REG - Reliance Infra Ld - Annual Financial Report
RELIANCE INFRASTRUCTURE LIMITED
Registered Office: Reliance Center, Ground Floor, 19, Walchand Hiranchand Marg, Ballard Estate, Mumbai 400 001
website:www.rinfra.com CIN : L75100MH1929PLC001530
Statement of Audited Standalone Financial Results for the Year Ended March 31, 2021
Sr. No.
Particulars
Rs Crore
Quarter ended
Year Ended
Year ended
31-Mar-21
31-Dec-20
31-Mar-20
31-Mar-21
31-Mar-20
refer note 15
Unaudited
refer note 15
Audited
Audited
1
Income from Operations
776.87
468.50
358.50
1,689.15
1,319.07
2
Other Income (net) [refer note 9]
368.45
133.24
339.76
833.02
2,019.64
Total Income
1,145.32
601.74
698.26
2,522.17
3,338.71
3
Expenses
(a) Construction Materials Consumed and Sub-contracting Charges
689.08
379.61
305.70
1,384.13
1,040.15
(b) Employee Benefits Expense
16.23
19.40
4.97
78.33
86.24
(c) Finance Costs
381.61
310.78
280.51
1,193.23
918.15
(d) Depreciation and Amortisation Expense
14.46
14.75
16.64
59.24
65.31
(e) Other Expenses [refer note 3]
55.26
71.26
84.65
272.32
233.24
Total Expenses
1,156.64
795.80
692.47
2,987.25
2,343.09
4
Profit before Exceptional Items and Tax (1+2-3)
(11.32)
(194.06)
5.79
(465.08)
995.62
5
Exceptional Items (Net)-refer note 8
121.59
231.97
-
353.56
-
4
Profit /(Loss) before tax
110.27
37.91
5.79
(111.52)
995.62
5
Tax Expenses
- Current Tax
0.65
(0.10)
1.85
1.44
4.35
- Deferred Tax (net)
(18.35)
(22.00)
(26.37)
(93.88)
(40.06)
- Tax adjustment for earlier years (net)
-
-
-
0.06
6
Net Profit/(Loss) after tax for the period/year (4+5)
127.97
60.01
30.31
(19.08)
1,031.27
7
Other Comprehensive Income
Items that will not be reclassified to Profit and Loss
Remeasurement of net defined benefit plans - (gain)/loss
1.28
-
(1.84)
(0.21)
(2.94)
Income Tax relating to the above
-
-
-
-
-
(1.28)
-
1.84
0.21
2.94
8
Total Comprehensive Income/(Loss) (6+7)
126.69
60.01
32.15
(18.87)
1,034.21
9
Paid-up Equity Share Capital (Face value of ` 10 per share)
263.03
263.03
10
Other Equity
10,112.55
10,183.98
11
Earnings Per Share (* not annualised) (Face value of ` 10 per share)
(a) Basic and Diluted Earnings per Share (in ` )
4.87*
2.28*
1.15*
(0.73)
39.21
(b) Basic and Diluted Earnings per Share (in ` )-before effect of withdrawl of scheme (refer note 3)
5.33*
1.57*
4.53*
(2.69)
44.59
(c) Basic and Diluted Earnings per Share (in ` )-after effect of withdrawl of scheme
4.87*
2.28*
1.15*
(0.73)
39.21
RELIANCE INFRASTRUCTURE LIMITED
Standalone Statement of Assets and Liabilities
Rs Crore
Particulars
As at
As at
31-Mar-21
31-Mar-20
Audited
Audited
ASSETS
Non-Current Assets
Property, Plant and Equipment
379.57
582.57
Capital Work-in-progress
16.53
28.73
Investment Property
-
482.66
Other Intangible Assets
0.04
0.82
Financial Assets
Investments
7,655.21
8,010.34
Trade Receivables
86.37
51.13
Loans
9.81
13.64
Other Financial Assets
29.55
88.42
Other Non - Current Assets
5.92
69.23
Total Non-Current Assets
8,183.00
9,327.54
Current Assets
Inventories
3.65
3.68
Financial Assets
Trade Receivables
2,848.34
4,106.24
Cash and Cash Equivalents
56.44
72.68
Bank Balance other than Cash and Cash Equivalents above
73.44
179.36
Loans
5,740.73
5,765.21
Other Financial Assets
2,109.70
1,941.43
Other Current Assets
1,183.81
1,275.75
Total Current Assets
12,016.11
13,344.35
Non Current Assets Held for sale and Discontinued Operations
544.94
544.94
Total Assets
20,744.05
23,216.83
Equity and Liabilities
Equity
Equity Share Capital
263.03
263.03
Other Equity
10,112.55
10,183.98
Total Equity
10,375.58
10,447.01
LIABILITIES
Non-Current Liabilities
Financial Liabilities
Borrowings
115.94
3,416.38
Trade Payables
Total outstanding dues to Micro and Small Enterprises
-
-
Total outstanding dues to Others
18.16
