loss, of the loss for the
period ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
period ended on that date.
Emphasis of Matter:
a. Without qualifying our opinion, we invite attention to Note 35 to
the financial statements, in relation to notice served by the Company''s
subsidiaries for closure of two projects. The Company''s exposure
including Equity contributions and advances is amounting to Rs.
40,60,52,000/- (excluding guarantees of Rs. 38,91,00,000/-). Pending
conclusion between the parties, no adjustments have been made in the
financial statements.
b. The Company incurred a net loss after tax of Rs. 139,666,403/- during
the nine months period ended December 31, 2013 and, as of that date,
the Company''s current liabilities exceeded its current assets by Rs.
4,570,946,831/-. Management''s plans to address the uncertainty as to
the timing and realisation of cash flows are discussed in Note 36. Our
opinion is not qualified in this matter
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of sub-
section (4A) of section 227 of the Companies Act, 1956, we enclose in
the Annexure a statement on the matters specified in paragraphs 4 and 5
of the said Order.
2. As required by Section 227(3) of the Companies Act 1956, we report
that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
Audit;
ii) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
the books;
iii) The Balance Sheet, Statement of Profit & Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
accounts;
iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement comply with the Accounting Standards
notified under the Companies Act, 1956 read with General Circular
15/2013 dated 13 September 2013, issued by the Ministry of Corporate
Affairs, in respect of Section 133 of the Companies Act, 2013; and
v) On the basis of the written representation received from the
directors and taken on record by the Board of Directors, we report that
none of the directors are disqualified as on December 31, 2013 from
being appointed as a director in terms of Clause (g) of Sub- section
(1) of section 274 of the Companies Act, 1956 on the said date.
Annexure to the Auditors'' Report
(Referred to in our report of even date)
Re: Gammon Infrastructure Projects Limited
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) Fixed assets have been physically verified by the management during
the period and no material discrepancies were identified on such
verification.
(c) There was no disposal of a substantial part of fixed assets during
the period.
(ii) (a) The management has conducted physical verification of inventory
at reasonable intervals during the period.
(b) The procedures of physical verification of inventory followed by the
management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and as per
the report of the site auditors provided to us, no material
discrepancies were noticed on such verification.
(iii) (a) The Company has granted loans to 13 parties covered in the
register maintained under Section 301 of the Companies Act, 1956. The
maximum amount involved during the period was Rs. 6,089,578,427/- and the
period-end balance of loans granted to such parties was Rs.
4,598,398,794/-.
(b) In our opinion and according to the information and explanations
given to us, the rate of interest, wherever charged and other terms and
conditions for such loans are not prima facie prejudicial to the
interest of the Company.
(c) In respect of the loans granted, repayment of the principal amount
and interest is as stipulated.
(d) There is no overdue amount of loans granted to companies, forms or
other parties listed in the register maintained under section 301 of
the Companies Act, 1956.
(e) The Company has taken loan from 4 companies covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
amount involved during the period was Rs. 2,908,583,977/- and the
period-end balance of loans taken from such parties was Rs.
2,873,183,977/-.
(f) In our opinion and according to the information and explanations
given to us, the rate of interest, wherever charged and other terms and
conditions for such loans are not prima facie prejudicial to the
interest of the Company.
(g) The payment of the principal and interest is as stipulated. Where
the loans taken are re-payable on demand, as informed to us, the
lenders have not demanded repayment of any such loan during the period,
and thus, there has been no default on the part of the Company.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the rendering of
services. The activities of the Company do not involve sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the Company in respect of these areas.
(v) (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register
required to be maintained under that section.
(b) All the transactions have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time and
the nature of services rendered by such parties.
(vi) The Company has not accepted any deposits from the public during
the period under audit, and consequently the directives issued by the
Reserve Bank of India and the provisions of sections 58A and 58AA of
the Act and the rules framed there under are not applicable. There is
no order that has been passed by Company Law Board or National Company
Law Tribunal or Reserve Bank of India or any Court or any other
Tribunal in respect of the said sections.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of accounts maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956, and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained.
(ix) (a) The Company is generally regular in depositing with
appropriate authorities undisputed statutory dues including provident
fund, investor education and protection fund, employees'' state
insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty
and other material statutory dues applicable to it.
