IRB Infrastructure Trust Auditor Reports

To the Unit Holders of IRB Infrastructure Trust

REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

OPINION

We have audited the accompanying Standalone Ind AS Financial Statements of IRB Infrastructure Trust ("the InvIT" or "the Trust"), which comprise the Standalone Balance Sheet as at March 31, 2023, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Cash Flows, the Standalone Statement of Changes in Unit Holders? Equity and the Standalone Statement of Net Assets at Fair value as at March 31, 2023 and the Standalone Statement of Total Returns at Fair Value and the Standalone 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 (Ind AS) and/or any addendum thereto as defined in the rule 2(1)(a) of the Companies (Indian Accounting Standards) Rules, 2015, as amended ("Ind AS") and other accounting principles generally accepted in India, of the State of Affairs of the Trust as at March 31, 2023, its profits and total comprehensive income, movement of Unit Holders? fund and 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 the net distributable cash flow 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 Auditor?s Responsibilities for the Audit of the Standalone Financial Statements section of this 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 of the financial 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.

PARTICULARS	HOW THEY WERE ADDRESSED IN OUR AUDIT
1. Loss on fair value measurement of other payable / deferred consideration payable to IRB Group.	• We reviewed the Placement Memorandum filed with SEBI and the consequential legal documentation entered into by the Trust, including inter alia the Debt Novation Agreements and their reflection in the underlying SPVs.
Pursuant to settlement of IRB Infrastructure Trust by IRB Infrastructure Developers Limited (Sponsor), as a Private INVIT, the Trust has entered into Debt Novation Agreements (DNA). As per the terms of DNA, in consideration of assets taken over in 9 SPVs, Trust has issued units and agreed to transfer to the Sponsor, the claim amounts when and to the extent the same are eventually received by Project SPVs, on account of Sponsor Claims.	• We have reviewed the methodology adopted by the valuer in deriving the value including the assumptions made.
Such Sponsor Claims shall be lodged after obtaining COD by respective SPVs. The amount realizable against claims has been estimated by the valuers appointed by the Management based on the weighted average of probabilities of realization of such claims.	• We assessed the estimates of Fair Value provided in the Valuation Report and realizability of claims as indicated therein.
Based on the fair value of liability as estimated by the valuers, a resultant impact in the value of liability has been recognized under the head ‘Loss on fair value measurement of other payable?.	• We also reviewed the reasonableness of the variables applied in the said computation.
	• Based on the above, the fair value of liability to the Sponsor, as estimated by the valuer, taking into consideration the weighted average of probabilities of realization has been validated.
2. Impairment Testing
The Group has toll collection rights as intangible assets pursuant to the concession agreement. The carrying value of these rights acquired under BOT basis is being compared to the recoverable value (which is value in use in the instant case) thereof to ascertain if there is any impairment.	• We evaluated management?s assessment on impairment for intangible assets under development and intangible assets – toll collection rights by testing the assumptions and methodologies used by the Management.
The process involves estimating the value in use of the asset which is determined by forecasting and discounting future cash flows. The same is sensitive to changes in discount rate, traffic growth rates, toll growth rates etc. The determination of the recoverable amount of the toll collection right involves significant judgment due to inherent uncertainty in the assumptions supporting the recoverable amount of these rights.	• Referred to valuation reports and Traffic Growth Study Reports and determined reasonableness of future toll revenue.
Accordingly, the evaluation of impairment of toll collection rights has been determined as a Key Audit Matter.	• Evaluated the potential changes in major components as compared to previous year vis-?-vis actual performance in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable.
	• Assessed the appropriateness of the weighted average cost of capital used in determining recoverable amount.
	• Performed sensitivity analysis of key assumptions used in valuation.
	• Tested the arithmetical accuracy of the model.

INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR?S REPORT THEREON

The Board of Directors of Investment Manager is responsible for the preparation of the other information. The other information comprises the information included in the Report of Investment Manager including annexures to Investment Manager?s Report and other information as required to be given by SEBI InvIT Regulations, but does not include the standalone financial statements and our 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, 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 Standalone financial position as at 31 March 2023, financial performance including other comprehensive income, movement of Unit Holders? fund and 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 the net distributable cash flow of the trust for the year ended March 31, 2023 in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified and/or any addendum thereto as defined in Rule 2(1)(a) of Companies (Indian Accounting Standards) Rules, 2015, as amended read with the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulation 2014 as amended from time to time including any guidelines and circulars issued thereunder (together referred to as the "InvIT Regulations").

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the 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 Trust?s 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 Trust?s financial reporting process.

AUDITOR?S RESPONSIBILITY FOR THE AUDIT OF THE STANDALONE IND AS 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 auditor?s 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 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 such controls.

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

• Conclude on the appropriateness of use of the going concern basis of accounting by the Board of Directors of Investment Manager and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Trust?s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor?s 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 auditor?s 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 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 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 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;

b. The Balance Sheet and the Statement of Profit and Loss including 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 standalone financial statements comply with the Indian Accounting Standards specified under Rule 2(1)(a) of Companies (Indian Accounting Standards) Rules, 2015, as amended.

For Gokhale & Sathe,

Chartered Accountants

Firm Registration No.: 103264W

CA Kaustubh Deshpande,

Partner

Membership No. 121011

UDIN: 23121011BGXXWA9139

Date: 12th May 2023

Place: Mumbai