25.25
Other Financial Liabilities
212.61
123.92
Provisions
160.00
160.00
Deferred Tax Liabilities (Net)
0.05
93.93
Other Non - Current Liabilities
1,364.66
1,426.71
Total Non-Current Liabilities
1,871.42
5,246.19
Current Liabilities
Financial Liabilities
Borrowings
448.15
741.92
Trade Payables
Total outstanding dues to Micro and Small Enterprises
11.88
13.05
Total outstanding dues to Others
1,693.74
2,368.15
Other Financial Liabilities
3,743.03
2,048.20
Other Current Liabilities
2,137.24
1,827.58
Provisions
20.14
47.62
Current Tax Liabilities (Net)
442.87
477.11
Total Current Liabilities
8,497.05
7,523.63
Liabilities of Discontinued Operations
-
-
Total Equity and Liabilities
20,744.05
23,216.83
RELIANCE INFRASTRUCTURE LIMITED
Cash Flow Statement for the year ended March 31, 2021
Rs Crore
Particulars
Year ended March 31, 2021
Year ended March 31, 2020
Audited
Audited
A. Cash Flow from Operating Activities :
Profit/(Loss) before Tax
(111.52)
995.62
Adjustments for :
Depreciation and Amortisation Expenses
59.24
65.31
Net Income relating to Investment Property
(10.84)
(41.76)
Interest Income
(144.98)
(1,038.00)
Fair Value Gain on Financial Instrument through FVTPL/Amortised Cost
(65.98)
(173.14)
Dividend Income
(60.38)
(29.85)
Net Loss/ (Gain) on Sale/Redemption Investments
(54.55)
37.79
Finance Cost
1,193.23
918.15
Provision for Doubtful debts / Advances / Deposits
-
(25.44)
Recovery from Investment eralier w/off
(36.86)
Exceptional Items (net)
(353.56)
-
Excess Provisions written back
(423.76)
(80.40)
Loss on Sale / Discarding of Assets (Net)
(3.51)
1.75
Bad Debts
89.58
8.82
Cash generated from Operations before Working Capital changes
76.11
638.85
Adjustments for :
Decrease in Financial Assets and Other Assets
509.70
283.20
Decrease in Inventories
0.04
3.83
Decrease in Financial Liabilities and Other Liabilities
(121.95)
(960.18)
387.79
(673.15)
Cash generated from Operations
463.90
(34.30)
Income Taxes paid (net of refund)
(18.45)
264.00
Net Cash generated from Operating Activities
445.45
229.70
B. Cash Flow from Investing Activities :
Purchase of Property, Plant and Equipment (including Capital work-in-progress, capital advances and capital creditors)
(14.03)
(6.58)
Proceeds from Disposal of Property, Plant & Equipment and Investment Property*
7.84
3.37
Net Income relating to Investment Property
(5.95)
31.20
Redemption in Fixed Deposits with Banks
86.36
21.44
Investments in Subsidiaries / Joint Ventures / Associates
(6.39)
(31.90)
Sale/Redemption of Investment in Subsidiaries/Joint ventures/Associates
883.00
176.51
Sale / Redemption of Investments in Others
47.74
67.19
Loan given (Net)
(15.41)
326.30
Dividend Received
60.38
29.85
Interest Income
7.87
256.98
Net Cash generated from Investing Activities
1,051.41
874.36
C. Cash Flow from Financing Activities :
Repayment of Long Term Borrowings*
(702.64)
(242.53)
Short Term Borrowings (Net)
(94.23)
(168.08)
Payment of Interest and Finance Charges
(714.30)
(689.79)
Dividends paid to shareholders
(1.93)
(1.87)
Net Cash generated from / (used in) Financing Activities
(1,513.10)
(1,102.27)
Net Increase / (Decrease) in Cash and Cash Equivalents ( A+B+C)
(16.24)
1.79
Cash and cash equivalents as at the beginning of the year
72.68
70.89
Cash and cash equivalents as at the end of the year
56.44
72.68
Net Increase / (Decrease) as disclosed above
(16.24)
1.79
Cash and Cash Equivalents
56.44
72.68
* Excluding transfer of Investment property and Land of Rs 1200 Cr to lenders towards their outstanding
Notes:
1. The Standalone Audited Financial Results of Reliance Infrastructure Limited ("the Company") have been prepared in accordance with Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) Amendment Rules, 2016.
