To,
The Unit Holders of POWERGRID Infrastructure Investment Trust
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of POWERGRID
Infrastructure Investment Trust ("the Trust"/"PGInvIT"), which
comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss including
the Other Comprehensive Income, the statement of change in Unit Holders equity, the
Statement of Cash Flows for the year then ended, the Statement of Net Assets at fair value
as at 31 March 2023, the Statement of Total Returns at fair value, the Statement of Net
Distributable cash Flows (NDCFs) for the year then ended and notes to the standalone
financial statements including a summary of significant accounting policies and other
explanatory information (hereinafter referred to as "the standalone financial
statements").
In our opinion and to the best of our information and according to the explanations
given to us, the standalone financial statements give the information required by the
Securities and. Exchange Board of India (Infrastructure Investment Trusts) Regulations,
2014 as amended from time to time including any guidelines and circulars issued thereunder
in the manner so required and give a true and fair view in conformity with Indian
Accounting Standards (Ind AS) and/or any addendum thereto as defined in the Rule 2(1)(a)
of the Companies (Indian Accounting Standards) Rule, 2015 and other accounting principles
generally accepted in India, of the state of affairs of the Trust as at 31 March 2023, its
profit and total comprehensive income, change in unit holders equity Trust and its cash
flows for the year ended 31 March 2023, its net assets at fair value as at 31 March 2023,
its total returns at fair value and the net distributable cash flows for the year ended on
that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the
Standards on Auditing (SAs) issued by Institute of Chartered Accountants of India
("ICAI"). Our responsibilities under those Standards are further described in
the Auditors Responsibility for the Audit of the Financial Statements section of our
report. We are independent of the Trust in accordance with the Code of Ethics issued by
the ICAI and we have fulfilled our other ethical responsibilities in accordance with the
ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the standalone financial
statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the standalone financial statements of the current period.
These matters were addressed in the context of our audit of the standalone financial
statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. We have determined the matters described below to be
the key audit matters to be communicated in our report.
| S. No Key Audit Matters |
How our audit addressed the key audit matter |
| 1 Assessing Impairment of investments in subsidiaries |
|
| As at 31 March 2023, the carrying value of Trusts investment in subsidiaries amounted
to Rs.29,778.25 million. |
In making the assessment of the recoverable amount, we relied on the valuation report
issued by the independent valuer appointed by the Investment Manager in accordance with
SEBI InvIT Regulations. |
| Management reviews regularly whether there are any indicators of impairment of such
investments by reference to the requirements under Ind AS. Management performs its
impairment assessment by comparing the carrying value of these investments made, to their
recoverable amount, to determine whether impairment needs to be recognized. |
|
| For impairment testing, the value in use has been determined by forecasting and
discounting future cash flows of subsidiaries. Further, the value in use is highly
sensitive to changes in critical variable used for forecasting the future cash flows
including discounting rates. The determination of the recoverable amount from subsidiaries
involves significant judgment and accordingly, the evaluation of impairment of investments
in subsidiaries has been determined as a key audit matter |
|
| 2 Computation and disclosures as prescribed in the InvIT regulations relating to
Statement of Net Assets at Fair Value and Total Returns at Fair Value |
Our audit procedures include the following: |
| As per the provisions of InvIT Regulations, the Trust is required to disclose
Statement of Net Assets at Fair Value and Statement of Total Returns at Fair Value which
requires fair valuation of assets. For this purpose, fair value is determined by
forecasting and discounting future cash flows. The inputs to the valuation models are
taken also from observable markets where possible, but where this is not feasible, a
degree of judgement is required in establishing fair values. Judgements include
considerations of inputs such as WACC, Tax rates, Inflation rates etc. |
- Read the requirements of SEBI InvIT regulations for disclosures relating to
Statement of Net Assets at Fair Value and Statement of Total Returns at Fair Value. |
| Accordingly, the aforementioned computation and disclosures are determined to be a key
audit matter in our audit of the standalone financial statements. |
- Reviewed and verified the disclosures in the standalone financial statements for
compliance with the relevant requirements of InvIT Regulations. |
|
-Relied on the valuation report issued by the independent valuer appointed by the
Investment Manager in accordance with SEBI InvIT Regulations. |
| 3 Related party transactions and disclosures |
Our audit procedures, included the following: |
| The Trust has undertaken transactions with its related parties in the normal course of
business. These include providing loans to SPVs, interest on such loans, fees for services
provided by related parties to Trust etc., as disclosed in Note no. 25 of the standalone
financial statements. |
- Obtained, read and assessed the Trusts policies, processes and procedures in
respect of identifying related parties, evaluating of arms length, obtaining necessary
approvals, recording and disclosure of related party transactions, including compliance of
transactions and disclosures in accordance with InvIT regulations. |
| We identified the accuracy and completeness of related party transactions and its
disclosure as set out in respective notes to the standalone financial statements as a key
audit matter due to the significance of transactions with related parties during the year
