Adani Ports & Special Economic Zone Ltd.
|BSE: 532921||Sector: Others|
|NSE: ADANIPORTS||ISIN Code: INE742F01042|
|BSE 00:00 | 24 Apr||Adani Ports & Special Economic Zone Ltd|
|NSE 05:30 | 01 Jan||Adani Ports & Special Economic Zone Ltd|
|Mkt Cap.(Rs cr)||55,010|
|Mkt Cap.(Rs cr)||55,010|
Adani Ports & Special Economic Zone Ltd. (ADANIPORTS) - Auditors Report
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Company auditors report
The Members of
Adani Ports and Special Economic Zone Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements ofAdani Ports and Special Economic Zone Limited ("the Company") which comprisethe Balance Sheet as at March 31 2019 and the Statement of Profit and Loss
(including Other Comprehensive Income) the Statement of Cash Flows andthe Statement of Changes in Equity for the accounting yearthen ended and a summary ofsignificant policies and other explanatory information. In our opinion and to the best ofour information and according to the explanations given to us the aforesaid standalonefinancial statements give the information required by the Companies Act 2013 ("theAct") in the manner so required and give a true and fair view in conformity with theIndian Accounting Standards prescribed under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended ("Ind AS") andother accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2019 and its profit total comprehensive income its cash flowsand the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in theAuditor's Responsibility for the Audit of the Standalone Financial Statements sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Emphasis of Matter
We draw attention to:
(i) Note 38 to the standalone financial statements which describes themanagement's assessment for recoverability of the project cost incurred by theCompany pending execution of definitive agreements between the parties.
(ii) Note 4(b)(ii) to the standalone financial statements whichdescribes the basis on which Management has considered that no impairment is necessary asat March 31 2019 for long term-investments amounting to र 115.89 crore and loan amountingto र 442.47 crore (including interest accrued र 48.81 crore) in Adani Murmugao PortTerminal Private Limited and long term-investments amounting to र 120.05 crore and loanamounting to र 1233.69 crore (including interest accrued र 69.07 crore) in Adani KandlaBulk Terminal Private Limited.
Our report is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period.
These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.
Impairment of Long-term Investment and Loans to Adani Murmugao PortTerminal Private Limited ("AMPTPL") and Adani Kandla Bulk Terminal PrivateLimited ("AKBTPL") Refer to Note 4(b)(ii) to the standalone financialstatements
Key Audit Matter Description
The Company has made equity investments of र 115.89 crore and र 120.05crore in AMPTPL and AKBTPL respectively.
Further the Company has also provided loans of र 442.47 crore(including interest accrued र 48.81 crore) and र 1233.69 crore (including interestaccrued र 69.07 crore) to these entities respectively.
The Company's evaluation of impairment of its equity investmentsin and loan to these companies involves the comparison of their recoverable values totheir corresponding carrying values. The Company used the discounted cash flow model toestimate recoverable values which requires management to make estimates and assumptionsrelated to forecasts of future revenues and operating margins and discount rates.Changesintheseassumptionscouldhave significantimpact on either the recoverablevalue the amount of any impairment charge or both.
We focused on this area as Key Audit Matter due to the size/materialityof the balances of equity investment in and loans to these companies and because theCompany's assessment of the recoverable values involves judgements about the futureresults of the business and the discount rates applied to future cash flow forecasts.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to forecasts of future revenue andoperating margin and selection of the discount rate for these assets included thefollowing among others:
We tested the Design Implementation and Operating effectivenessof controls over impairment assessment process including those over the forecasts offuture revenue and operating margin and the selection of the discount rate.
We evaluated the reasonableness of management's revenue andoperating margin forecasts by comparing the forecasts to:
Historical revenues and operating margins.
Internal communications to management and the Board ofDirectors.
With the assistance of our fair value specialists we evaluatedthe reasonableness of the (1) valuation methodology and (2) discount rate by:
Testing the source information underlying the determination ofthe discount rate and the mathematical accuracy of the calculation.