2. COVID 19 has impacted businesses across the globe and India causing significant disturbance and slowdown of economic activities. The Company's operations during the year were impacted due to COVID 19 and it has considered all possible impact of COVID 19 in preparation of the financial result, including assessment of the recoverability of financial and non financial assets based on the various internal and external information and assumptions relating to economic forecasts up to the date of approval of these financial results. The aforesaid assessment is based on projections and estimations which are dependent on future development including government policies. Any changes due to the changes in situations / circumstances will be taken into consideration, if necessary, as and when it crystallizes.
3. Pursuant to the Scheme of Amalgamation of Reliance Infraprojects Limited with the Company, sanctioned by the Hon'ble High Court of Judicature at Bombay on March 30, 2011, net foreign exchange gain of Rs 12.09 Crore and Loss of Rs 51.75 Crore for the quarter and year ended March 31, 2021 respectively have been credited/debited to the Statement of Profit and Loss and an equivalent amount has been transferred/withdrawn to/from General Reserve. Had such transfer/withdrawal not been done, the profit before tax would have been higher by Rs 12.09 Crore and Loss before tax would have been higher by Rs 51.75 Crore for the quarter and year ended March 31, 2021 respectively and General Reserve would have been lower/higher by an equivalent amount. The treatment prescribed under the Scheme overrides the relevant provisions of Ind AS 1 "Presentation of Financial Statements". This matter has been referred to by the auditors in their report as an emphasis of matter.
4. The Company has outstanding obligations payable to lenders and in respect of loan arrangements of certain entities including subsidiaries/associates where the Company is also a guarantor where certain amounts have also fallen due. During the quarter and year ended March 31, 2021, the Company has paid Rs. 1,843.86 Crore and Rs 2,275.19 Crore respectively to the lenders through monetisation/receipt of claims thereby reducing total debt outstanding by more than 35%. The Company is confident of meeting of obligations by way of time bound monetisation of its assets and receipt of various claims and accordingly, notwithstanding the dependence on these material uncertain events, the Company continues to prepare the Standalone Financial Results on a going concern basis.
5. The dispute between Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of the Company and Delhi Metro Rail Corporation (DMRC) arising out of the termination by DAMEPL of the Concession Agreement for Delhi Airport Metro Express Line Project (Project) was referred to arbitral tribunal, which vide its award dated May 11, 2017, granted arbitration award for a sum of Rs 4,662.59 Crore on the date of the Award in favour of DAMEPL being inter alia in consideration of DAMEPL transferring the ownership of the Project to DMRC who has taken over the same. The Award was upheld by a Single Judge of Hon'ble Delhi High Court vide Judgment dated March 06, 2018. However, the said Judgment dated March 06, 2018 was set aside by the Division Bench of Hon'ble Delhi High Court vide Judgement dated January 15, 2019. DAMEPL has filed Special Leave Petition (SLP) before the Hon'ble Supreme Court of India against the said Judgement dated January 15, 2019 of Division Bench of Hon'ble Delhi High. Hon'ble Supreme Court of India, while hearing the Interlocutory Application filed by DAMEPL seeking interim relief, had directed vide its Order dated April 22, 2019 that DAMEPL's accounts shall not be declared as NPA till further orders and further directed listing of the SLP for hearing.Based on the facts of the case and the applicable law and as legally advised DAMEPL has a fair chance of succeeding in the Hon'ble Supreme Court. In view of the above, pending outcome of SLP before the Hon'ble Supreme Court of India, DAMEPL has continued to prepare its financial statements on going concern basis.
6. With respect to Company's ten subsidiaries engaged in road projects:
a. The Company has net recoverable amounts aggregating to Rs. 3,473.18 Crore from its ten subsidiaries (road SPVs) as at March 31, 2021. Management has recently performed an impairment assessment of these recoverable by considering interalia arbitrational claims filed by SPVs aggregating Rs. 6,373 Cr and projected future cash flows from the respective projects. As legally advised on arbitration matters, Company is confident of recovering its entire investment in road SPVs. The determination of the recoverable value of investments involves significant management judgement and estimates on the various assumptions including time that may be required to get the award and its subsequent settlements by the customers, etc. Accordingly, based on the assessment and as advised by the experts, impairment of said recoverable is not considered.
b. KM Toll Road Private Limited (KMTR), a subsidiary of the Company and part of road SPVs referred above, has terminated the Concession Agreement with National Highways Authority of India (NHAI) for Kandla Mundra Road Project (Project) on May 7, 2019, on account of Material Breach and Event of Default under the provisions of the Concession Agreement by NHAI. The operations of the Project have been taken over by NHAI and NHAI has given a contract to a third party for toll collection with effect from April 16, 2019. In terms of the provisions of the Concession Agreement, NHAI is liable to pay KMTR a termination payment estimated at Rs 1,205.47 Crore as the termination has arisen owing to NHAI Event of Default. KMTR has also raised further claims of Rs 1,092.74 Crore. KMTR has invoked dispute resolution process under clause 44 of the Concession Agreement. Subsequently, vide letter dated August 21, 2020, NHAI advised its Programme Director for release of termination payment to KMTR and accordingly Rs 181.21 Crore was released during the year towards termination payment, which has been utilised for debt servicing.
