indinfravit trust Auditors report

INDEPENDENT AUDITORS REPORT

To the Unit Holders of IndInfravit Trust

Report on the audit of the standalone financial statements Opinion

We have audited the accompanying standalone financial statements of IndInfravit Trust ("the InvIT" or "the Trust"), which comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Unitholders Equity and 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 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 (together referred to as the "SEBI 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, as amended ("Ind AS") and other accounting principles generally accepted in India, to the extent not inconsistent with SEBI InvIT Regulations, of the state of affairs of the Trust as at 31 March 2023, its loss including other comprehensive income, its cash flows, its statement of changes in Unitholders equity 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 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 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 Trust 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 SEBI 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 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 for the financial year ended 31 March 2023. 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.

1. Impairment of investments and loans made by the Trust in subsidiaries

Key audit matter	Auditors response
The assessment of impairment loss involves management estimates and judgement which may affect the outcome of the assessment. These estimates and judgements include future cash flows from the operations of the investee entities, discounting rates, operating expenses which are considered in assessing whether a diminution in the value of investments/ recoverability of loans is other than temporary in nature.	Our audit procedures included the following:
There is an inherent risk in the valuation of investment/ recoverability of loans, due to the use of estimates and judgements mentioned above.	• Assessing the appropriateness of the Trusts valuation methodology applied in determining the recoverable amount of investments;
Therefore, impairment of investments in equity shares of investee entities / loans made to their recoverable amount is considered as a Key Audit Matter.	• In making this assessment, we also evaluated the objectivity, independence and competency of specialists involved in the process;
Refer Note 2.16 for the accounting policy on impairment of investments & Note 4 for investments as at 31 March 2023. Also refer Note 2.6 for the accounting policy on financial asset & Note 5 for Loans to related parties as on 31 March 2023.	• Assessing the assumptions around the key drivers of the revenue projections, future cash flow, discount rates / weighted average cost of capital that were used by the experts in determining recoverable amount, including considerations due to current economic and market conditions;
	• Discussing / evaluating the potential changes in key drivers as compared to previous year / actual performance for valuation with LTIDPL IndvIT Services Limited ("Investment Manager") in order to evaluate whether the inputs and assumptions used in the cash flow projections were appropriate, including considerations due to current economic and market conditions;
	• We compared the recoverable amount of the investment to the carrying value in books as at 31 March 2023;
	• Performing sensitivity analysis of key assumptions to understand the scenarios in case of changes to key assumptions;
	• Test the arithmetical accuracy of the model.
	As regards loans granted, we obtained and considered management evaluation of recoverability of loans and advances granted to its subsidiaries.

2. Computation and disclosures as prescribed in the SEBI InvIT regulations relating to Statement of Net Assets and Total Returns at Fair Value

Key audit matter	Auditors response
As per SEBI InvIT Regulations, the Trust is required to disclose statement of net assets at fair value and statement of total returns at fair value. The fair value is determined by forecasting and discounting future cash flows from the operations of the investee entities which involves management estimates and judgement. These estimates and judgements include discounting rates, Tax rates and inflation rates which are considered for computing the fair value.	Our audit procedures included the following:
There is an inherent risk in the computation of fair value due to the use of estimates and judgements mentioned above.	• Assessing the appropriateness of the Trusts valuation methodology applied in determining the fair values. In making this assessment, we also evaluated the objectivity, independence and competency of specialists involved in the process;
Therefore, computation and disclosures of statement of net assets at fair value and statement of total returns at fair value is considered as a Key Audit Matter.	• Assessing the assumptions around the key drivers of future cash flow, discount rates / weighted average cost of capital, tax rates and inflation rates that were used by the experts in determining the fair values, including considerations due to current economic and market conditions;
Refer statement of net assets at fair value and Statement of total returns at fair value of the standalone financial statements.	• Discussing / evaluating the potential changes in key drivers as compared to previous year for valuation with LTIDPL IndvIT Services Limited ("Investment Manager") in order to evaluate whether the inputs and assumptions used in the cash flow projections were appropriate, including considerations due to current economic and market conditions;
	• Performing sensitivity analysis of key assumptions to understand the scenarios in case of changes to key assumptions;
	• Test the arithmetical accuracy of computation in the statement of net assets and total returns at fair value;
	• Ensured disclosures is compliance with SEBI InvIT Regulations relating the statement of net assets at fair value and the statement of total returns at fair value.

