We have jointly audited the accompanying standalone financialstatements of IRB Infrastructure Developers Limited (“theCompany”), which comprise the Balance Sheet as at March31, 2025, and the Statement of Profit and Loss, includingOther Comprehensive Income, Statement of Changes inEquity and Statement of Cash Flows for the year then ended,and notes to the standalone financial statements, includingmaterial accounting policy information and other explanatoryinformation (hereinafter referred to as the “standalonefinancial statements”).
In our opinion and to the best of our information and accordingto the explanations given to us, the aforesaid standalonefinancial statements give the information required by theCompanies Act, 2013 (“the Act’) in the manner so requiredand give a true and fair view in conformity with the IndianAccounting Standards prescribed under section 133 of theAct read with Companies (Indian Accounting Standards)Rules, 2015, as amended (“Ind AS”) and other accountingprinciples generally accepted in India, of the state of affairs ofthe Company as at March 31,2025, and profit (including othercomprehensive income), changes in equity and its cash flowsfor the year ended on that date.
Basis for Opinion
We conducted our joint audit of the standalone financialstatements in accordance with the Standards on Auditing (SAs)specified under section 143(10) of the Act. Our responsibilitiesunder those Standards are further described in the ‘Auditor’sResponsibilities for the Audit of the Standalone FinancialStatements’ section of our report. We are independent ofthe Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India (“ICAI”)together with the ethical requirements that are relevant to ourjoint audit of the standalone financial statements under theprovisions of the Act and the Rules thereunder, and we havefulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe thatthe audit evidence obtained by us is sufficient and appropriateto provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professionaljudgment, were of most significance in our joint audit of thestandalone financial statements for the year ended March 31,2025. These matters were addressed in the context of ourjoint audit of the standalone financial statements as a whole,and in forming our opinion thereon, and we do not provide aseparate opinion on these matters. We have determined thematters described below to be the key audit matters to becommunicated in our report.
Key Audit Matter
How the Key Audit Matter was addressed in our joint audit
Assessment of impairment of investment in subsidiaries,recoverability of loans/advances to subsidiaries and joint venturesand fair valuation of other receivable from joint venture (refer Note4, 6 and 7 to the standalone financial statements)
A) The carrying amount of the investments (including sub-debt) insubsidiaries held at cost less impairment as at March 31, 2025 is' 33,183.62 million.
These investments are associated with significant risk in respectof valuation. Changes in business environment could alsohave a significant impact on the valuation. The investments arecarried at cost less any impairment in value of such investments.These investments are unquoted and hence it is difficult tomeasure the recoverable amount. The Company performs anannual assessment of impairment for its investments at eachcash generating unit (CGU) level, to identify any indicators ofimpairment. The recoverable amount of the CGUs which is basedon the higher of the value in use or fair value less costs to sell,has been derived from discounted forecast cash flow modelswhich requires management to make significant estimates andassumptions related to future revenue growth, concession period,operations costs, the discount rate and assessments of the statusof the project and cost to complete balance work.
A) Impairment of investment in subsidiaries.
Our audit procedures included:
1. Tvaluated the design and implementation and verified, on a testcheck basis the operating effectiveness of key controls placedaround the impairment assessment process of the recoverabilityof the investments made, including the estimation of future cashflows forecasts, the process by which they were produced anddiscount rates used.
2. Txamined the key controls in place for making investments insubsidiaries and evidenced the Board of Directors approvalobtained.
3. Assessed the net worth of subsidiaries on the basis of latestavailable financial statements. Further:
- Aompared the carrying amount of investments with therelevant subsidiaries balance sheet to identify their net assets,being an approximation of their minimum recoverable amount.Where the net assets are in excess of their carrying amount,also assessed that those subsidiaries have historically beenprofit-making.
- Tor the investments where the carrying amount exceededthe net asset value, comparing the carrying amount of theinvestment with the expected value of the business baseddiscounted cash flow analysis.
4.
Tested and verified some of the key assumptions such as futurerevenue growth, concession period, operations costs, thediscount rate and assessments of the status of the project andcost to complete balance work, which were most sensitive to therecoverable value of the investments.