As a part of the dispute resolution, KMTR has invoked arbitration and it is confident of fair outcome. Pending final outcome of the dispute resolution process and as legally advised, the claims for the Termination Payment are considered fully enforceable. Notwithstanding the dependence on above said uncertain events, KMTR continues to prepare the financial statements on a going concern basis. The Company is confident of recovering its entire investment in KMTR of Rs 544.94 Crore as at March 31, 2021, and hence, no provision for impairment of the KMTR is considered in the financial statements. The Investment in the KMTR are classified as Non Current Assets held for sale as per Ind AS 105 "Non Current Assets held for sale and discontinued operations"
7. The Company has net recoverable amounts aggregating to Rs 2,380.78 Crore from RPower Group as at March 31, 2021. Management has recently performed an impairment assessment of these recoverable by considering interalia the valuations of the underlying subsidiaries of RPower which are based on their value in use (considering discounted cash flows) and valuations of other assets of RPower/its subsidiaries based on their fair values, which have been determined by external valuation experts. The determination of the value in use / fair value involves significant management judgement and estimates on the various assumptions including relating to growth rates, discount rates, terminal value, time that may be required to identify buyers, negotiation discounts etc. Accordingly, based on the assessment, impairment of said recoverable is not considered necessary by the management.
8. Exceptional Items for the year represents gain of Rs 742.23 Crore (Rs. 156.83 Crore for the quarter) on sale of entire investment in its subsidiaries DA Toll Road Private Limited and Parbati Koldam Transmission Company Limited, gain of Rs 551.26 Crore (Rs. 551.26 Crore for the quarter) on sale of Property Plant and Equipments and investment property, charge of Rs 1009.51 Crore (577.17 Crore for the quarter) on receivables, gain of Rs 82.10 Crore (Nil for the quarter) arising from fair valuation of Inter Corporate Loan pursuant to modification of terms, and Rs 12.52 Crore (Rs. 9.33 Crore for the quarter) towards write-off/impairment of Investment in subsidiaries of the Company.
9. Other income includes gain of Rs 28.89 Crore and Rs 106.18 Crore for the quarter and year ended March 31, 2021 respectively relating to fair valuation/invocation of Investment in shares of Reliance Power Limited (Rpower). The Corresponding impact during the previous quarter and year was considered in the Capital reserve. Figures for the current quarter and year are not comparable with previous year to that extent.
10. The Reliance Group of companies of which the Company is a part, supported an independent company in which the Company holds less than 2% of equity shares ("EPC Company") to inter alia undertake contracts and assignments for the large number of varied projects in the fields of Power (Thermal, Hydro and Nuclear), Roads, Cement, Telecom, Metro Rail, etc. which were proposed and/or under development by the Reliance Group. To this end along with other companies of the Reliance Group the Company funded EPC Company by way of project advances, subscription to debentures and inter corporate deposits. The total exposure of the Company as on March 31, 2021 is Rs 6,491.38 Crore (net of provision of Rs 3,972.17 Crore). The Company has also provided corporate guarantees aggregating of Rs 1,775 Crore.
The activities of EPC Company have been impacted by the reduced project activities of the companies of the Reliance Group. While the Company is evaluating the nature of relationship; if any, with the independent EPC Company, based on the analysis carried out in earlier years, the EPC Company has not been treated as related party.
Given the huge opportunity in the EPC field particularly considering the Government of India's thrust on infrastructure sector coupled with increasing project and EPC activities of the Reliance Group, the EPC Company with its experience will be able to achieve substantial project activities in excess of its current levels, thus enabling the EPC Company to meet its obligations. Based on the available facts, the provision made will be adequate to deal with any contingency relating to recovery from the EPC Company.
The Company has further provided corporate guarantees of Rs. 4,895.87 Crore on behalf of certain companies towards their borrowings. As per the reasonable estimate of the management of the Company, it does not expect any obligation against the above guarantee amount.
11. The listed non convertible debentures of Rs 1,087.70 Crore as on March 31, 2021 are secured by way of first pari passu charge on certain fixed assets and investments. There are certain shortfalls in the security cover.
Further, in respect of NCDs, CARE Ratings has given "CARED issuers not cooperating" while India Ratings and Research Private Limited has given "IND D" rating.
The outstanding NCD Series 18 (ISIN no- INE036A07294) and NCD Series 20E (ISIN No- INE036A07534) were due for repayment of principal with interest thereon as at March 31, 2021. Principal and interest on NCD Series 29 (ISIN No INE036A07567) was due on March 31, 2021 and February 28, 2021 respectively which has not been paid. The Next due date is September 30, 2021 and May 30, 2021 for principal and interest respectively.
