FUTURE ADANI PORTS Auditors Report

Report on the Ind AS financial statements


We have audited the accompanying standalone Ind AS financial statements of Adani Ports and Special Economic Zone Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss including other comprehensive income, Cash Flow Statement and Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.


Management’s Responsibility for the Ind AS financial statements


The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company 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 the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


Auditor’s Responsibility


Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.


An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.


Opinion


In our opinion and to the best of our information and according to the explanations given to us, the standalone Ind AS financial statements give the information required by the Act 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 Company as at March 31, 2017, its profit and its cash flows for the year ended on that date.


Emphasis of Matter


We draw attention to:


(a) Note 38(l) of the accompanying standalone Ind AS financial statements regarding recognition of Minimum Alternate Tax (‘MAT’) credit entitlement in respect of certain interest income based on the consideration that the Company would be able to claim tax holiday benefits on the same, as per provisions of section 80IAB of the Income Tax Act, 1961, more fully described in the said note.


(b) Note 41(a) of the accompanying standalone Ind AS financial statements regarding the basis of recognition of certain projects service revenue during the earlier year, as more fully described in the said note.


(c) Note 4(c)(i) of the accompanying standalone Ind AS financial statements which indicates that one of the subsidiary company has accumulated losses and its net worth has been eroded, the subsidiary company has incurred a net cash loss during the current year and previous year. These conditions along with other matters set forth in Note 4(c)(i), indicate the existence of material uncertainty that may impact the subsidiary company’s ability to continue as a going concern. However, the financial statements of the subsidiary company have been prepared on going concern basis for the reasons stated in the said Note.


Our opinion is not qualified in respect of these matters.


Report on Other Legal and Regulatory Requirements


1. As required by the Companies (Auditor’s report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.


2. As required by section 143 (3) of the Act, 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) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;


(c) The Balance Sheet, Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;


(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended;


(e) On the basis of written representations received from the directors as on March 31, 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017, from being appointed as a director in terms of section 164 (2) of the Act;


(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure 2” to this report;


(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:


i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 38 to the standalone Ind AS financial statements;


ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 15 to the standalone Ind AS financial statements;


iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company


iv. The Company has provided requisite disclosures in Note 43 to these standalone Ind AS financial statements as to the holdings and dealing in Specified Bank Notes as defined in the notification S.O. 3407 (E) dated November, 08, 2016 of the Ministry of Finance during the period from November 8, 2016 to December 30, 2016. Based on the audit procedure performed and the representation provided to us by the management we report that the disclosures are in accordance with the books of accounts maintained by the Company more so described in Note 43.


Annexure 1 referred to in Paragraph 1 of Report on Other Legal and Regulatory Requirements of our report of even date for the year ended March 31, 2017


(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.


(b) The Company has regular programme of physical verification of its fixed assets through which all the fixed assets are verified in a phased manner, over a period of three years. In our opinion, physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.


(c) According to information and explanations given by the management, the title deeds of immovable properties, included in fixed assets except for the immovable property in the nature of reclaimed land having Gross Book Value (GBV) aggregating RS.202.21 crores and Net Book Value (NBV) aggregating RS.171.87 crores and residential flats having GBV of RS.139.94 crores and NBV of RS.125.63 crores which are not registered in the name of the Company. Also refer note 3(a) of the standalone Ind AS financial statements.


(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.


(iii) (a) The Company has granted loans to a company covered in the register maintained under section 189 of the Companies Act, 2013. In our opinion and according to the information and explanations given to us, the terms and conditions of the grant of such loans are not prejudicial to the company’s interest.


(b) The Company has granted loans to a firm covered in the register maintained under section 189 of the Companies Act, 2013. The schedule of repayment of principal and payment of interest has been stipulated for the loans granted and the receipts are regular and there were no instalment of loan due during the year.


(c) There are no amounts of loans granted to companies, firms or other parties listed in the register maintained under section 189 of the Companies Act, 2013 which are overdue for more than ninety days.


(iv) In our opinion and according to the information and explanations given to us, and considering the legal opinion taken by the Company on applicability of section 185 of the Companies Act, 2013, in respect of certain loan transaction and that the same have been given in the ordinary course of the business, the Company has complied with the provisions of section 185 of the Companies Act 2013. Further, based on the information and explanations given to us, being an infrastructure company, provision of section 186 of the Companies Act, 2013 is not applicable to the Company and hence not commented upon.


(v) The Company has not accepted any deposits from the public.


(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under clause 148(1) of the Companies Act, 2013, for the services of the Company


(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees’ state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues applicable to it.


(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income tax, service tax, sales tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.


(c) According to the records of the Company, the dues outstanding of service tax, customs duty, excise duty and income tax on account of any dispute, are as follows:


































































































Name of the statute



Nature of Tax



Amount (Rs. in Crores)



Period to which the amount relates



Forum where dispute is pending



Customs Act, 1962



Custom Duty



2.00



June, 2008



Commissioner of Customs & Central Excise, Ahmedabad



Customs Act, 1962



Custom Duty



0.14



July, 2003



Assistant Commissioner of Customs, Mundra



Customs Act, 1962



Custom Duty



0.25



August, 2007



Deputy Commissioner of Customs, Mundra



Finance Act, 1994



Service Tax



6.72



December 2004 to March 2006



Supreme court



Service Tax



0.56



October 2003 to August 2005



Commissioner (Appeals) Rajkot



Service Tax



304.71



April 2006 to September 2011



High Court of Gujarat



Service Tax



0.61



September 2009 to March 2010



Commissioner of Service Tax, Ahmedabad.



Service Tax



190.04



April 2011 to March 2014



Commissioner / Addl. Commissioner of Service Tax, Ahmedabad



Finance Act, 1994



Service Tax



6.72



April 2004 to August 2009



High Court of Gujarat



Service Tax



0.17



April 2009 to March 2011



Commissioner of Service Tax, Ahmedabad



Income Tax Act, 1961



Income Tax



75.48



AY 2009 - 10 to AY 2011 - 12



Income Tax Appellate Tribunal CIT (Appeal)



Income Tax



6.74



AY 2012 - 13 to AY 2013 - 14



(viii) In our opinion and according to information and explanations given by the management, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders. The Company does not have any outstanding dues to government during the year.


(ix) In our opinion and according to the information and explanations given by the management and on an overall examination of the balance sheet, the monies raised by way debt instruments in the nature of foreign currency bonds and term loans were applied for the purposes for which those were raised, though idle/surplus funds which were not required for immediate utilization have been temporarily invested in fixed deposits / mutual funds.


(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.


(xi) According to the information and explanations given by the management, we report that the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.


(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.


(xiii) According to the information and explanations given by the management, transactions with related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the standalone Ind AS financial statements, as required by the applicable accounting standards.


(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and hence, not commented upon.


(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.


(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.



For S R B C & CO LLP


Chartered Accountants


ICAI Firm Registration Number: 324982E/E300003


per Arpit K Patel


Place of Signature: Ahmedabad Partner


Date: May 24, 2017 Membership Number: 34032

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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