5.
Assessed the work performed by management as well asmanagement's external valuation expert, including the valuationmethodology and the key assumptions used. Also assessed thecompetence, capabilities and objectivity of the expert used by themanagement in the process of evaluating impairment models.
6.
1 nvolved our internal valuation specialist, where appropriate, toevaluate the reasonability of the methodology, approach andassumptions used in the valuation carried out for determining thecarrying amount of investments.
7.
Verified that the disclosures made in the Company's standalonefinancial statements in respect of the investment in the subsidiariesare adequate.
B) The Company has extended loans to subsidiaries and jointventures which are assessed for impairment at each year end.Financial assets, which include loans to subsidiaries and jointventures aggregated to ' 12,883.48 million at March 31, 2025.The Company also has other receivable of ' 38,460.77 million asMarch 31, 2025 from a joint venture on account of transfer of 9project companies to the said joint venture, which is measured atfair value through profit and loss.
Due to the nature of the business in the infrastructure projects,the Company is exposed to heightened risk in respect of theimpairment of the loans granted to the aforementioned relatedparties and appropriateness of assumptions used in fair valuationof other receivables due from the said joint venture.
There is a significant judgment and estimation uncertaintyinvolved in assessing the impairment of above loans madeto related parties, because it is dependent on number ofinfrastructure projects being completed as per the scheduletimeline and generation of future cash flows.
B) Recoverability of loans/advances to subsidiaries and jointventures and fair valuation of other receivable from joint venture
Our procedures included:
1. Evaluated the design and implementation and verified, on a testcheck basis the operating effectiveness of key internal controlsplaced around the impairment assessment process of the loans/advances to subsidiaries and joint ventures and assumptions usedin fair valuation of other receivable from joint venture.
2. Examined the key controls in place for issuing new loans andevidenced the Board of Directors approval obtained.
3. Assessed Group's identification of CGU with reference to theguidance in the applicable accounting standards.
4. Assessed the net worth of subsidiaries and joint ventures based onlatest available financial statements along with assessing that thosesubsidiaries/joint ventures have historically been profit-making andare servicing the principal and interest schedule on timely basis.
There is also an estimation uncertainty involved in determiningfair value of other receivables which rely on key assumptionssuch as timing of collection, the discount rate, and the probabilityof success in respect of the claims.
Obtained Company's assessment of the impairment of the loans/advances and fair valuation of other receivables, which includescash flow projections over the duration of the loans/advancesand other receivables. These projections are based on underlyinginfrastructure project cash flows and claims to be settled with thecustomers.
Assessed the work performed by management as well asmanagement's external valuation expert, including the valuationmethodology and the key assumptions used. Further, also assessedthe competence, capabilities and objectivity of the expert used bythe management in the process of evaluating impairment modelsand fair valuation, as appropriate.
1 nvolved our internal valuation specialist, where appropriate, toevaluate the reasonability of the methodology, approach andassumptions used in the valuation.
8.
Obtained confirmations to evaluate the completeness andexistence of loans/advances to subsidiaries and joint venturesand other receivables from joint venture as on March 31,2025.
9.
Verified the classification and adequacy of disclosures of theloans/advances and other receivables.
Measurement/ recognition of construction Revenue (refer Note 20
Measurement of construction Revenue.
to the standalone financial statements)
Revenue from construction contracts is recognized using percentageof completion method (“POC”) as per the input method prescribed
1.
Evaluated the accounting policy for revenue recognition of the
under Ind AS 115 - Revenue from contracts with customers (“Ind AS
Company and assessed compliance of the policy in terms of
115”) where performance obligations are satisfied over time.
principles enunciated under Ind AS 115.
It represents 65.94% of the total revenue from operations of theCompany.
2.
Evaluated the design and implementation and verified, on a testcheck basis the operating effectiveness of key controls around thecontract price (including claims), estimation of costs to complete
The Company has construction contracts whose revenue recognition
and billings to customers and management's testing of these
is dependent on a high level of judgement over the percentage ofcompletion. It is based on their best estimate of the costs to complete,
attributes.
valuation of contractual variations, litigating claims and ability to
3.