12. Other Disclosures required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of debt securities issued by the Company are as under
Sl
Particulars
March 31, 2021
March 31, 2020
1
Debt Service Coverage Ratio
0.28
0.88
2
Interest Service Coverage ratio
1.94
3.07
3
Debt Equity Ratio
0.37
0.55
4
Debenture Redemption Reserve
(Rs in Crore)
212.98
212.98
4
Net Worth (Rs in Crore) *
9,724.67
9,795.28
Ratios have been computed as under:
· Debt Service Coverage Ratio = Earnings before Interest and Tax and exceptional items / (Interest on Long Term Debt for the period/year + Principal Repayment of Long Term Debt within one year)
· Interest Service Coverage Ratio = Earnings before Interest and Tax and exceptional items / Interest on Long Term Debt for the period/year
· Debt Equity Ratio = Total Debt / Equity
*During the year ended March 31, 2020, the company had adjusted the loss on invocation / mark to market (required to be done due to invocation of shares by the lenders) of Rs. 5,024.88 Crore against the capital reserve. The auditors in their report had mentioned that the above treatment is not in accordance with the Ind AS 1 "Presentation of Financial Statements", Ind AS 109 "Financial Instruments" and Ind AS 28 "Investment in Associates and Joint Ventures". However, as disclosed in the financial results for the year ended March 31, 2020, the Company continues to disclose Net worth as on March 31, 2021 without considering impact of above.
13. The Company is predominantly engaged in the business of Engineering and Construction (E&C). E&C segment renders comprehensive, value added services in construction, erection and commissioning. All other activities of the Company revolve around E&C business. As such there are no separate reportable segments, as per the Ind-AS 108 on Operating Segment. All the operations of the Company are predominantly conducted within India, as such there are no separate reportable geographical segments.
14. The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020. The Company will assess the impact once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective.
15. The figures for the quarter ended March 31, 2021 and March 31, 2020 are the balancing figures between the audited figures in respect of full financial year and published year to date figures up the third quarter of respective financial year. The figures for the previous periods and for the year ended March 31, 2020 have been regrouped and rearranged to make them comparable with those of current year
16. After review by the Audit Committee, the Board of Directors of the Company has approved the Standalone Audited financial results at their meeting held on May 28, 2021.
For and on behalf of the Board of Directors
Place: Mumbai Punit Garg
Date: May 28, 2021 Executive Director and Chief Executive Officer
Auditor's Report on the standalone financial results of Reliance Infrastructure Limited for the quarter and year ended March 31, 2021pursuant to Regulation 33 and Regulation 52 read with Regulation 63(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Independent Auditor's Report
To The Board of Directors of Reliance Infrastructure Limited
Report on the audit of the Standalone Financial Results
Disclaimer of Opinion
We were engaged to audit the accompanying standalone financial results of Reliance Infrastructure Limited ("the Company") which includes joint operations on a proportionate basis listed in Annexure Afor the quarter and year ended March 31, 2021("standalone financial results") attached herewith, being submitted by the Company pursuant to the requirement of Regulation 33 and Regulation 52 read with Regulation 63(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended ("Listing Regulations").
Because of the substantive nature and significance of the matter described in the "Basis for Disclaimer of Opinion", we have not been able to obtain sufficient appropriate audit evidence to provide the basis of our opinion as to whether these standalone financial results:
i. are presented in accordance with the requirements of Regulation 33 and Regulation 52 read with Regulation 63(2) of the Listing Regulations in this regard; and
ii. give a true and fair view in conformity with the recognition and measurement principles laid down in the applicable Indian Accounting Standards and other accounting principles generally accepted in India of the net profit/(loss) and other comprehensive income and other financial information for the quarter and year ended March 31, 2021.
Basis for Disclaimer of Opinion
1. We refer to Note 10 to the standalone financial results regarding the Company's exposure in an EPC Company as on March 31, 2021 aggregating to Rs. 6491.38Crore (net of provision of Rs. 3,972.17Crore and amount written off during the year of Rs.1,009.51 Crore). Further, the Company has also provided corporate guarantees aggregating to Rs. 1,775 Crore on behalf of the aforesaid EPC Company towards borrowings of the EPC Company.
According to the Management of the Company, these amounts have been funded mainly for general corporate purposes and towards funding of working capital requirements of the party which has been engaged in providing Engineering, Procurement and Construction (EPC) services primarily to the Company and its subsidiaries and its associates and the EPC Company will be able to meet its obligation.
As referred to in the above note, the Company has further provided Corporate Guarantees of Rs. 4,895.87Crore in favour of certain companies towards their borrowings. According to the Management of the Company these amounts have been given for general corporate purposes.