(b) According to the information and explanations given to us, there
are no undisputed amounts payable in respect of provident fund,
investor education and protection fund, employees'' state insurance,
income-tax, wealth-tax, service tax, sales-tax, customs duty which were
outstanding, at the period end, for a period of more than six months
from the date they became payable.
(c) According to the information and explanation given to us, the
following Tax / duty etc has not been deposited on account of dispute.
Name of the
Statute Nature of the dues Amount Period to
which it Forum where
relates Dispute is
pending
Income Tax
Act 1961 Demand under 18,90,89,058 A.Y. 2005-
06 to Commissioner
of
u/s 153A A.Y. 2011-
12 Income-Tax
(Appeals)
Income Tax
Act 1961 Demand of Penalty 1,34,40,400 A.Y. 2007-
08 Commissioner
of
u/s 271 1(c) Income-Tax
(Appeals)
(x) The Company has no accumulated losses at the end of the financial
period and it has incurred cash losses in the current period, however
it has not incurred any cash losses in immediately preceding financial
year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution or bank. The Company did not have any outstanding dues in
respect of debenture holders during the period.
(xii) According to the information and explanations given to us and
based on the documents and records produced before us, the Company has
not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended)
are not applicable to the Company.
(xiv) In our opinion and the information given to us , the Company is
not dealing in or trading in shares, securities, debentures and other
investments. Accordingly, the provisions of clause 4(xiv) of the
Companies (Auditor''s Report) Order, 2003 (as amended) are not
applicable to the Company.
(xv) According to the information and explanations given to us, the
Company has given guarantee for loans taken by its subsidiary companies
from banks, the terms and conditions whereof, in our opinion, are not
prima-facie prejudicial to the interest of the Company.
(xvi) Based on information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that funds amounting to Rs. 2,482,721,831/-raised on short term basis in
the form of unsecured loans and other current liabilities have been
used for long-term investments.
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
section 301 of the Companies Act, 1956 and therefore the provisions of
clause 4(xviii) of the Companies (Auditor''s Report) Order, 2003 (as
amended) are not applicable to the Company.
(xix) The Company did not issue any debentures during the period and
therefore the provisions of clause 4(xix) of the Companies (Auditor''s
Report) Order, 2003 (as amended) are not applicable to the Company.
(xx) The Company has not raised any money by public issues during the
period and accordingly clause 4(xx) of Companies (Auditors'' Report)
Order, 2003 is not applicable.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the period.
For Natvarlal Vepari & Co. For S.R. Batliboi & Co. LLP
ICAI Firm Registration
Number: 106971W ICAI Firm Registration Number : 301003E
Chartered Accountants Chartered Accountants
N Jayendran per Hemal Shah
Partner Partner
M.No. 40441 M.No. 42650
Mumbai, Dated : March 1, 2014 Mumbai, Dated : March 1, 2014
Mar 31, 2013
Report on Financial Statements
We have audited the accompanying Financial Statements of Gammon
Infrastructure Projects Limited ("the Company"), which comprises the
Balance sheet as at 31st March, 2013 and the Statement of Profit and
Loss and the Cash Flow Statement for the year then ended, and a summary
of significant accounting policies and other explanatory notes.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the accounting standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and fair presentation of the financial statements
that are free from material misstatement, whether due to fraud or
error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a reasonable basis for our opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
(b) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
Order.
2. As required by Section 227(3) of the Companies Act 1956, we report
that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
Audit.
ii) In our opinion, proper books of accounts as required by law have
been kept by the Company so far as it appears from our examination of
the books.
iii) The Balance Sheet, Statement of Profit & Loss Account and Cash
Flow Statement dealt with by this report are in agreement with the
books of accounts.
iv) In our opinion, the Balance Sheet, Statement of Profit and Loss
Account and the Cash Flow statement dealt with by this report comply
with the accounting standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956.
v) On the basis of the written representation received from the
directors and taken on record by the Board of Directors, we report that
none of the directors is disqualified as on 31st March 2013 from being
appointed as a director in terms of Clause (g) of Sub-section (1) of
section 274 of the Companies Act, 1956 on the said date.
Annexure to the Auditors'' Report
(Referred to in our report of even date)
Re: Gammon Infrastructure Projects Limited
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) Fixed assets have been physically verified by the management during
the year and no material discrepancies were identified on such
verification
(c) There was no disposal of a substantial part of fixed assets during
the year.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
(b) The procedures of physical verification of inventory followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and as per
the report of the site auditors provided to us, no material
discrepancies were noticed on such verification.