Obtained and verified on test check basis the contract and other
deliver the contract within the contractual time limit.
related contractual provisions including contractually agreeddeliverables, entitlement to variable considerations, termination
The Company's current year revenue from construction contracts anda significant amount of its expenses incurred, arise from transactionswith related parties. These related parties are principally subsidiaries/joint ventures of the Company.
rights, penalties for delay, etc. to understand the nature and scopeof the arrangements with the customer.
Assessed key judgements inherent in the estimation of significantconstruction contract projects. It includes comparing the stage-of
The Company uses an input method based on costs incurred to
completion and costs to completion on significant projects using
measure progress of the projects. Under this approach, the Companyrecognises revenue based on the costs incurred to date relative to the
Lender's Engineer latest certificate/Monthly Progress report.
estimated total costs to complete the performance obligation. Profit is
Assessed the estimated costs to complete, variations in contract
not recognised until the outcome of the contract is fairly certain.
price and contract costs and sighted underlying invoices, signedcontracts/ statements of work completed for ongoing projects.
Revenue is a key performance indicator of the Company. Accordingly,there can be a risk that the Company may influence the judgementsand estimates of revenue recognition in order to achieve performancetargets to meet market expectations or incentive links to performancefor reporting period.
Obtained the Company's process for identifying related partiesand recording related party transactions. Assessed Company'skey controls in relation to the assessment and approval of relatedparty transactions and examined Company's disclosures in respectof the transactions.
Revenues, total estimated contract costs and profit recognition maydeviate significantly from original estimates based on new knowledge
Verified on test check basis, the approvals of the Audit Committee
about cost overruns and changes in scope/ term of a construction
and Board of Directors for related party transactions.
contract and outcome of litigations.
Verified samples of manual journals posted to revenue to identify
In view of above, the above matter has been identified as a key audit
unusual items.
matter.
Obtained management policy with respect to recognition ofrevenue in case of litigating matters.
10. Reviewed the legal opinion obtained from the management
to determine whether any adjustments on account of claimsrecognised in the previous periods needs to be made.
11
Assessed the disclosures made by the management is incompliance of Ind AS -115
Fair Valuation of Investments in InvIT & Related Assets (refer Note
Fair Valuation of Investments in InvIT & Related Assets
4, 21 and 29 to the standalone financial statements)
With regulatory changes relating to operations of InfrastructureInvestment Trust, coupled with changes in business environment
Discussed the changes in the regulatory/business environment
and emerging business opportunities, the Company has aligned its
and understood from the management the rationale for change in
business model with respect to its investments in IRB Infrastructure
the business model w.r.t. investment in InvIT & Related Assets.
Trust and related assets (‘InvIT & Related Assets').
Evaluated the appropriateness of management's assessment of
Consequently, the Company assessed its eligible investments,
the applicability of the criteria specified in Ind AS 28 read with Ind
including interest in joint ventures meeting the required conditions
AS 27 for measurement at FVTPL including technical accounting
under Ind AS 28, “Investment in Joint ventures and Associates” read
and other memos obtained by the management from external
with Ind AS 27 “Separate Financial Statements” for measurement at
experts.
fair value through profit and loss account (“FVTPL”).
Evaluated the design and implementation and verified, on a test
Accordingly, on initial recognition, investments in InvIT & Related
check basis the operating effectiveness of key internal controls
Assets have been measured at FVTPL in accordance with Ind AS 109
placed around the assessment process of valuation of investments
which were previously measured at cost in accordance with Ind AS
in InvIT & other assets.
27. The one-time impact of reclassification and fair valuation has been
Assessed the work performed by management as well as
presented as ‘Exceptional items' in Statement of Profit and Loss.
Subsequent changes on the measurement of these investments atfair value have been presented under ‘Revenue from Operations'.
management's external valuation expert, including the valuationmethodology and the key assumptions used. Further, alsoassessed the competence, capabilities and objectivity of theexpert used by the management in the process of valuations.
