To the Unit Holders of Bharat Highways InvIT
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of
Bharat Highways InvIT ("the InvIT"), which
comprise the Balance sheet as at March 31 2024, the Statement of Profit and Loss,
including other comprehensive
income, the Statement of Changes in Unit Holders Equity, the Statement of Cash Flow for
the year then ended, the
Statement of Net Assets at fair value as at March 31,2024, the Statement of Total Returns
at fair value, the Statement
of Net Distributable Cash Flows (NDCFs1) of the InvIT for the year then ended,
and a summary of material accounting
policies and other explanatory notes (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 aforesaid
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 circulars, notifications,
clarifications and guidelines issued thereunder (together referred as the "InvIT
Regulations") in the manner so
required and give a true and fair view in conformity with the accounting principles
generally accepted in India, of the
state of affairs of the InvIT as at March 31, 2024, its profit including other
comprehensive income, its cash movements
and its movement of the unit holders funds for the year ended March 31, 2024, its net
assets at fair value as at March
31, 2024, its total returns at fair value and the net distributable cash flows of the
InvIT for the year ended March 31,
2024.
Basis for Opinion
We conducted our audit of the standalone financial statements in
accordance with the Standards on Auditing (SAs),
issued by the Institute of Chartered Accountants of India. Our responsibilities under
those Standards are further
described in the Auditors Responsibilities for the Audit of the Standalone Financial
Statements section of our report.
We are independent of the InvIT in accordance with the ‘Code of Ethics issued by the
Institute of Chartered
Accountants of India together with the ethical requirements that are relevant to our audit
of the standalone financial
statements under the provisions of the InvIT Regulations, and we have fulfilled our other
ethical responsibilities in
accordance with these requirements and the 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.
Emphasis of Matter
We draw attention to note 8(e) which describes the presentation /
classification of "Unit Capital" as "Equity" instead
of the applicable requirements of Ind AS 32 - Financial Instruments: Presentation, in
order to comply with the relevant
InvIT regulations. Our opinion is not modified in respect of this matter.
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 for the financial year ended March 31, 2024. 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. For each matter below, our description of
how our audit addressed
^-srd&eqnatter is provided in that context.
performance of procedures designed to respond to our assessment of the
risks of material misstatement of the
standalone financial statements. The results of our audit procedures, including those
procedures performed to
address the matters below, provide the basis for our audit opinion on the accompanying
standalone financial
statements.
| Key audit matters | How our audit addressed the key audit matter |
| Acquisition of subsidiaries (as described in note 3(c) and 9 of the standalone financial statements) | Our audit procedures included the following: |
| During the year, the InvIT has acquired 100% stake in seven subsidiaries from GR Infraprojects Limited (GRID against the same, the InvIT has issued its units of 13,75,30,405 with issue price of INR 100 per unit. Further, the InvIT has entered into assignment agreement dated February 20, 2024 with for assignment of its unsecured loan receivable from above subsidiaries of INR 5,540.83 million in exchange of 5,54,08,300 units with issue price of INR 100 per unit which resulting in GRIL holding 43.56% stake in the InvIT. | • Read and assessed the InvITs accounting policies with respect to acquisition accounting. |
| The Investment manager has made evaluation of the transaction both from legal compliance and accounting perspective. Key matters for accounting evaluation include | • Obtained and read through legal opinion obtained to evaluate its relationship between Sponsor and GRIL. |
| (a) whether the acquisitions is to be considered as common control transaction which in turn involves evaluation of control and relationship between InvITs Sponsor and GRIL, | • Read and evaluated the key terms of the underlying agreements applicable to the acquisitions along with the necessary approvals, as applicable, for the acquisition. |
| (b) assessment of fair value of investment on the date of acquisition, and | • Obtained managements evaluation relating to assessment of whether the acquisition is considered at fair value instead of transaction value and record difference in capital reserve. |
(c) accounting for difference, if any, arising between fair value of investment acquired and consideration paid. Based on the above evaluation, the Investment manager has accessed and concluded that the acquisition should be accounted as fair valuation and difference recorded as capital reserve amounting to INR 5,656.26 million. The above transaction involves significant assumptions and judgement and accordingly the same has been considered as key audit matter. |
• Obtained and read the fair valuation reports issued by the independent valuer engaged by the management for measuring, the assets acquired, and liabilities assumed, at fair value. Enquired valuer regarding specific reasons for difference between fair value of net assets acquired and consideration paid and also assessed the independent valuers objectivity and independence. |
| • Involved valuation specialists to review the significant assumptions used by the independent valuer engaged by the management in arriving at the fair value of assets and liabilities acquired. | |
| • Assessed the related disclosures and compliance in the standalone financial statements regarding the acquisition. |
| Impairment Assessment of InvITs Interest in subsidiaries (as described in note 2.2 (h) and 3 of the standalone financial statements) | Our audit procedures included but were not limited to: |
| As at March 31, 2024, the InvIT had investment in operational HAM assets aggregating to INR 19,409.30 million which are operated under concession agreement. | • Assessed the InvITs accounting policies with respect to impairment in accordance with Ind AS 36 "Impairment of assets". |
| 1 & Qys^&r requirement of Ind AS 36 "Impairment of assets", the ma^igkment reviews at each reporting period existence of j any ^plftcators of impairment of the investments in subsidiaries and where impairment indicators exist, the investment manager estimates the recoverable amounts of the investments, being higher of fair value less costs of disposal and value in use. The value in use of the underlying businesses is determined based on the discounted cash flow projections. | • We obtained understanding the InvITs valuation methodology applied by the investment manager in determining the recoverable amount of its investment and obtained management assessment of the recoverable amount of the investments. |
| Significant judgements are required to determine the key assumptions used in the discounted cash flow models, such as annuity, Interest rate, discount rate, future operating income and cost as well as finance cost based on investment managers view of future business prospects. | • Obtained the financial model and understood the key assumptions around the cash flow forecasts like annuity, interest rate, discount rate, future operating income and cost as well as finance costs. |
| Accordingly, the impairment of investment in operational HAM asset operated under concession arrangement was determined to be a key audit matter in our audit of the standalone financial statements. | • In performing the above procedures, we used our valuation specialists to perform an independent review of methodology and key assumptions used in the valuation. |
| • Performed testing and sensitivity analysis of key assumptions. | |
| • Tested the arithmetical accuracy of the model. | |
| • Read and assessed the adequacy of the disclosures made in the standalone financial statements. |
Information Other than the Standalone Financial Statements and Auditors Report Thereon
The Management of GR Highways Investment Manager Private Limited (the
"Investment Manager") is responsible for
the other information other than the standalone financial statements and auditors report
thereon. The other
information other than the standalone financial statements and auditors report thereon
comprises the information
included in the Annual Report but does not include the standalone financial statements and
our auditors report
thereon.