Developing a range of independent estimates and comparing thoseto the discount rate selected by management.
Recoverability of project cost Refer to Note 38 to the standalonefinancial statements
Key Audit Matter Description
The Company's assets include project inventories of र 562.89 croretowards construction of project facilities as referred to in a preliminary agreemententered into by the Company with one of its customers. Pending definitive agreementbetween the parties the assessment of recoverability of the project assets involvedjudgement and hence considered a key audit matter.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to the assessment of recoverability ofaforesaid balances included the following:
We tested key controls over the management judgments and theassumptions-setting processes including judgments regarding expected realization date andvalue.
Assessing the underlying preliminary agreement project progressreports the reports of the committee set up by the e agreements with the Company andvarious communications between definitiv customertofacilitatetheexecutionof the Companyand the customer which indicate that considerable progress has been made towards signingof the definitive agreements.
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for theother information. The other information comprises the information included in theDirector's Report of even date and annexure thereof but does not include theconsolidated financial statements standalone financial statements and our auditor'sreport thereon.
Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.
If based on the work we have performed we conclude that thereis a material misstatement of this other information we are required to report that fact.We have nothing to report in this regard.
Management's Responsibility for the Standalone FinancialStatements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonableanddoubt on the Company's ability to continue prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Those Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial control relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section
143(3)(i) of the Act we are also responsible for expressing ouropinion on whether the Company has adequate internal financialcontrols system in place andthe operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast as a significantgoing concern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the standalonefinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsany significant deficiencies in internal control that we identify during our audit. Wealso provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
1. As required by Section 143(3) of the Act based on our audit wereport that: a) We have sought and obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the purposes of our audit. b) Inour opinion proper books of account as required by law have been kept by the Company sofar as it appears from our examination of those books. c) The Balance Sheet the Statementof Profit and
Loss including Other Comprehensive Income the Statement of Cash Flowsand Statement of Changes in Equity dealt with by this Report are in agreement with thebooks of account. d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act. e) On the basis of the writtenrepresentations received from the directors as on March 31 2019 taken on record by theBoard of Directors none of the directors is disqualified as on March 31 2019 from beingappointed as a director in terms of
Section 164(2) of the Act. f) With respect to the adequacy of theinternal financial controls over financial reporting of the Company and the operatingeffectiveness of such controls refer to our separate Report in
"Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controlsover financial reporting. g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended in our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act. h) With respect tothe other matters to be included in the Auditor's Report in accordance with Rule 11of the Companies (Audit and Auditors) Rules
2014 as amended in our opinion and to the best of our information andaccording to the explanations given to us: i. The Company has disclosed the impact ofpending litigations on its financial position in its standalone financial statements; ii.The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts; iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.
Annexure "A" to the Independent Auditor's Report
(Referred to in paragraph 1(f) under Report on Other Legal andRegulatory Requirements' section of our report of even date)
Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Subsection 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financialreporting of Adani Ports and Special Economic Zone Limited ("the Company") as ofMarch 31 2019 in conjunction with our audit of the standalone Ind AS financial statementsthe Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting the Company based on our audit. We conductedour audit in accordance with the Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting (the "Guidance Note") issued by the Institute ofChartered Accountants of India and the Standards on Auditing prescribed under
Section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls. Those
Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting established and maintainedand if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.
A company's internal financial control over financial reportingincludes those policies and procedures that (1) pertain to the maintenance of recordsthat in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsfinancial reporting were operating effectively as at March 31 2019 based on the criteriafor internal financial control over financial reporting the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.