(iii) (a) The Company has granted loans to 11 parties covered in the
register maintained under Section 301 of the Companies Act, 1956. The
maximum amount involved during the year was Rs. 5,033,493,446/-, and the
year-end balance of loans granted to such parties was Rs.
4,926,264,896/-.
(b) In our opinion and according to the information and explanations
given to us, the rate of interest, wherever charged and other terms and
conditions for such loans are not prima facie prejudicial to the
interest of the Company.
(c) In respect of the loans granted, repayment of the principal amount
and interest is as stipulated.
(d) There is no overdue amount of loans granted to companies, firms or
other parties listed in the register maintained under section 301 of
the Companies Act, 1956.
(e) The Company has taken loan from 4 companies covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
amount involved during the year wasRs. 2,442,945,291/- and the year-end
balance of loans taken from such parties wasRs. 1,677,245,291/-
(f) In our opinion and according to the information and explanations
given to us, the rate of interest, wherever charged and other terms and
conditions for such loans are not prima facie prejudicial to the
interest of the Company.
(g) The payment of the principal and interest is as stipulated. Where
the loans taken are re-payable on demand, as informed to us, the
lenders have not demanded repayment of any such loan during the year,
and thus, there has been no default on the part of the Company.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the rendering of
services. The activities of the Company do not involve sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the Company in respect of these areas.
(v) (a) In our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register
required to be maintained under that section.
(b) All the transactions have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time and
the nature of services rendered by such parties.
(vi) The Company has not accepted any deposits from the public during
the year under review, and consequently the directives issued by the
Reserve Bank of India and the provisions of sections 58A and 58AA of
the Act and the rules framed there under are not applicable.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956, and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained.
(ix) (a) The Company is generally regular in depositing with
appropriate authorities undisputed statutory dues including provident
fund, investor education and protection fund, employees'' state
insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty
and other material statutory dues applicable to it.
(b) According to the information and explanations given to us, there
are no undisputed amounts payable in respect of provident fund,
investor education and protection fund, employees'' state insurance,
income-tax, wealth-tax, service tax, sales-tax, customs duty which were
outstanding, at the year end, for a period of more than six months from
the date they became payable.
(c) According to the information and explanation given to us, the
following Tax / duty etc has not been deposited on account of dispute.
Name of the
Statute Nature of the
dues Amount Period to
which it Forum where
relates Dispute is
pending
Income Tax
Act 1961 Demand u/s
153 A 205,089,058 A.Y.
2005-06 to Commissioner of
A.Y. 2011-12 Income Tax
(Appeals)
Income Tax
Act 1961 Demand of
Penalty 13,440,400 A.Y.
2007-08
Commissioner of
u/s 271
1(c) Income Tax
(Appeals)
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution or bank. The Company did not have any outstanding dues in
respect of debenture holders during the year.
(xii) According to the information and explanations given to us and
based on the documents and records produced before us, the Company has
not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended)
are not applicable to the Company.
(xiv) In our opinion and the information given to us , the Company is
not dealing in or trading in shares, securities, debentures and other
investments. Accordingly, the provisions of clause 4(xiv) of the
Companies (Auditor''s Report) Order, 2003 (as amended) are not
applicable to the Company. (xv) According to the information and
explanations given to us, the Company has given guarantee for loans
taken by its subsidiary companies from banks, the terms and conditions
whereof, in our opinion, are not prima-facie prejudicial to the
interest of the Company.
(xvi) Based on information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that funds amounting to^ 2,029,998,908 raised on short term basis in
the form of unsecured loans and other current liabilities have been
used for long-term investments.
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
section 301 of the Companies Act, 1956 and therefore the provisions of
clause 4(xviii) of the Companies (Auditor''s Report) Order, 2003 (as
amended) are not applicable to the Company.
(xix) The Company did not issue any debentures during the year and
therefore the provisions of clause 4(xix) of the Companies (Auditor''s
Report) Order, 2003 (as amended) are not applicable to the Company.
(xx) The Company has not raised any money by public issues during the
year and accordingly clause (xx) of Companies (Auditors'' Report) Order,
2003 is not applicable.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the year.
