We have audited the accompanying Standalone Ind AS Financial Statements of Ircon International Limited (“the Company") which comprise the Balance Sheet as at 31st March, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and notes to the financial statements including a summary of the material accounting policies and other explanatory information in which are incorporated the Returns for the year ended on that date audited by branch auditors of the Company's branches at Algeria, Bangladesh, Sri Lanka and Myanmar (hereinafter referred to as the “Standalone Ind AS Financial Statements").
We have audited the financial statements of the three (3) foreign branches situated at South Africa, Malaysia and Sri Lanka (Indian part) for the year ended 31st March, 2024. However, we have not visited any foreign branch and the relevant information for the audit purpose was provided to us by the management at corporate level.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013 (“the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules,2015 (“Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2024, the profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.
This report has been revised consequent upon observations of Comptroller of Auditor General of the India during the course of audit u/s 139(5) of the Companies Act, 2013 as amended, for the year ended on 31st March 2024, and this report supersedes our earlier report dated 21st May, 2024 under section 143 of the Companies Act, 2013.
Basis for Opinion
We conducted our audit of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing ("SAs") specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI") together with the ethical requirements that are relevant to our audit of the Standalone Ind AS Financial Statements under the provisions of the Act and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence obtained by us and other auditors in terms of their reports referred to it "Other Matter" paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS Financial Statements.
Emphasis of Matters
Reference is invited to footnote no. (iii) of Note no. 8.1 of the Standalone Ind AS Financial Statements wherein it has been stated that financial statements of one of the jointly controlled entities i.e. Indian Railway Stations Development Corporation Ltd. (IRSDC) have been prepared on liquidation basis and that the Company does not foresee any impairment in the value of investments held by it in IRSDC.
Our opinion is not modified in respect of the above matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Ind AS Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Ind AS 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.
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Key Audit Matter
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How our audit addressed the matter
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Revenue Recognition in terms of Ind AS 115 "Revenue
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- Our audit procedures included considering the
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from Contracts with Customers"
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appropriateness of the Company's revenue recognition
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Accounting Standard on Revenue which prescribes five
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accounting policies and assessing compliance with the
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steps revenue recognition model.
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policies in terms of the applicable accounting standards. We evaluated the effectiveness of control over the
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The Company recognizes revenue for a performance obligation satisfied over time after estimating its progress towards complete satisfaction of the performance obligation. The recognition of revenue requires assessments and judgments to be made on changes in work scope, claims (compensation, rebates etc.) and other payments to the extent performance obligation is satisfied. The company measures the performance obligation by applying input method. In the contracts where performance obligation cannot be measured
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preparation of information that are design to ensure the completeness and accuracy. We selected a sample of contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and satisfaction of performance obligations. We also examined costs included within WIP balances on a sample basis and tested their recoverability through comparing the net realizable values as per the agreements with estimated cost to complete.
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by input method, the output method is applied, which faithfully depict the Company's performance towards complete satisfaction of the performance obligation.
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- We performed following substantive procedures over revenue recognition with specific focus on whether there is single performance obligation or multiple performance obligations in the contract and whether the performance
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During order fulfillment, contractual obligations may need to be reassessed. In addition, change orders or cancelations have to be considered. As a result, total
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obligation is being satisfied over the period of time or at a point in time:
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estimated project costs may exceed total contract
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• Read, analyzed and identified the distinct performance
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revenues and therefore require immediate recognition of
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obligations in these contracts.
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the expected loss.
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• Compared these performance obligations with that
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Ind AS 115 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to
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identified and recorded by the Company.
• Considered the terms of the contracts to verify
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contracts with their customers.
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the transaction price used to allocate to separate performance obligations.
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The application of the revenue accounting standard
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involves certain key judgements relating to -i. identification of distinct performance obligations;
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• Checked whether the performance obligation is being satisfied over the period of time or at a point in time.