3. Related party transactions and disclosures

Key audit matter	Auditors response
The Trusts has undertaken transactions with its related parties in the normal course of business. These include providing loans to investee SPVs, earning interest on such loans, and other transactions with investee SPVs as disclosed in Note 26 of the standalone financial statements.	Our audit procedures included the following:
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 considering the quantum and percentage of transactions in the balance sheet and Statement of Profit and loss account during the year ended 31 March 2023.	• Ensured that the Trusts policies, processes and procedures in respect of identifying related parties, evaluation of arms length, obtaining necessary approvals, recording and disclosure of related party transactions, including compliance of transactions and disclosures in accordance with SEBI InvIT Regulations and related Ind AS accounting standards.
	• We reviewed minutes of governing body of Trust in connection with transactions to assess authorization by the Board and whether the transactions are in the ordinary course of business at arms length and in accordance with the SEBI InvIT Regulations.
	• We tested, on a sample basis, related party transactions with the underlying contracts and other supporting documents to ensure that the accounting of the transaction represents the arrangement between the parties and reflects the nature of transactions intended.
	• Ensured that the disclosures made in accordance with the requirements of Ind AS and SEBI InvIT Regulations.

Information other than the standalone financial statements and auditors report thereon

The Board of Directors of Investment Manager is responsible for the other information. The other information comprises the information included in the Report of Investment Manager including annexures to Investment Managers Report and other information as required to be given by SEBI InvIT Regulations, 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 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 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.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors of Investment Manager for the standalone financial statements

The Board of Directors of 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, cash flows and the movement of the unitholders equity for the year ended 31 March 2023, the net assets at fair value as at 31 March 2023, the total returns at fair value and the net distributable cash flows

of the Trust for the year ended 31 March 2023, in accordance with the requirements of the SEBI InvIT Regulations, Indian Accounting Standards as defined in Rule 2(1)(a) of Companies (Indian Accounting Standards) Rules, 2015, as amended and other accounting principles generally accepted in India, to the extent not inconsistent with SEBI InvIT Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the SEBI 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 judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls for ensuring the accuracy and completeness of 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 and error.

In preparing the standalone financial statements, the Board of Directors of Investment Manager 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 of Directors of Investment Manager either intends to liquidate the Trust or to cease operations, or has no realistic alternative but to do so.

The Board of Directors of Investment Manager are also responsible for overseeing the Trusts financial reporting process.

Auditors responsibility for the audit of the standalone financial statements

Our objectives are to obtain reasonable assurance 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 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 an opinion on the effectiveness of the entitys internal controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors of the Investment Manager.

• Conclude on the appropriateness of the Board of Directors of Investment Manager 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 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.

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 for the financial year ended 31 March 2023 and are therefore the key audit matters. We describe these matters in our 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 SEBI 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 purposes of our audit of aforesaid standalone financial statement;

b) The standalone Balance Sheet and the standalone Statement of Profit and Loss including the Statement of Other Comprehensive Income dealt with by this Report are in agreement with the books of account of the Trust; and

c) In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards as defined in Rule 2(1)(a) of Companies (Indian Accounting Standards) Rules, 2015, as amended, to the extent not inconsistent with SEBI InvIT Regulations.

For Sharp & Tannan

Chartered Accountants (Firms Registration No. 003792S)

	Sd/-
	V.Viswanathan
	Partner
Place: Coimbatore	Membership No.215565
Date: 08 May 2023	UDIN: 23215565BGYMBM9969