S.R. DINODIA & Co. LLP CHARTERED ACCOUNTANTS K-39, Connaught Place, New Delhi-110001 INDIA Ph. : +91-(0) 011-4370 3300 Fax: +91(0) 011-4151 3666 Independent Auditor's Report To, The Board of Directors, Dedicated Freight Corridor Corporation of India Limited (DFCCIL) New Delhi Report on the Audit of the Special Purpose Project Financial Statements Qualified Opinion We have audited the accompanying Special Purpose Project Financial Statements (hereinafter referred as PFS) of Eastern Dedicated Freight Corridor Project III (hereinafter referred to as "EDFC-l1l" or the "Project") financed by the International Bank for Reconstruction and Development (IBRD) under Loan agreement 8513-IN between Dedicated Freight Corridor Corporation of India Limited and IBRD and implemented by Dedicated Freight Corridor Corporation of India Limited (hereinafter referred as "DFCCIL" or "Implementing Agency"). These financial statements comprise of the following: a. Statement of Sources and Application of Funds and Expenditure (ILUFR-1) for the year April 1, 2019 to March 31, 2020 (Annexure-1) and the accompanying notes, b. A list of all individual Withdrawal Applications during FY 2019-20 (Annexure-II), and c. A Statement of Reconciliation of Claims to Total Applications of Funds for the year ended March 31, 2020 (Annexure-Ill). In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid Special Purpose Project Financial Statements give a true and fair view of the sources and application of funds and expenditure under the Project for the year ended on March 31, 2020, the individual funds claimed from IBRD under the Project for the year ended on March 31, 2020 and reconciliation of claims to total applications of funds for the year ended on March 31, 2020, in accordance with the financial reporting provisions of Section 5.09 of the General Conditions of Loan Agreement No. 8513-IN dated October 21, 2016. Basis for Qualified Opinion Figures of sources of Funds in IUFR-1 submitted to IBRD for the period March 1, 2020 to March 31, 2020 and as attached in Annexure 1 contain certain errors as given hereunder: Particular Opening Balance 01.03.2020 to For FY ending Project to Date as on 01.04.2019 31.03.2020 31,03.2020 as on 31.03.2020 Sources of Funds Amount received from IBRD 5,49,57,29,889 40,16,63,701 4,52,92,41,408 10,02,49,71,297 Counterpart Funding - Equity 3,18,99,85,131 50,53,60,217 2,97,58,87,680 6,16,58,72,811 Total 8,68,57,15,020 90,70,23,918 7,50,51,29,088 16,19,08,44,108 Correct figures of IUFR-1 for the period March 1, 2020 to March 31, 2020 are as follows: Particular Opening Balance 01.03.2020 to For FY ending Project to Date as on 01.04.2019 31.03.2020 31.03.2020 as on 31.03.2020 Sources of Funds Amount received from IBRD 5,49,57,29,891 24,54,63,219 4,77,46,74,627 10,27,04,04,518 Counterpart Funding - Equity 3,18,99,85,129 66,15,60,699 2,73,04,54,460 5,92,04,39,589 Total 8,68,57,15,020 90,70,23,918 7,50,51,29,087 16,19,08,44,107 0DA E-mail: srdinodia@srdinodia.com Website: www.srdinodia.com LLPIIN :AAB-7484 We conducted our audit in accordance with the Standards on Auditing issued by Institute of Chartered Accountants of India (ICAI). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Special Purpose Project Financial Statements section of our report. We are independent of the implementing agency in accordance with the ICAl's Code of Ethics for undertaking this assignment, and we have fulfilled our other ethical responsibilities in accordance with ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for qualified opinion. Responsibilities of Management and those charged with Governance for the Special Purpose Project Financial Statements The Management of the implementing agency is responsible for the preparation and fair presentation of the Special Purpose Project Financial Statements in accordance with the financial reporting framework as described in Note 1 of Annexure 1 to the Special Purpose Project Financial Statements and for such internal controls as management determines is necessary to enable the preparation of Special Purpose Project Financial Statements that are free from material misstatement, whether due to fraud or error. The Management and those charged with governance are responsible for overseeing the implementing agency's financial reporting process. Auditor's Responsibilities for the Audit of the Special Purpose Project Financial Statements Our objectives are to obtain reasonable assurance about whether the Special Purpose Project 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 the Standards of Auditing 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 Standards of Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * identify and assess the risks of material misstatement of the