ended 31 March 2023 and regulatory compliance thereon |
- We tested, on a sample basis, related party transactions with the underlying
contracts and other supporting documents for appropriate authorization and approval for
such transactions. |
|
- We read minutes of Board and its relevant committee meetings in connection with
transactions with related parties affected during the year and Trusts assessment of
related party transactions being in the ordinary course of business at arms length and in
accordance with the InvIT regulations. |
|
- Assessed and tested the disclosures made in accordance with the requirements of Ind
AS and InvIT regulations. |
Information other than the Standalone Financial Statements and Auditors Report Thereon
The management of POWERGRID Unchahar Transmission Limited ("Investment
Manager") is responsible for the preparation of the other information. The other
information comprises the information that may be included in the Management Discussion
and Analysis, Investment Managers report including Annexures to Investment Managers
Report and Investment Managers Information, but does not include the standalone financial
statements and our auditors report thereon. The other information as identified above is
expected to be made available to us after the date of this Auditors Report.
Our opinion on the standalone financial statements does not cover the other information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility
is to read the other information identified above when it becomes available and, in doing
so, consider whether the other information is materially inconsistent with the standalone
financial statements or our knowledge obtained during the course of our audit or otherwise
appears to be materially misstated. When we read those documents including annexures, if
any thereon, if we conclude that there is .a material misstatement therein, we shall
communicate the matter to those charged with the governance. Managements Responsibility
for the Standalone Financial Statements The Management of POWERGRID Unchahar Transmission
Limited (Investment Manager), is responsible for the preparation of these standalone
financial statements that give a true and fair view of the financial position as at 31
March
2023, financial performance including other comprehensive income, movement of the unit
holders equity and cash flows for the year ended 31 March 2023, its net assets at fair
value as at 31 March 2023, its total returns at fair value and the net distributable cash
flows of the Trust for the year ended 31 March 2023, in accordance with accounting
principles generally accepted in India, including the Indian Accounting Standards (Ind AS)
and/or any addendum thereto as defined in Rule 2(1)(a) of the Companies (Indian Accounting
Standards) Rules, 2015, as amended read with the Securities and Exchange Board of India
(Infrastructure Investment Trusts) Regulations, 2014 as amended from time to time
including any guidelines and circulars issued thereunder (together referred to as
the" InvIT Regulations"). Responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of InvIT Regulations for safeguarding
of the assets of the Trust 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; for ensuring the accuracy and
completeness of the accounting records, 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. In preparing the standalone financial
statements, management is responsible for assessing the Trusts ability to continue as
going concern, disclosing as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Trust
or to cease operations, or has no realistic alternative but to do so.
The Investment Manager is also responsible for overseeing the Trusts financial
reporting process.
Auditors Responsibilities for the Audit of Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditors report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with SAs
will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements. As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the standalone
financial statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal financial controls relevant to the audit 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 such controls
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
• Conclude on appropriateness of managements use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Trusts
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditors report to the related disclosure in the
financial statement or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to date of our auditors report.
However, future events or conditions may cause the Trust to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the standalone financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
Materiality is the magnitude of misstatements in the standalone financial statements
that, individually or in aggregate, makes it probable that the economic decisions of a
reasonably knowledgeable user of the financial statements may be influenced. We consider
quantitative materiality and qualitative factors in (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 financial statements. We communicate with those
charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit. We also provide those charged with
governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the standalone financial statements
of the current period and are therefore, the key audit matters. We describe these matters
in our auditors report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Based on our audit and as required by InvIT Regulations, we report that:
a) 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;
b) The Balance Sheet, the. Statement of Profit and Loss including Other Comprehensive
Income, Statement of Changes in Unit Holders Equity and the Statement of Cash Flow dealt
with by this report are in agreement with the books of account of the Trust; and
c) In our opinion, the aforesaid standalone financial statements comply with the
Accounting Standards (Ind AS) and/or any addendum thereto as defined in Rule 2(1)(a) of
the Companies (Indian Accounting Standards) Rules, 2015, as amended.
d) There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Trust
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