We were unable to evaluate about the relationship, recoverability and possible obligation towards the Corporate Guarantees given. Accordingly, we are unable to determine the consequential implications arising therefrom in the standalone financial results of the Company.
2. We refer to Note 12 of the Standalone financial results wherein the loss on invocation of shares and/or fair valuation of shares of investments held in Reliance Power Limited (RPower) aggregating to Rs. 1,983.49 Crore and Rs. 5,024.88 Crore for the quarter and year ended March 31, 2020 was adjusted against the capital reserve as against charging the same in the Statement of Profit and Loss. The said treatment of loss on invocation and fair valuation of investments was not in accordance with the Ind AS 28 "Investment in Associates and Joint Venture", Ind AS 1 "Presentation of Financial Statements" and Ind AS 109 "Financial Instruments". Had the Company followed the above Ind AS's the profit before tax for the quarter and year ended March 31, 2020 would have been lower by Rs.1,983.49 Crore and Rs.5,024.88 Crorerespectively and Net Worth of the Company as at March 31, 2020 and March 31, 2021 would have beenlower by Rs. 5,024.88 Crore.
As a result of the matters described in paragraph 1and 2 above, we were not able to obtain sufficient appropriate evidence to provide a basis of our Opinion on the standalone financial results.
Material Uncertainty related to Going Concern
We draw attention to Note 4 to the standalone financial results, wherein the Company has outstanding obligations to lenders and the Company is also a guarantor for its subsidiaries and associates whose loans have also fallen due which indicate that material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. However, for the reasons more fully described in the aforesaid note the accounts of the Company have been prepared as a Going Concern.
Our opinion on the standalone financial results is not modified in respect of this matter.
Emphasis of Matter Paragraph
1. We draw attention to Note 3 to the standalone financial results regarding the Scheme of Amalgamation ('the Scheme') between Reliance Infraprojects Limited (wholly owned subsidiary of the Company) and the Company sanctioned by the Hon'ble High Court of Judicature at Bombay vide its order dated March 30, 2011, wherein the Company, as determined by the Board of Directors, is permitted to adjust foreign exchange/derivative/hedging losses/gains debited/credited to the Statement of Profit and Loss by a corresponding withdrawal from or credit to General Reserve which overrides the relevant provisions of Ind AS - 1 'Presentation of financial statements'. The net foreign exchange gain/(loss) of Rs. 12.09Crore and Rs. (51.75)Crore for the quarter and year ended March 31, 2021 respectively has been credited/debited to Statement of Profit and Loss and an equivalent amount has been transferred to/withdrawal from General Reserve in terms of the Scheme. Had such transfer / withdrawal not been made, profit/(loss) before tax for the quarter and year ended March 31, 2021 would have been higher by Rs. 12.09Crore and Rs. (51.75)Crore respectively and General Reserve would have been lower/higher by an equivalent amount.
2. We draw attention to Note 7 to the standalone financial results which describes the impairment assessment performed by the Company in respect of its receivables of Rs.2,380.78 CrorefromReliance Power Limited and its subsidiaries ("RPower Group") in accordance with Ind AS 36 "Impairment of assets" / Ind AS 109 "Financial Instruments". This assessment involves significant management judgment and estimates on the valuation methodology and various assumptions used in determination of value in use/fair value by independent valuation experts / management as more fully described in the aforesaid note. Based on management's assessment and independent valuation reports, no impairment is considered necessary on the receivables.
3. We draw attention to Note 6(b) to the standalone financial results regarding KM Toll Road Private Limited (KMTR), a subsidiary of the Company, has terminated the Concession Agreement with National Highways Authority of India (NHAI) for KandlaMundra Road Project (Project) on May 7, 2019, on account of Material Breach and Event of Default under the provisions of the Concession Agreement by NHAI. The Company is confident of recovering its entire investment of Rs 544.94 Crore in KMTR, as at March 31, 2021 and no impairment has been considered necessary against the above investment for the reasons stated in the aforesaid note.
4. We draw attention to Note 6(a) to the standalone financial results which describes the impairment assessment performed by the Company in respect of its Investments and loans of Rs. 3,473.18Crore in ten subsidiaries i.e. Toll Road SPV's Companies (including KMTR as stated in paragraph 3 above) in accordance with Ind AS 36 "Impairment of assets" / Ind AS 109 "Financial Instruments". This assessment involves significant management judgment and estimates on the valuation methodology and various assumptions used by the management as more fully described in the aforesaid note. Based on management's assessment no impairment is considered necessary on the investments and loans.
5. We draw attention to Note 2to the standalone financial results, as regards to the management evaluation of impact of COVID - 19 on the future performance of the Company.
Our opinion is not modified in respect of the above matters.