Special Purpose Project 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 controls. * obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. * evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * evaluate the overall presentation, structure and content of the Special Purpose Project Financial Statements, including the disclosures and whether these financial statements present the Project's operations and underlying transactions and events in a manner that achieves fair presentation in accordance with the financial reporting provisions described in Note 1 of Annexure 1 to the Special Purpose Project 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 controls that we identify during our audit. We 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. Other Matter The implementing agency - Dedicated Freight Corridor Corporation of India Limited has prepared a separate set of entity financial statements for the year ended March 31, 2020 on which we have issued a separate auditor's report to the Shareholders dated August 26, 2020 and expressed an unmodfied audit opinion. Report on Other Legal and Regulatory Requirements Further to our qualified opinion and basis therefore as given above, we further 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. Proper books of accounts have been kept by the implementing agency for Project purposes so far as appears from our examination of those books; c. The PFS dealt with by this report is in agreement with the books of accounts except entries recorded in the books of accounts on accrual basis as per regular system of accounting employed by DFCCIL. However, amounts recorded in the PFS are derived from the books of accounts; d. The Project funds were utilized for the purposes for which they were intended; e. Expenditures, including assets created under the Project, shown in the PFS are eligible for financing under the loan agreement and these are exclusively financed through the Project Funds and no other sources of funds have been received by DFCCIL for incurring these expenditure f. Interim Financial Reports (IFR) submitted by the Project management can be relied upon to support applications for withdrawal of the Loan, and adequate supporting documentation has been maintained to support these claims; g. The accounting and internal control systems underlying the project, including material compliance with the Project Implementation Manual, and oversight over the Project funds were adequate and maintained throughout the audit period. h. As per the information available and explanation given to us, the clause related to Procurement by Dedicated Freight Corridor Corporation of India Limited in line with the agreed procedures laid down in the Project Implementation Manual is not applicable to the Project for the year under audit, as there was no procurement contract executed during the year which was not prior reviewed by IBRD. Basis of Accounting and Restriction on Distribution and Use We draw attention to Note 1 of Annexure 1 to the Special Purpose Project Financial Statements describing the basis of accounting. The PFS is prepared to assist the DFCCIL to meet the financial reporting requirements of the Loan Agreement No. 8513-IN dated October 21, 2016 between Dedicated Freight Corridor Corporation of India Limited and IBRD in respect of preparation of the Special Purpose Project Financial Statements in a manner to reflect the operations, resources and expenditures related to the Project. As a result, these Special Purpose Project Financial Statements may not be suitable for another purpose. For S.R. Dinodia & Co. LLP. Chartered Accountants, Firm's Registration Number 001478N/N500005 (Sandeep Dinodia) Partner Membership Number 083689 UDIN: 20083689AAAAIL8936 Place of Signature: New Delhi Date: 30th December, 2020 Annexure I Dedicated Freight Corridor Corporation of India Limited : EDFC-III Project IBRD Loan No - 8513-IN Statement of Sources and Application of Funds and Expenditure for Financial Year Ending March 31, 2020 (Amount in Z) Opening Balance For the year ended Project to Date S Particulars (cumm) 31.03.2020 (cumm) No. As on 01.04.2019 As on 31.03.2020 1 1 2 3 4 Sources of Funds A Amount received from IBRD 5,49,57,29,889 4,52,92,41,408 10,02,49,71,297 B Counterpart funding - Equity 3,18,99,85,131 2,97,58,87,680 6,16,58,72,811 Total Sources 8,68,57,15,020 7,50,51,29,088 16,19,08,44,108 Uses of Funds C CST and System Works - Part 1 of Project 1 Design & Const. of Ciivl, Structure & Track Work between Sahanewal-Pilkhani 5,11,87,02,577 2,35,94,36,884 7,47,81,39,461 & Contract No. HQ/EN/Proc/CST/301 & 302/ Part-II dt. 29.08.2016 2 Design and Construction of Civil Structure and Track Work for Railway 2,98,71,08,472 4,77,84,52,426 7,76,55,60,898 