In measuring these investments, valuation methods are used basedon inputs that are not directly observable from market information and
1 nvolved our internal valuation specialist, where appropriate, to
certain other unobservable inputs. The Management has also availed
evaluate the reasonability of the methodology, approach and
the services of an independent valuation expert in this regard.
assumptions used in the valuations.
The valuation of these assets is a focus area of our audit as it ishighly dependent on estimates (including various assumptions andtechniques used) which contain assumptions that are not observablein the market.
6. Assessed the adequacy of disclosures made by the Company inthe standalone financial statements.
Given the inherent subjectivity and judgement involved in assessingwhether the criteria for measurement at FVTPL as per Ind AS 28 readwith Ind AS 27 is met, the estimation uncertainties involved in thevaluation of the above investments, materiality of amounts involved,judgements involved in selecting the valuation basis, and use ofunobservable inputs, we determined this to be a key audit matter.
Information Other than the Standalone FinancialStatements and Auditor’s Report Thereon
The Company’s Board of Directors is responsible for theother information. The other information comprises theinformation included in the Annual report but does not includethe standalone financial statements and our auditor’s reportthereon. The Annual Report is expected to be made availableto us after the date of this auditor’s report.
Our opinion on the standalone financial statements does notcover the other information and we will not express any formof assurance conclusion thereon.
In connection with our joint audit of the standalone financialstatements, our responsibility is to read the other informationidentified above when it becomes available and, in doingso, consider whether the other information is materiallyinconsistent with the standalone financial statements or ourknowledge obtained in the audit, or otherwise appears to bematerially misstated.
When we read the Annual Report, if we conclude thatthere is a material misstatement therein, we are required tocommunicate the matter to those charged with governanceunder SA 720 ‘The Auditor’s responsibilities Relating to OtherInformation’.
Responsibilities of Management and Board ofDirectors for the Standalone Financial Statements
The Company’s Board of Directors is responsible for thematters stated in section 134(5) of the Act with respect tothe preparation of these standalone financial statementsthat give a true and fair view of the financial position,financial performance, changes in equity and cash flows ofthe Company in accordance with the accounting principlesgenerally accepted in India, including the AccountingStandards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequateaccounting records in accordance with the provisions of theAct for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies;making judgments and estimates that are reasonable andprudent; and design, implementation and maintenance ofadequate internal financial controls, that were operating
effectively for ensuring the accuracy and completenessof the accounting records, relevant to the preparation andpresentation of the standalone financial statement that givea true and fair view and are free from material misstatement,whether due to fraud or error.
In preparing the standalone financial statements, theManagement and Board of Directors are responsible forassessing the Company’s ability to continue as a goingconcern, disclosing, as applicable, matters related to goingconcern and using the going concern basis of accountingunless the Board of Directors either intends to liquidate theCompany or to cease operations, or has no realistic alternativebut to do so.
The Board of Directors are also responsible for overseeingthe Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of theStandalone Financial Statements
Our objectives are to obtain reasonable assurance aboutwhether the standalone financial statements as a wholeare free from material misstatement, whether due to fraudor error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance,but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, theycould reasonably be expected to influence the economicdecisions of users taken on the basis of these standalonefinancial statements.
We give in “Annexure A” a detailed description ofAuditor’s responsibilities for Audit of the StandaloneFinancial Statements.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order,2020 (“the Order”), issued by the Central Governmentof India in terms of sub-section (11) of section 143 of theAct, we give in “Annexure B” a statement on the mattersspecified in paragraphs 3 and 4 of the Order, to theextent applicable.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information andexplanations which to the best of our knowledgeand belief were necessary for the purposes ofour audit.
(b) In our opinion, proper books of account as requiredby law have been kept by the Company so far as itappears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit andLoss including other comprehensive income, theStatement of Changes in Equity and the Statementof Cash Flow dealt with by this Report are inagreement with the books of account.