Annexure "B" to the Independent Auditor's Report
(Referred to in paragraph 2 under Report on Other Legal andRegulatory Requirements' section of our report of even date)
(i) In respect of fixed assets a. The Company has maintained properrecords showing full particulars including quantitative details and situation of fixedassets. b. Some of the fixed assets were physically verified during the year by theManagement in accordance with a programme of verification which verificationof all thefixed assets at in our opinion provides for physical reasonable intervals. According tothe information and explanations given to us no material discrepancies were
. noticedonsuchverification c. According to the information andexplanations given to us and the records examined by us and based on the examination ofthe registered sale deed/ transfer deed/ conveyance deed provided to us we report thatthe title deeds comprising all the immovable properties of land and acquired buildingswhich are freehold are held in the name of the Company as at the balance sheet dateexcept the following:
In respect of immovable properties of land that have been taken onlease and disclosed as fixed asset in the financial statements the lease agreements arein the name of the Company where the Company is the lessee in the agreement.
(ii) As explained to us the inventories were physically verifiedduring the year by the Management at reasonable intervals and no material discrepancies
(iii) The Company has not granted any loans secured or unsecuredfirmsLimited to companies
Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013.
(iv) In our opinion and according to the information and explanationsgiven to us and considering the legal opinion taken by the Company on applicability ofsection 185 of the Companies Act 2013 in respect of certain loan transactions and thatthe same have been given in the ordinary course of business the Company has complied withthe provisions of the Section 185 of the Companies Act 2013 in respect of grant of loansand providing guarantees and securities as applicable. Further based on the informationand explanations given to us the Company has complied with the provisions of Section 186of the Companies Act 2013 in respect of grant of loans making investments and providingguarantees and securities as applicable.
(v) According to the information and explanations given to us theCompany has not accepted any deposits from the public to which the directives issued bythe
Reserve Bank of India and the provisions of section 73 to 76 or anyother relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules2014 as amended would apply. Accordingly paragraph 3(v) of the Order is not applicableto the Company.
(vi) To the best of our knowledge and according to the information andexplanations given to us the Company is not required to maintain cost records pursuant to
Companies (Cost Records and Audit) Rules 2014 as amended prescribedby the Central Government under section 148(1) of the Companies Act 2013.
(vii) According to the information and explanations given to us inrespect of statutory dues: (a) The Company has generally been regular in depositingundisputed statutory dues of Provident Fund Employees' State Insurance Income-taxCustom Duty Goods and Services Tax cess and other material statutory dues applicable toit to the appropriate authorities.
(b) There were no undisputed amounts payable in respect of ProvidentFund Employees' State Insurance Income-tax Custom Duty Goods and Services Taxcess and other material statutory dues in arrears as at March 31 2019 for a period ofmore than six months from the date they became payable.
(c) Details of dues of Income-tax Service Tax and Customs Duty whichhave not been deposited as on March 31 2019 on account of disputes are given below:
There are no dues of Sales Tax Excise Duty Value Added Tax and Goods& Services Tax as on March 31 2019 on account of disputes.
(viii) In our opinion and according to the information and explanationsgiven to us as at the reporting date the Company has not defaulted in the repayment ofloans or borrowings to financial institutions banks and dues to debenture holders. TheCompany has not taken any loans from the government.
(ix) In our opinion and according to the information and explanationsgiven to us and on an overall examination of the balance sheet monies raised by way ofterm loans have been applied by the Company during the year for the purposes for whichthey were raised other than temporary deployment pending application of proceeds. TheCompany has not raised monies by way of initial public offer or further public offer(including debt instruments) during the year.
(x) To the best of our knowledge and according to the information andexplanations given to us no material fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanationsgiven to us the Company has paid/ provided managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.
(xii) The Company is not a Nidhi Company and hence reporting underclause (xii) of paragraph 3 of the Order is not applicable.
(xiii) In our opinion and according to the information and explanationsgiven to us and considering the legal opinion taken by the Company on applicability ofSection
188(1)(d) of the Companies Act 2013 in respect of loans given by theCompany to its subsidiary companies the Company is in compliance with Sections 188 and
177 of the Companies Act 2013 where applicable for all transactionswith the related parties and the details of related party transactions have been disclosedin the financial statements etc. as required by the applicable accounting standards.
(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause (xiv) of paragraph 3 of the Order is not applicable to theCompany.
(xv) In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any non-cash transactionswith its directors or persons connected with him and hence provisions of section 192 ofthe Companies Act 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.