HQ/EN/EC/D-B/Khuria-Pilkhani Section /CP-303 Dated: 15.03.2018 Total CST and System Works 8,10,58,11,049 7,13,78,89,310 15,24,37,00,359 D Consultants services * Part 1 of Project 1 Project Mangement Consultancy Services for Const. of Single line electrified (2x25KV) Rail Track complete with signalling & tele. System & related 33,08,64,663 17,03,56,817 50,12,21,480 infrastructure for SNL-PKY section of EDFC-Project-301 & Contract No. HQ/EN/Procurement /PMC/SNL-PKY dt. 09.09.2016 2 HQ/EN/Proc./PMC/KRJ-PKY (Systra MVA Consulting India Pvt. Ltd.) 8,18,98,663 14,69,89,293 22,88,87,957 3 Quality and Safety Audit Consultancy Services for Sahnewal - Khurja Section 5,86,34,032 4.98,93,667 10,85,27,699 (QSAC) Total Consultants' Services 47,13,97,358 36,72,39,777 83,86,37,136 E Goods. Consultants Services & Training under Heavy Haul TA (Part 2 of Project) Total Heavy Haul F Front End Fee 10,85,06,613 10,85,06,613 Total Uses (C+D+E+F) 8,68,57,15,020 7,50,51,29,088 16,19,08,44,108 Note The above annexure has been prepared on cash basis of accounting except statutory dues such as TDS, TDS on GST, Labour Cess, etc. (which are accounted at the time of payment to the contractor and paid subsequently) and based on the provisions of section 5.09 of the General Conditions of the Loan Agreement No. 8513 dated October 21, 2016 between DFCCIL and International Bank for Reconstruction and For S.R. Dinodia & Co. LLP. For and on behalf of Board of Directors Chartered Accountants, Dedicated Freight Corridor Corporation of India Limited Firm Registration Number 001478N/N500005 (Sandeep Dinodia) / (Aparng Tripathi) Partner General Manager (Finance) Membership Number 083689 Place of Signature: New Delhi J 0 DE C 2020 Annexure II Dedicated Freight Corridor Corporation of India Limited : EDFC- III Project IBRD Loan No - 8513-IN A list of all Individual Withdrawal Applications during Financial Year 2019-20 Application No. Claim Amount(T) Date of Receipt Receipt in USD Receipt Amount (T) WA-13 36,16,81,686 14-May-19 51,32,057 36,04,24,332 WA-14 95,10,21,739 25-06-2019 1,37,02,121 94,68,85,069 WA-15 55,72,425 14-08-2019 78,199 55,56,590 WA-16 1,06,25,82,455 30-10-2019 1,49,90,230 1,06,05,58,774 WA-17 37,28,87,456 14-11-2019 51,75,722 37,09,95,730 WA-18 1,38,36,43,008 22-01-2020 1,94,31,824 1,38,31,57,212 WA-19 40,27,61,084 24-02-2020 55,94,953 40,16,33,701 WA-20 24,22,62,296 23-03-2020 32,25,111 24,54,63,219 4,78,24,12,149 6,73,30,216 4,77,46,74,627 Note The above annexure provides details of funds received during financial year 2019-2020 against respective withdrawal applications. For S.R. Dinodia & Co. LLP. For and on behalf of Board of Directors Chartered Accountants, Dedicated Freight Corridor Corporation of India Limited Firm Registration Number 001478N/N500005 4t (Sandeep Dinodia (Aparna T hpathi) Partner General Manager (Finance) Membership Number 083689 Place of Signature: New Delhi Date: 30 DEC 2020 Annexure III Dedicated Freight Corridor Corporation of India Limited : EDFC-ll1 Project IBRD Loan No - 8513-IN Statement of Reconciliaiton of Claims to Total Application of Funds during Financial Year 2019-20 (Disbursement mechanism: Reimbursement through IUFR) S No Particulars Amount in (') For the period April 1, 2019 to March 31, 2020 1 Expenditure claimed in IUFR for the period under audit Part I of the Project Civil and Electrical works 7,13,78,89,310 Consultants' Services 36,72,39,777 Part II of the Project Goods, Consultants' Services & Training under Heavy Haul TA - 7,50,51,29,087 2 % of expenditure financed by World Bank Part I of the Project 67% Part 11 of the Project 100% 3 Eligible Claim Amount Part I of the Project 5,02,84,36,489 Part II of the Project - 5,02,84,36,489 4 Amount claimed by DFCCIL via IUFR 01.04.2019 to 21.06.2019 95,10,21,739 22.06.2019 to 30.06.2019 55,72,425 01 07.2019 to 30.09.2019 1,06,25,82,455 01 10.2019 to 31.10.2019 37,28,87,456 01 11.2019 to 31.12.2019 1,38,36,43,008 01.01.2019 to 31.01.2019 40,27,61,084 01.02.2020 to 29.02.2020 24,22,62,296 01.03.2020 to 31.03.2020 60,77,06,025 5,02,84,36,488 5 Claim made by World Bank WA-14 dated 25-06-2019 95,10,21,739 WA-15 dated 14-08-2019 55,72,425 WA-16 dated 30-10-2019 1,06,25,82,455 WA-17 dated 14-11-2019 37,28,87,456 WA-18 dated 22-01-2020 1,38,36,43,008 WA-19 dated 24-02-2020 40,27,61,084 WA-20 dated 23-03-2020 24,22,62,296 WA-21 dated 12-05-2020 60,77,06,025 5,02,84,36,488 6 Excess/ short claim (5 - 6) For S.R. Dinodia & Co. LLP. For and on behalf of the Board of Directors Chartered Accountants, Dedicated Freight Corridor Corporation of India Limited Firm Registration Number 001478N/N500005 (Sandeep Dinodia) ' 0 (Aparna ripathi) Partner 0 General Manager (Finance) Membership Number 083689 Place of Signature: New Delhi Date 3 0 DEC 2020