Management's Responsibilities for the Standalone Financial Results
The standalone financial results, which is the responsibility of the Company's Management and approved by the Board of Directors, has been prepared on the basis of standalone financial statements.TheCompany's Board of Directors are responsible for the preparation of these financial results that give a true and fair view of the net profit/loss and other comprehensive income and other financial information in accordance with the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 and Regulation 52 read with Regulation 63(2) of the Listing Regulations.
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 financial results that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial results, the Board of Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Results
Our responsibility is to conduct an audit of the standalone financial results in accordance with Standards on Auditing and to issue an auditor's report. However, because of the matter described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these standalone financial statements.
We are independent of the Company in accordance with the Code of Ethics and provisions of the Act that are relevant to our audit of the standalone financial statements in India under the Act, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics and the requirements under the Act.
Other Matters
1. The standalone financial results include the audited financial results of 3 joint operations included in the Statement, whose financial information reflect total assets of Rs. 286.60Crore as at March 31, 2021, total revenues of Rs. 117.11Crore and Rs. 303.74Crore, total net profit/(loss) after tax of Rs. 2.11Crore and Rs. (1.51) Crore and total comprehensive income / (loss) of Rs. 2.11Crore and Rs. (1.51) Crore for the quarter and year ended March 31, 2021 respectively as considered in this Statement. These financial information have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the standalone financial results, in so far it relates to amounts and disclosures included in respect of these joint operations, is solely based on the reports of the other auditors and the procedures performed by us are as stated in paragraph above.
Our opinion on the standalone financial results is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.
2. The standalone financial results include the results for the quarter ended March 31, 2021beingthe balancing figure between the audited figures in respect of the full financial year and the published unaudited year to date figures up to the third quarter of the current financial year which were subject to limited review by us.
3. The comparative audited standalone financial results of the Company for the quarter and year ended March 31, 2020 included in thesestandalone financial results had been audited by Pathak H.D. & Associates LLP, Chartered Accountants, whose reports dated May8, 2020 expressed a Disclaimer of Opinion on those audited standalone financial results for the quarter and year ended March 31, 2020.
For Chaturvedi & Shah LLP
Chartered Accountants
Firm's Registration No:101720W/W100355
ParagD. Mehta
Partner
Membership No:113904
UDIN:
Date: May 28, 2021
Place: Mumbai
Annexure A
The Standalone financial results includes the financial information of the following joint operations
Sr. No.
Name of the Joint Operations
1.
Rinfra& Construction Association Interbudmntazh JT Stock Co. Ukaraine (Jv)
2.
Rinfra - Astaldi Joint Venture
3.
Rinfra - Astaldi JV
ANNEXURE I
Statement on Impact of Audit Qualifications (for audit report with modified opinion) submitted along-with Annual Audited Financial Results - Standalone)
Statement on Impact of Audit Qualifications for the Financial Year ended March 31, 2021
[See Regulation 33 / 52 of the SEBI (LODR) (Amendment) Regulations, 2016]
I
Sr. No.
Particulars
Audited Figures (Rs in Crore)
(as reported before adjusting for qualifications)
Audited Figures (Rs in Crore) (audited figures after adjusting for qualifications) quoted in II (a)(2)
1
Turnover / Total income
2,522.17
2,522.17
2
Total Expenditure including exceptional items
2,541.25
2,541.25
3
Net profit/(loss) for the year after tax
(19.08)
(19.08)
4
Earnings Per Share (Rs.)
(0.73)
(0.73)
6
Total Assets
20,744.05
20,744.05
7
Total Liabilities
10,368.47
10,368.47
8
Net Worth
9,724.67
4,699.79
9
Other Equity
10,375.58
10,375.58
II
Audit Qualification (each audit qualification separately):
a.
Details of Audit Qualification:
3. We refer to Note 10 to the standalone financial results regarding the Company's exposure in an EPC Company as on March 31, 2021 aggregating to Rs. 6491.38 Crore (net of provision of Rs. 3,972.17 Crore and amount written off during the year of Rs.1,009.51 Crore). Further, the Company has also provided corporate guarantees aggregating to Rs. 1,775 Crore on behalf of the aforesaid EPC Company towards borrowings of the EPC Company.
According to the Management of the Company, these amounts have been funded mainly for general corporate purposes and towards funding of working capital requirements of the party which has been engaged in providing Engineering, Procurement and Construction (EPC) services primarily to the Company and its subsidiaries and its associates and the EPC Company will be able to meet its obligation.
As referred to in the above note, the Company has further provided Corporate Guarantees of Rs. 4,895.87 Crore in favour of certain companies towards their borrowings. According to the Management of the Company these amounts have been given for general corporate purposes.
We were unable to evaluate about the relationship, recoverability and possible obligation towards the Corporate Guarantees given. Accordingly, we are unable to determine the consequential implications arising therefrom in the standalone financial results of the Company.