For Natvarlal Vepari & Co. For S.R. Batliboi & Co. LLP
ICAI Firm Registration
Number: 106971W ICAI Firm Registration Number :
301003E
Chartered Accountants Chartered Accountants
N Jayendran per Hemal Shah
Partner Partner
M.No. 40441 M.No. 42650
Mumbai, Dated : May 24, 2013 Mumbai, Dated : May 24, 2013
Mar 31, 2012
1. We have audited the attached Balance Sheet of Gammon Infrastructure
Projects Limited ("the Company") as at March 31, 2012 and the related
Statement of Profit and loss and the Cash Flow Statement for the year
ended on that date annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 (as
amended) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956, we enclose
in the Annexure a Statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
ii) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of the
books;
iii) The Balance Sheet, Statement of Profit and loss and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
iv) In our opinion, the Balance Sheet, Statement of Profit and loss and
the Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956;
v) On the basis of the written representations received from the
directors, as on March 31, 2012 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2012 from being appointed as a director in terms of Clause
(g) of Sub-section (1) of section 274 of the Companies Act, 1956;
vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956 in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India;
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2012;
(b) in the case of Statement of Profit and loss of the profit for the
year ended on that date; and
(c) in the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
(Referred to in our report of even date)
Re: Gammon Infrastructure Projects Limited
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) Fixed assets have been physically verified by the management during
the year and no material discrepancies were identified on such
verification.
(c) There was no disposal of a substantial part of fixed assets during
the year.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
(b) The procedures of physical verification of inventory followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and as per
the report of the site auditors provided to us, no material
discrepancies were noticed on such verification.
(iii) (a) The Company has granted loans to 9 parties covered in the
register maintained under Section 301 of the Companies Act, 1956. The
maximum amount involved during the year was Rs. 2,610,468,770/-, and the
year-end balance of loans granted to such parties was Rs.
2,597,468,770/-.
(b) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(c) In respect of the loans granted, repayment of the principal amount
and interest is as stipulated.
(d) There is no overdue amount of loans granted to companies, firms or
other parties listed in the register maintained under section 301 of
the Companies Act, 1956.
(e) The Company has taken loan from three companies covered in the
register maintained under section 301 of the Companies Act, 1956. The
maximum amount involved during the year was Rs.1,228,670,000/- and the
year-end balance of loans taken from such parties was Rs. 1,064,945,291/-
(f) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(g) The loans taken are re-payable on demand. As informed to us, the
lenders have not demanded repayment of any such loan during the year,
and thus, there has been no default on the part of the Company. The
payment of interest is as stipulated.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the rendering of
services. The activities of the Company do not involve sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the Company in respect of these areas.
(v) In our opinion, there are no contracts or arrangements that need to
be entered in the register maintained under Section 301 of the
Companies Act, 1956.
(vi) The Company has not accepted any deposits from the public during
the year under review, and consequently the directives issued by the
Reserve Bank of India and the provisions of sections 58A and 58AA of
the Act and the rules framed there under are not applicable.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956, and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained.
(ix) (a) The Company is generally regular in depositing with
appropriate authorities undisputed statutory dues including provident
fund, investor education and protection fund, employees' state
insurance, income-tax, sales-tax, wealth-tax, service tax, customs
duty, cess and other material statutory dues applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees' state insurance, income-tax,
wealth-tax, service tax, sales-tax, customs duty, cess were
outstanding, at the year end, for a period of more than six months from
the date they became payable.
(c) According to the information and explanations given to us, there
are no dues of income tax, sales-tax, wealth tax, service tax, customs
duty, excise duty and cess which have not been deposited on account of
any dispute.
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution or bank. The Company did not have any outstanding dues in
respect of debenture holders during the year.
(xii)According to the information and explanations given to us and
based on the documents and records produced before us, the Company has
not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
(xiii)In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended)
are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor's Report) Order,
2003 (as amended) are not applicable to the Company.
(xv) According to the information and explanations given to us, the
Company has given guarantee for loans taken by its subsidiary companies
from banks, the terms and conditions whereof, in our opinion, are not
prima-facie prejudicial to the interest of the Company.
(xvi)Based on information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that funds amounting to Rs. 1,789,170,597/- raised on short term basis in
the form of unsecured loans have been used for long-term investments.
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during the
year.
(xx) We have verified that the end use of money raised by public issue
is as disclosed in Note 28 to the financial statements.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the year.
