To The Unitholders of India Infrastructure Trust
Report on the Audit of Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of India
Infrastructure Trust ("the Trust"), which comprise the Standalone Balance Sheet
as at March 31, 2023, Standalone Statement of Profit and Loss (including Other
Comprehensive Income), Standalone Statement of Changes in Unitholders Equity, Standalone
Statement of Cash Flows for the year then ended, Standalone Statement of Net Assets at
Fair Value as at March 31, 2023, Standalone Statement of Total Returns at Fair Value and
Net Distributable Cash Flows for the year then ended as an additional disclosure in
accordance with Securities Exchange Board of India (SEBI) Circular No. CIR/IMD/
DF/127/2016, dated November 29, 2016 and a summary of significant accounting policies and
other explanatory information (together hereinafter referred 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 any guidelines and circulars
issued thereunder read with the SEBI circular number CIR/IMD/DF/127/2016, dated November
29, 2016 (the "InvIT Regulations") in the manner so required and give a true and
fair view in conformity with the Indian Accounting Standards as defined in Rule 2(1)(a) of
the Companies (Indian Accounting Standards) Rules, 2015 amended), and other accounting
principles generally accepted in India, to the extent not inconsistent with the InvIT
Regulations, of the state of affairs of the Trust as at March 31, 2023, and its profit
(including other comprehensive income), its changes in unitholders equity, its cash flows
for the year ended March 31, 2023, its net assets at fair value as at March 31, 2023, its
total returns at fair value and net distributable cash flows for the year ended on that
date and other financial information of the Trust.
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 (the
ICAI). Our responsibilities under those Standards are further described in the
‘Auditors Responsibility for the Audit of the Standalone Financial Statements
section of our report. We are independent of the Trust in accordance with the Code of
Ethics issued by the ICAI and have fulfilled our ethical responsibilities in accordance
with the ICAIs Code of Ethics. We believe that the audit evidence obtained by us 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 10.2 of the standalone financial statements, which describes
the presentation of Capital" as "Equity" to comply with InvIT Regulations.
Our opinion is not modified in respect of this matter.
Key Audit Matter
Key audit matter is the matter that, in our professional judgment, was of most
significance in our audit of the standalone financial statements of the current year. This
matter was 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
this matter. We have determined the matter described below to be the key audit matter to
be communicated in our report.
| Sr. No. |
Key Audit Matter |
Auditors Response |
| 1 |
Fair valuation of Investment in Non- convertible |
Principal audit procedures performed: |
|
The valuation of investment in Non- convertible debentures (NCDs) issued by Pipeline
Infrastructure Limited ("PIL", "SPV") was a key area of audit focus
due to degree of complexity and judgement involved in valuing the NCDs. |
Our audit procedures related to the discount rate used to determine the fair value of
the investment in NCDs included the following, among others: |
|
As at March 31, 2023, fair value of these NCDs was Rs. 5,997.19 crores. These NCDs are
measured at fair value and classified as "Level 3" of the fair value hierarchy. |
• We obtained the independent valuers valuation report to obtain an
understanding of the source of information used by the independent valuer in determining
the assumption. |
|
The fair value of these NCDs is determined by an independent valuer using discounted
cash flow method. |
• We tested the reasonableness of inputs, shared by management with the
independent valuer, by comparing it to source information used in preparing the inputs
such as schedule of Equated Yearly Instalments. |
|
While there are several assumptions that are required to determine the fair value of
NCDs, assumption with the highest degree of estimate, subjectivity and impact on fair
value is the discount rate. Auditing this assumption required a high degree of auditor
judgment as the estimates made by the independent valuer contain significant measurement
uncertainty. |
• We evaluated the Companys fair valuation specialists competence to perform
the valuation. |
|
Refer note 22 to the standalone financial statements. |
• We also involved our internal fair valuation specialists to independently
determine fair value of the NCDs on the balance sheet date, which included assessment of
the reasonableness of the discount rate used by management in valuation. |
|
|
• We compared the fair value determined by the Company with that determined by
our internal fair valuation specialist to assess the reasonableness of th fair valuation. |
Information Other than the Financial Statements and Auditors Report Thereon
• Brookfield India Infrastructure Manager Private Limited acting in its capacity
as an Investment Manager of the Trust is responsible for the other information. The other
information comprises the information and included in the Annual Report but does not
include the standalone financial statements, consolidated financial statements and our
auditors report thereon. The Annual Report 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 and will 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 the Annual Report, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to those charged with
governance as required under SA 720 ‘The Auditors responsibilities Relating to Other
Information.
Responsibilities of Management and Those Charged with Governance for the Standalone
Financial Statements
The Board of Directors of the Investment Manager ("the Board") is responsible
for the preparation of these standalone financial statements that give a true and fair
view of the financial position, financial performance including other comprehensive
income, changes in unitholders equity, cash flows for the year ended March 31, 2023, net
assets at fair value as at March 31, 2023, total returns at fair value and net
distributable cash flows for the year ended on that date and other financial information
of the Trust in conformity with the InvIT Regulations, the Indian Accounting Standards as
defined in Rule 2(1)(a) of the Companies (Indian Accounting Standards) Rules, 2015 (as
amended) and other accounting principles generally accepted in India, to the extent not
inconsistent with InvIT Regulations. This responsibility also includes maintenance of
adequate accounting records for safeguarding 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; 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
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, the Board is responsible for
assessing the Trusts 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 either intends to liquidate the Trust or to cease operations, or has no
realistic alternative but to do so.
The Board is also responsible for overseeing the financial reporting process of the
Trust.
Auditors Responsibility 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
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 control 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 the Trusts internal control.
• 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 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 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 Trust 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.
• Obtain sufficient appropriate audit evidence regarding the Standalone financial
statements of the Trust to express an opinion on the standalone financial statements.
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 standalone 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, 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 year 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 Standalone Balance sheet, Standalone Statement of Profit and Loss (including
Other Comprehensive Income), Standalone Statement of Changes in Unitholders Equity,
Standalone Statement of Cash Flows, Standalone Statement of Net Assets at fair value,
Standalone Statement of Total Return at fair value and the Statement of Net Distributable
Cash Flows dealt with by this Report are in agreement with the relevant books of account
of the Trust;
c) In our opinion, the aforesaid standalone financial statements comply with the Indian
Accounting Standards as defined in Rule 2(1)(a) of the Companies (Indian Accounting
Standards) Rules, 2015 (as amended), and other accounting principles generally accepted in
India, to the extent not inconsistent with the InvIT Regulations.
For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firms Registration No. 117366W/ W100018)
Rajendra Sharma
Partner (Membership No. 119925)
(UDIN: 23119925BGZBIA1424)
Place: Mumbai
Date: May 19, 2023
+91-9892691696