4. We refer to Note 12 of the Standalone financial results wherein the loss on invocation of shares and/or fair valuation of shares of investments held in Reliance Power Limited (RPower) aggregating to Rs. 1,983.49 Crore and Rs. 5,024.88 Crore for the quarter and year ended March 31, 2020 was adjusted against the capital reserve as against charging the same in the Statement of Profit and Loss. The said treatment of loss on invocation and fair valuation of investments was not in accordance with the Ind AS 28 "Investment in Associates and Joint Venture", Ind AS 1 "Presentation of Financial Statements" and Ind AS 109 "Financial Instruments". Had the Company followed the above Ind AS's the profit before tax for the quarter and year ended March 31, 2020 would have been lower by Rs.1,983.49 Crore and Rs.5,024.88 Crore respectively and Net Worth of the Company as at March 31, 2020 and March 31, 2021 would have beenlower by Rs. 5,024.88 Crore.
b.
Type of Audit Qualification : Qualified Opinion / Disclaimer of Opinion / Adverse Opinion
Disclaimer of Opinion
c.
Frequency of qualification: Whether appeared first time / repetitive / since how long continuing
Item II(a)(1) coming Since year ended March 31, 2019
Item II(a)(2) - coming Since year ended March 31, 2020
d.
For Audit Qualification(s) where the impact is quantified by the auditor, Management's Views:
With respect to Item II(a)(2) Management view is set out in notes to the Standalone Financial Results, as below:
During the year ended March 31, 2020 Rs. 3,050.98 Crore being the loss on invocation of pledge of shares of RPower held by the Company has been adjusted against the capital reserve. According to the management of the Company, this is an extremely rare circumstance where even though the value of long term strategic investment is high, the same is being disposed off at much lower value for the reasons beyond the control of the Parent Company, thereby causing the said loss to the Company. Hence, being the capital loss, the same has been adjusted against the capital reserve.
Further, due to above said invocation, during the year ended March 31, 2020, investment in RPower has been reduced to 12.77% of its paid-up share capital. Accordingly in terms of Ind AS 28 on Investments in Associates, RPower ceases to be an associate of the Company. Although this being strategic investment and Company continues to be promoter of the RPower, due to the invocations of the shares by the lenders for the reasons beyond the control of the Company the balance investments in RPower have been carried at fair value in accordance with Ind AS 109 on financial instruments and valued at current market price and loss of Rs. 1,973.90 crore being the capital loss, has been adjusted against the capital reserve
e.
For Audit Qualification(s) where the impact is not quantified by the auditor (with respect to II(a)(1) above:
(i) Management's estimation on the impact of audit qualification:
Not Determinable
(ii) If management is unable to estimate the impact, reasons for the same:
With respect to Item II(a)(1) Management view is set out in notes to the Standalone Financial Results, as below:
The Reliance Group of companies of which the Company is a part, supported an independent company in which the Company holds less than 2% of equity shares ("EPC Company") to inter alia undertake contracts and assignments for the large number of varied projects in the fields of Power (Thermal, Hydro and Nuclear), Roads, Cement, Telecom, Metro Rail, etc. which were proposed and/or under development by the Reliance Group. To this end along with other companies of the Reliance Group the Company funded EPC Company by way of project advances, subscription to debentures and inter corporate deposits. The total exposure of the Company as on March 31, 2021 is Rs 6,491.38 Crore (net of provision of Rs 3,972.17 Crore). The Company has also provided corporate guarantees aggregating of Rs 1,775 Crore.
The activities of EPC Company have been impacted by the reduced project activities of the companies of the Reliance Group. While the Company is evaluating the nature of relationship; if any, with the independent EPC Company, based on the analysis carried out in earlier years, the EPC Company has not been treated as related party.
Given the huge opportunity in the EPC field particularly considering the Government of India's thrust on infrastructure sector coupled with increasing project and EPC activities of the Reliance Group, the EPC Company with its experience will be able to achieve substantial project activities in excess of its current levels, thus enabling the EPC Company to meet its obligations. Based on the available facts, the provision made will be adequate to deal with any contingency relating to recovery from the EPC Company.
The Company has further provided corporate guarantees of Rs. 4,895.87 Crore on behalf of certain companies towards their borrowings. As per the reasonable estimate of the management of the Company, it does not expect any obligation against the above guarantee amount.
(iii) Auditors' Comments on (i) or (ii) above:
Impact is not determinable.
III
Signatories:
Punit Garg
(Executive Director and Chief Executive Officer )
Pinkesh Shah
(Chief Financial Officer)
Manjari Kacker #
(Audit Committee Chairman)
Statutory Auditors
For Chaturvedi & Shah LLP
Chartered Accountants
Firm Registration No:101720W /W100355
Parag D Mehta #
Partner
Membership No. 113904
Place: Mumbai
Date: May 28, 2021
# Present in the meeting through audio visual means
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