For Natvarlal Vepari & Co. For S.R. Batliboi & Co.
Firm Registration Number : 106971W Firm Registration Number : 301003E
Chartered Accountants Chartered Accountants
N Jayendran per Hemal Shah
Partner Partner
M.No. 40441 M.No. 42650
Mumbai, Dated : May 9, 2012 Mumbai, Dated : May 9, 2012
Mar 31, 2011
1. We have audited the attached Balance Sheet of Gammon Infrastructure
Projects Limited ("the Company") as at March 31,.2011 and the related
Profit and Loss Account and the Cash Flow Statement for the year ended
on that date annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor's Report] Order, 2003 (as
amended) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956, we enclose
in the Annexure a Statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
li) In our opinion, proper books of accounts as required by law have
been kept by the Company so far as it appears from our examination of
the books;
lii) The Balance Sheet, Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
accounts;
iv) In our opinion, the Balance Sheet, Profit and Loss Account and the
Cash Flow statement dealt with by this report comply with the
accounting standards referred to in sub-section (30 of section 211 of
the Companies Act, 1956;
v) On the basis of the written representations received from the
directors, as on March 31, 2011 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2011 from being appointed as a director in terms of Clause
|g) of Sub-section (1) of section 274 of the Companies Act, 1956;
vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956 in the manner so require and give a
true and fairview in conformity with the accounting principles
generally accepted in India:
(a) in the case of Balance Sheet of the state of affairs of the Company
as at March 31, 2011;
(b) in the case of Profit and Loss Account of the profit for the year
ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Annexure to the Auditors' Report
(Referred to in our report of even date)
Re: Gammon Infrastructure Projects Limited
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) Fixed assets have been physically verified by the management during
the year and no material discrepancies were identified on such
verification.
(c) There was no disposal of a substantial part of fixed assets during
the year.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
lb) The procedures of physical verification of inventory followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and as per
the report of the site auditors provided to us, no material
discrepancies were noticed on such verification.
(iii) According to the information and explanations given to us, the
Company has not granted any loans, secured or unsecured to companies,
firms or other parties covered in the register maintained under section
301 of the Companies Act, 1956. Accordingly, the provisions of clause
4(iii)(a] to (d) of the Companies (Auditor's Report] Order, 2003 (as
amended) are not applicable to the Company and hence not commented
upon.
(e) The Company had taken loan from three companies covered in the
register maintained under section 301 of the Companies Act, 1956. The
maximum amount involved during the year was Rs. 1/36,200,000 and the
year-end balance of loans taken from such parties was Rs. 736,200,000.
(f) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(g) The loans taken are re-payable on demand.
(iv) In our opinion and according to the information and explanations
given to us there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the rendering of
services. The activities of the Company do not involve sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the Company in respect of these areas.
(v) (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Companies Act, 1956 that
need to be entered into the register maintained under section 301 have
been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees five Lakhs have been entered
into during the financial year at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
Ivi] The Company has not accepted any deposits from the public during
the year under review, and consequently the directives issued by the
Reserve Bank of India and the provisions of sections 58A and 58AA of
the Act and the rules framed there under are not applicable.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed the maintenance of cost records under
clause Id) of sub-section (1) of section 209 of the Companies Act,
1956.
(ix) (a) The Company is generally regular in depositing with
appropriate authorities undisputed statutory dues including provident
fund, employees' state insurance, income-tax, sales-tax, wealth-tax,
service tax and other material statutory dues applicable to it though
there has been slight de-lay in a few cases.
Further, since the Central Government has till date not prescribed the
amount of cess payable under section 441 A of the Companies Act, 1956,
we are not in a position to comment upon the regularity or otherwise of
the company in depositing the same.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees' state insurance, income-tax,
wealth-tax, service tax, sales- tax, customs duty, excise duty cess and
other material statutory dues were outstanding, at the year end, for a
period of more than six months from the date they became payable.
[c] According to the information and explanations given to us, there
are no dues of income tax, sales- tax, wealth tax, service tax, customs
duty, excise duty and cess which have not been deposited on accountof
any dispute.
(xj The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year
(xi] Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution. The Company did not have any outstanding dues towards any
bank or debenture holders during the year.
Ixii] According to the information and explanations given to us and
based on the documents and records produced to us, the Company has not
granted loans and advances on the basis of security by way of pledge of
shares, debentures and other securities.
Ixiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor's Report] Order, 2003 (as amended]
are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv] of the Companies (Auditor's Report] Order,
2003 las amended) are not applicable to the Company.
(xv] According to the information and explanations given to us, the
Company has given guarantee for loans taken by its subsidiary companies
from banks, the terms and conditions whereof, in our opinion, are not
prima-facie prejudicial to the interest of the Company.
(xvi) Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
(xvii] According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that funds amounting to f.574,648,385 raised on short term basis in the
form of unsecured loans have been used for long-term investments.
IxviiilThe Company has not made any preferential allotment of shares to
parties or companies covered in the register maintained under section
301 of the Companies Act, 1956 Therefore, the provisions of clause
4-fxviii] of the Companies (Auditor's Report) Order. 2003 (as amended]
are not applicable to the Company.
(xix] The Company did not have any outstanding debentures during the
year. Therefore, the provisions of clause iixix) of the Companies
(Auditors Report! Order, 2003 las amended) are not applicable to the
Company.
(xx) We have verified the end use of money raised by public issues as
disclosed in the note C 3 (b) of schedule 19 to the financial
statements.
[xxi] Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For Natvarlal Vepari & Co. For S. R. Batliboi & Co.
Firm Registration Number: 106971W Firm Registration Number : 301003E
Chartered Accountants Chartered Accountants
N Jayendran per Hemal Shah
Partner Partner
M. No. 40441 M. No. 42650
Mumbai, Dated : May 19, 2011 Mumbai, Dated : May 19, 2011
Mar 31, 2010
1. We have audited the attached Consolidated Balance Sheet of Gammon
Infrastructure Projects Limited (GIPL or the Company) Group (the
Group or GIPL Group), as at March 31, 2010, and also the
Consolidated Profit and Loss Account and the Consolidated Cash Flow
statement for the year ended on that date annexed thereto. These
Consolidated Financial Statements are the responsibility of GIPLs
management and have been prepared by the management on the basis of
separate financial statements and other financial information regarding
components. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. We did not audit the financial statements of
a. certain subsidiaries whose financial statements reflect total
assets of Rs. 4,223,235,116 as at March 31, 2010 and total income of
Rs. 1,209,378,163 and cash flows of Rs. 41,732,311 for the year then
ended;
b. certain joint venture Companies whose financial statements reflect
total assets of Rs. 2,264,645,944 as at March 31, 2010, the total
income of Rs. 70,533,500 and cash flows amounting to Rs. 10,935,020 for
the year then ended, the Companys share of such assets, total income
and cash flows being Rs. 1,127,402,394, Rs. 35,266,750 and Rs.
2,934,883 respectively and
c. certain associates whose financial statements reflect a total loss
Rs. 10,028,959 for the year ended March 31, 2010, the Groups share in
the losses of such associates being Rs. 3,342,488.
The above mentioned financial statements have been audited by other
auditors whose reports have been furnished to us, and our opinion is
based solely on the report of other auditors except for certain joint
ventures whose financial statements reflect total assets of Rs.
1,464,903,745 as at March 31, 2010, total income of Rs. 70,533,500 and
cash flows of Rs. (11,316,333) for the year then ended, the Groups
share of such assets, total income and cash flows being Rs.
732,451,873, Rs. 35,266,750 and Rs. (5,658,167) respectively, which are
based on unaudited financial statements certified by the respective
managements of the said joint ventures.
In respect of the other subsidiaries, the audit has been conducted by
either of us and the audit of GIPL has been conducted by us jointly.
4. We report that the Consolidated Financial Statements have been
prepared by GIPLs management in accordance with the requirements of
Accounting Standard (AS) 21, Consolidated financial statements, AS 23,
Accounting for Investments in Associates in Consolidated Financial
Statements and AS 27, Financial Reporting of Interests in Joint
Ventures notified pursuant to the Companies (Accounting Standards)
Rules, 2006.
5. Without qualifying our opinion, we draw attention to Note B 4(b)(i)
of Schedule 19 of the Consolidated Financial Statements regarding the
Early Completion Bonus accrued by two subsidiary Companies in earlier
years and included in sundry debtors at March 31, 2010. The outcome of
the matter cannot be presently determined and hence no provision for
any liability has been made in the financial statements.