(d) I n our opinion, the aforesaid standalone financialstatements comply with the Accounting Standardsspecified under Section 133 of the Act.
(e) On the basis of the written representations receivedfrom the directors as on March 31, 2025 takenon record by the Board of Directors, none of thedirectors are disqualified as on March 31, 2025from being appointed as a director in terms ofSection 164 (2) of the Act.
(f) With respect to the adequacy of the internalfinancial controls with reference to standalonefinancial statements of the Company and theoperating effectiveness of such controls, refer toour separate Report in “Annexure C”.
(g) With respect to the other matters to be included inthe Auditor’s Report in accordance with Rule 11 ofthe Companies (Audit and Auditors) Rules, 2014, inour opinion and to the best of our information andaccording to the explanations given to us:
i. The Company has disclosed the impact ofpending litigations on its financial position in itsstandalone financial statements - Refer Note31 to the standalone financial statements;
ii. The Company did not have any long¬term contracts for which there were anymaterial foreseeable losses. The Companyhas made provision, as required under theapplicable law or accounting standards, formaterial foreseeable losses on derivativecontracts - Refer Note 48 to the standalonefinancial statements;
iii. There has been no delay in transferringamounts, required to be transferred, to the
Investor Education and Protection Fund bythe Company.
iv. a) The Management has represented that,
to the best of its knowledge and belief,no funds have been advanced or loanedor invested (either from borrowed fundsor share premium or any other sources orkind of funds) by the Company to or in anyother person(s) or entity(ies), includingforeign entities (“Intermediaries”), withthe understanding, whether recorded inwriting or otherwise, that the Intermediaryshall, directly or indirectly lend or investin other persons or entities identified inany manner whatsoever by or on behalf ofthe Company (“Ultimate Beneficiaries”) orprovide any guarantee, security or the likeon behalf of the Ultimate Beneficiaries.
b) The Management has represented,that, to the best of its knowledge andbelief, no funds have been receivedby the Company from any person(s) orentity(ies), including foreign entities(Funding Parties), with the understanding,whether recorded in writing or otherwise,as on the date of this audit report, thatthe Company shall, directly or indirectly,lend or invest in other persons or entitiesidentified in any manner whatsoeverby or on behalf of the Funding Party(“Ultimate Beneficiaries”) or provide anyguarantee, security or the like on behalfof the Ultimate Beneficiaries.
c) Based on the audit procedures performedthat have been considered reasonableand appropriate in the circumstances,and according to the information andexplanations provided to us by theManagement in this regard nothing hascome to our notice that has caused usto believe that the representations undersub-clause (i) and (ii) of Rule 11(e) asprovided under (vi)(a) and (vi)(b) above,contain any material mis-statement.
v. The interim dividend declared and paid by theCompany during the year and until the date ofthis audit report is in accordance with section123 of the Companies Act 2013.
The interim dividend paid by the Companyduring the year in respect of the same
during the course of our audit, we did not comeacross any instance of audit trail feature beingtampered with. Additionally, the audit trail hasbeen preserved by the Company as per thestatutory requirements for record retention.
declared for the previous year is in accordancewith section 123 of the Companies Act 2013 tothe extent it applies to payment of dividend.
vi. Based on our examination, which includedtest checks, the Company has used anaccounting software for maintaining its booksof account which has a feature of recordingaudit trail (edit log) facility and the same hasoperated throughout the year for all relevanttransactions recorded in the software. Further,
3. I n our opinion, according to information, explanationsgiven to us, the remuneration paid by the Company toits directors is within the limits laid prescribed underSection 197 read with Schedule V of the Act and therules thereunder.
For Gokhale & Sathe For M S K A & Associates
Chartered Accountants Chartered Accountants
ICAI Firm Registration No.103264W ICAI Firm Registration No.105047W
Chinmaya Deval Siddharth Iyer
Membership No.: 148652 Membership No.: 116084
UDIN: 25148652BMKSLL4726 UDIN: 25116084BMNYBP6309
Mumbai Mumbai
Date: 19 May 2025 Date: 19 May 2025