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• Performed analytical procedures for reasonableness of
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ii. determination of transaction price of the identified performance obligations;
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revenues disclosed
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iii. the appropriateness of the basis used to measure
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revenue recognized at a point in time or over time.
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Additionally, revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. Revenue recognition from these judgements were identified as a Key Audit Matter and required a higher extent of audit effort.
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Refer Note no. 39 to the Standalone Ind AS Financial Statements.
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Contingent Liabilities
There are a number of litigations pending before various forums against the Company and the management's judgement is required for estimating the amount to be disclosed as contingent liability. We identified this as a key audit matter because the estimates on which these amounts are based involve a significant degree of management judgement in interpreting the cases.
Refer Note no. 37 of the Standalone Financial Statements, read with the Accounting Policy No. 2.2.16.
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We have obtained an understanding of the Company's procedure in respect of estimation and disclosure of contingent liabilities and adopted the following audit procedure:
• Reviewing the current status and material developments of legal matters.
• Examining recent orders from competent authorities and/or communication received from various authorities, judicial forums and follow-up action thereon.
• Review and analysis of evaluation of the contentions of the company through discussions, collection of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues.
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System Environment and internal Controls
The Company is having SAP system in place and only FI-CO & Payroll module is Implemented and other system like inventory, MM Module etc. is under the process of implementation. Further, the SAP project system module (PS) is required to generate the projects invoices with integration support.
The IT system in the company are not fully automated and manual interventions are in place in preparing and reporting of financial statements. This required a high degree of auditor judgement in evaluating the audit evidence and a higher extent of audit effort.
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Our procedures included but were not limited to:
• Discussing with management and IT department on the IT environment and consideration of the key financial processes to understand where IT systems were integral to the financial reporting process.
• Testing the design of the key IT controls relating to financial reporting systems of the company.
• We also tested the company's controls around system interfaces.
• We applied substantive audit procedures to ensure that areas where there are manual controls are operating effectively.
• Our audit planning and procedures also includes the various reports which the system generates and without which it is difficult for us to collect the data of the various heads of the Balance sheet.
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Information Other than the Standalone Ind AS Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Company's Annual Report but does not include consolidated financial statements, the Standalone Ind AS Financial Statements and our auditor's report thereon.
Our opinion on the Standalone Ind AS 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 Ind AS 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 Ind AS 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 Management and Those Charged with Governance for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of 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, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS specified under section 133 of the Act. This responsibility also 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 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 Ind AS 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 Ind AS Financial Statements, Management and the Board of Directors are responsible for assessing the Company'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 either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Company's Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind AS 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 Ind AS 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 controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system with reference to Standalone Ind AS Financial Statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.
• Conclude on the appropriateness of management's 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 Company'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 Standalone Ind AS 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 Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Standalone Ind AS Financial Statements, including the disclosures, and whether the Standalone Ind AS Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Standalone Ind AS Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Ind AS 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 Ind AS 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 financial controls 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 Ind AS Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's 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.
Other Matters
• We did not audit the financial statements / financial information of four (4) foreign branches included in the Standalone Ind AS Financial Statement of the company whose financial statements/financial information reflect total assets of Rs. 831.76 Crores (Previous year Rs. 709.32 Crores) as at 31st March 2024, total revenue of Rs. 548.44 Crores (Previous Year Rs. 401.53 crores) and total PBT of Rs. 112.41 crores (previous year Rs. 84.32 crores), for the year ended on that date. The financial statements/information of these branches have been audited by the branch auditors whose
reports have been furnished to us and our opinion in so far as it relates to the amounts and disclosure included in respect of these branches, is based solely on the reports of such branch auditors.
• The financial statements include profit/(loss) of (-) Rs.0.08 Crores (Previous Year Rs.0.08 Crores), the company's share in two (2) integrated joint operations (unincorporated) accounts which have been audited by other firms of chartered Accountants and profit/ (loss) of Rs.0.90 Crores (Previous Year Rs. 0.47 Crores) the company's share in two (2) joint operations accounts certified by the management for the year ended March 2024.