Our opinion on the standalone financial statements does not cover the
other information other than the standalone
financial statements and auditors report thereon 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
other than the standalone financial statements and auditors report thereon and, in
doing so, consider whether such
other information other than the standalone financial statements and auditors report
thereon is materially
inconsistent with the standalone financial statements, or our knowledge obtained in the
audit or otherwise appears to
be materially misstated. If, based on the work we have performed, we conclude that there
is a material misstatement
of this other information other than the standalone financial statements and auditors
report thereon, we are required
to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Financial Statements
The Board of Directors of the Investment Manager are responsible for
the preparation and presentation of these
standalone financial statements that give a true and fair view of the financial position,
financial performance including
other comprehensive income, cash movements and the movement of the unit holders funds for
the year ended March
31, 2024, the net assets at fair value as at March 31, 2024, the total returns at fair
value of the InvIT and the net
distributable cash flows of the InvIT in accordance with the requirements of the InvIT
Regulations; the Indian
Accounting Standards as defined in Rule 2(l)(a) of the Companies (Indian Accounting
Standards) Rules, 2015 (as
amended), and other accounting principles generally accepted in India.. This
responsibility also include the design,
implementation and maintenance of adequate controls for ensuring the accuracy and
completeness of the accounting
records, relevant to the preparation and presentation of the standalone financial
statements that give a true and fair
^-sr^^iew and are free from material misstatement, whether due to fraud or error.
Irnaraiwing the standalone financial statements, the Board of Directors
of the Investment Manager is responsible for
/ fv / asseVsjp k the ability of the InvIT to continue as a 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 InvIT or
to cease operations, or has no realistic alternative but to do so.
The Board of Director of Investment Manager are also responsible for
overseeing the InvITs financial reporting
process.
Auditors Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the
standalone 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 standalone financial
statements.
As part of an audit in accordance with SAs, we exercise professional
judgment and maintain professional skepticism
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 control relevant to the audit in
order to design audit procedures that are
appropriate in the circumstances but not for the purpose of expressing opinion on
effectiveness of the entitys
internal controls.
? Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and
related disclosures made by management.
? Conclude on the 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 ability of the InvIT 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 disclosures in the
standalone financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditors report. However,
future events or
conditions may cause the InvIT to cease to continue as a going concern.
? Evaluate the overall presentation, structure and content of the
standalone financial statements, including the
disclosures, and whether the standalone financial statements represent the underlying
transactions and events
in a manner that achieves fair presentation.
We communicate with those charged with governance, 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 for the financial year
ended March 31, 2024 and are
therefore the key audit matters. We describe these matters in our auditors report unless
law or regulation precludes
? ffljbfic disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not
^"bec^N^unicated in our report because the adverse consequences of doing so would
reasonably be expected to
outwfetm the public interest benefits of such communication.
Other Matter
The financial statements of the InvIT for the period from June 16, 2022
to March 31, 2023 included as comparative
financial information in the accompanying standalone financial statements have been
prepared solely based on the
information as compiled by the investment Manager and approved by the Board of Directors
of Investment Manager
and has not been subjected to audit.
Report on Other Legal and Regulatory Requirements
Based on our audit and as required by InvIT Regulations, we report that;
A. We have sought and 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 Standalone Balance Sheet, and the Statement of Standalone Profit
and Loss are in agreement with the books
of account; 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(lXa) of the Companies (Indian Accounting
Standards) Rules,
2015, as amended.
| For S R B C & CO LLP |
| Chartered Accountants |
| ICAI Firm Registration Number; 324982E/E300003 |
| per Sukrut Mehta |
| Partner |
| Membership Number: 101974 |
| UDIN: 24101974BKERTK4060 |
| Place of Signature: Ahmedabad |
| Date: May 28, 2024 |
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