6. Based on our audit and on consideration of reports of other
auditors on the financial statements and of the other financial
information of the components, and to the best of our information and
according to the explanations given to us, we are of the opinion that
the attached Consolidated Financial Statements give a true and fair
view in conformity with the accounting principles generally accepted in
India:
a. in the case of the consolidated Balance Sheet, of the state of
affairs of the GIPL Group as at March 31, 2010;
b. in the case of the consolidated Profit and Loss Account, of the
profit of the GIPL Group for the year ended on that date; and
c. in the case of the consolidated Cash Flow Statement, of the cash
flows of the GIPL Group for the year ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(Referred to in our report of even date)
Re: Gammon Infrastructure Projects Limited
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets;
(b) The fixed assets have been physically verified by the management at
reasonable intervals and no material discrepancies were noticed on such
verification;
(c) There was no substantial disposal of fixed assets during the year.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
(b) The procedures of physical verification of inventory followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and as per
the report of the site auditors provided to us, no material
discrepancies were noticed on such verification.
(iii) As informed, the Company has not taken or granted any fresh loan
from/to any party covered in the Register maintained under Section 301
of the Companies Act 1956. Hence clause (iii) and of para 4 of the
Order is not applicable.
(iv) In our opinion and according to the information and explanations
given to us there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the rendering of
services. During the course of our audit, no major weakness has been
noticed in the internal control system in respect of these areas.
During the course of our audit, we have not observed any continuing
failure to correct major weakness in internal control system of the
company.
(v) a) In our opinion and according to the information and explanations
given to us, the transactions that need to be entered into a register
in pursuance of section 301 of the Act have been so entered.
b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees five lakhs have been entered
into during the financial year at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
(vi) The Company has not accepted any deposits from the public during
the year under review, and consequently the directives issued by the
Reserve Bank of India and the provisions of sections 58A and 58AA of
the Act and the rules framed there under are not applicable.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed maintenance of cost records under clause
(d) of sub-section (1) of section 209 of the Companies Act, 1956.
(ix) (a) The Company is generally regular in
depositing Provident Fund, Income tax and service tax dues with the
appropriate authorities though there has been a slight delay in a few
cases. The provisions of the investor education and protection fund,
employees state insurance, sales- tax, customs duty and excise duty
are not applicable to the Company.
Further, since the Central Government has till date not prescribed the
amount of cess payable under section 441 A of the Companies Act,1956,
we are not in a position to comment upon the regularity or otherwise of
the company in depositing the same.
(b) According to the information and explanations given to us, there
are no undisputed arrears of outstanding statutory dues as at the last
day of the financial year for a period of more than six months from the
date they became payable.
(c) According to the information and explanations given to us there are
no dues of provident fund, income tax and service tax which have not
been deposited on account of any dispute.
(x) The Company does not have any accumulated losses at March 31, 2010
and has not incurred cash losses in current year and the previous year.
(xi) The Company does not have any borrowings from banks and Financial
institutions and therefore clause (xi) of para 4 of the Order is not
applicable.
(xii) According to the information and explanations given to us and
based on the documents and records produced to us, the Company has not
granted loans and advances on the basis of security by way of pledge of
shares, debentures and other securities.
(xiii) The Company is not a chit fund or a nidhi/ mutual benefit
fund/society and accordingly clause (xiii) of para 4 of the Order is
not applicable.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditors Report) Order,
2003 (as amended) are not applicable to the Company.
(xv) According to the information and explanations given to us the
Company has given guarantee for loans taken by its subsidiary company
from banks which is not prejudicial to the interests of the company.
(xvi) The Company has not taken any term loans and therefore clause
(xvi) of para 4 of the Order is not applicable.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii) The Company has not made any preferential allotment of shares
during the year to parties covered in the Register maintained under
section 301 of the Act and therefore clause (xviii) of the said Order
is not applicable.
(xix) The Company has not issued any debentures and accordingly clause
(xix) of the said Order is not applicable.
(xx) We have verified the end use of money raised by public issues as
disclosed in the note C 3 (b) of schedule 19 to the financial
statements.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For Natvarlal Vepari & Co. For S.R. Batliboi & Co.
Firm Registration Number Firm Registration Number
109671W 301003E
Chartered Accountants Chartered Accountants
N Jayendran per Hemal Shah
Partner Partner
M.No. 40441 M.No. 42650
Mumbai, Mumbai,
Dated : May 21, 2010 Dated : May 21, 2010