• Reference is invited to Note no. 46 (ii) of the Standalone Ind AS Financial Statements regarding amendments made in the IndAS-1. As explained by the Management there is no financial impact of such amendments.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 ("the Order"), issued by the Central Government in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act, based on our audit 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) 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 and proper returns adequate for the purpose of our Audit has been received from branches not visited by us.
(c) The reports on the accounts of branch offices of the Company audited under section 143(8) of the Act by branch auditors have been sent to us and have been properly dealt with by us in preparing this report.
(d) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
(e) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Ind AS specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended).
(f) Being a government company, provision of section 164(2) of the Act are not applicable pursuant to the notification No. G.S.R.463(E) dated 5 June 2015, issued by the Central
Government.
(g) 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 B".
(h) Being a government company, provision of section 197 of the Act are not applicable vide notification no. G.S.R. 463 (E) dated 5th June 2015, issued by the Central Government.
(i) 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, as amended, 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 no. 37 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 Refer Note no. 19.2 to the Standalone Ind AS Financial Statements. The Company did not have any derivative contracts.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
iv. a) The Management has represented that,
to the best of its knowledge and belief, as disclosed in Note no. 45 to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Company or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
b) The Management has represented that, to the best of its knowledge and belief as disclosed in Note no. 45 to the accounts, no funds have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend
or invest in other persons or entities identified in any manner whatsoever (“Ultimate Beneficiaries") by or on behalf of the Funding Parties or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
c) Based on the audit procedures that
have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. As stated in Accounting Policy No. 2.2.15 to
the standalone Ind AS Financial Statements
a) The final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with section 123 of the Companies Act 2013 to the extent applicable.
b) The interim dividend declared and paid by the Company during the year and until the date of this report is in accordance with section 123 of the Act.
c) The Board of Directors of the company have proposed final dividend for the current year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend proposed is in accordance with section 123 of the Act to the extent applicable.
vi. Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended 31st March, 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of the audit trail feature being tempered with.
As proviso to Rule 3(1) of the Companies (Account) Rules 2014 is applicable from 1st April 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March, 2024.
3. As required by Section 143(5) of the Act and as per directions issued by Comptroller and Auditor General of India, we report that:
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S.
No
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Directions
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Auditor's Replies
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1.
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Whether the company has system in place to process all the accounting transactions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.
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The Company is using SAP S/4 Hana system for all its projects located in India and also in its foreign branches. As per information and explanation provided to us no accounting transactions have been processed outside the IT system except income billing for which no financial implication were observed.
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2.
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Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/ interest etc. made by a lender to the company due to the company's inability to repay the loan? If yes, the financial impact may be stated. Whether such cases are properly accounted for? (In case, lender is a government company, then this direction is also applicable for statutory auditor of lender company).
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No, the Company does not have any case of restructuring of an existing loan or cases of waiver/write off of debts/ loans/interest etc. made by a lender to the company.
However, the Company has given a loan to one of its subsidiary, Ircon PB Tollway Ltd. (IPBTL). On request of the subsidiary company, the holding company has waived off interest for the current year. However, the company has booked interest on the basis of fair valuation as per Ind AS amounting to Rs. 16.31 crores.
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3.
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Whether funds (grants/subsidy etc.) received/ receivable for specific schemes from Central/State Government or its agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation.
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According to the information and explanation given to us and as per examination of records, no funds have been received/ receivable for any specific scheme from Central/State Government or its agencies during the financial year 2023-24.
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For Ramesh C Agrawal & Company
Chartered Accountants Firm Registration No: 001770C
Sd/-
Sanjay Agrawal
(Partner)
Date : July 01, 2024 Membership No:072867
Place: New Delhi UDIN : 24072867BKHCUG4294
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