Auditor Report of Indian Railway Finance Corporation Ltd.

Mar 31, 2025

We have audited the Standalone Ind AS Financial Statements of
Indian Railway Finance Corporation Limited (“the Company”),
which comprise the Balance Sheet as at 31^st March, 2025 and
the Statement of Profit and Loss (including Other Comprehensive
Income), Statement of Changes in Equity, and the Statement of Cash
Flows for the year then ended, and Notes to the Standalone Ind AS
Financial Statements, including a summary of material accounting
policies and other explanatory information (hereinafter referred to
as “Standalone Ind AS Financial Statements”) .

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 accounting principles
generally accepted in India, of the state of affairs of the Company as
at 31^st March, 2025 and the profit and total comprehensive income,
changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our Audit in accordance with the Standards on
Auditing (SAs) specified under section 143(10) of the Companies
Act, 2013. 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
together with the ethical requirements that are relevant to our audit
of the standalone Ind AS financial statements under the provisions
of the Companies Act, 2013 and the Rules there-under, 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.

Emphasis of Matter

We draw attention to Note- 33 of the standalone Ind AS financial
statements where company has disclosed about recognition of
lease receivable for Project EBR IF 2019-20 w.e.f. 24^th March, 2025
and execution of lease agreement for same is under process on the
reporting date.

Our opinion is not modified in respect of matter stated above.

Key Audit Matters

Key audit matters are those matters that, in our professional
judgement, 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.

Key Audit Matters

Auditor’s Response

Lease Income and Lease Receivables The primary business of company involves financial leasing of rolling stock assets, railway infrastructure assets and national projects. The company borrows funds from financial market and finances the acquisition/creation of railway assets and then lease out the same to Ministry of Railways (MoR) as finance lease. The lease period is typically for 30 years, comprising a primary period of 15 years followed by a secondary period of 15 years. As part of the lease, recovery of the principal component and interest is effected during the primary lease period and at the end of the lease period, assets are transferred to the MoR at a nominal price. The company adopts cost plus lease arrangement which ensures a net interest margin for company.

Principal audit procedures performed included the following: • We have obtained an understanding of the processes and controls for finalization of lease terms and conditions and formulation of lease agreement. • We have examined the lease agreement for determination of identifiable assets, lease term, internal rate of return, moratorium periods etc. • We have verified the measurement and recognition of lease rentals into lease income and lease receivables in the statement of profit and loss and Balance Sheet.

Key Audit Matters	Auditor’s Response
We have identified assessment of lease income as a key audit matter because income from leased asset contributes a significant portion to the total income of the company.	• We have reviewed the measurement and recognition of various other expenses related to borrowed funds recovered/paid from/to MoR and adjusted with the lease income. • We have reviewed the adequacy of disclosures with respect to lease income and lease receivable assets in the financial statements. Our audit procedure did not identify any significant material exception.

Information Other than the Standalone Ind AS Financial
Statements and Auditor’s Report thereon

The Company''s Board of Directors are responsible for the other
information. The other information comprises the Directors'' report,
Corporate Governance report, Business responsibility report and
Management Discussion and Analysis etc. in the Annual report but
does not include the standalone Ind AS financial statements and
our report thereon. Such other information is expected to be made
available to us after the date of this Auditor''s Report.

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
identified above when it becomes available and, in doing so, consider
whether the other information is materially inconsistent with the
standalone Ind AS financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there
is a material misstatement therein, we are required to communicate
the matter to those charged with governance.

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, total comprehensive
income, changes in equity and cash flows of the Company in accordance
with the accounting principles generally accepted in India, including the
Indian accounting standards (Ind AS) specified under section 133 of the
Act read with relevant rules, as amended.

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 statement 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
is 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
management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.

The Board of Directors are 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 Standalone Ind AS
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 control 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 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 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 misstatement in the standalone Ind
AS financial statements that, individually or in aggregate, makes it
probable that the economic decisions of a reasonable 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 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.

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 of India
in terms of Section 143(11) of the Act, and on the basis of
such checks of the books and records of the Company as
we considered appropriate and according to the information
and explanations given to us, we give in "Annexure - A” a
statement on the matters specified in paragraphs 3 and 4 of
the said Order, to the extent applicable.

2. On the basis of information and explanations given to us by
the company we are enclosing our report in "Annexure - B”
on the directions/ sub-directions issued by Comptroller and
Auditor General of India in terms of Section 143(5) of the Act.

3. 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, the Statement of Profit and Loss
including other comprehensive income, the statement
of changes in equity and the statement of cash flows
dealt with by this Report are in agreement with the
books of account;

d) In our opinion, the aforesaid financial statements comply
with the Indian Accounting Standards specified under
Section 133 of the Act read with relevant rules.

e) In terms of Notification no. G.S.R. 463 (E) dated 05^th
June, 2015 issued by the Ministry of Corporate Affairs,
provisions of Section 164(2) of the Act regarding
disqualifications of the Directors are not applicable, as it
is a Government Company.

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 as referred in "Annexure - C”
of Audit Report.

g) Pursuant to Notification no. G.S.R. 463 (E) dated
5^th June, 2015 issued by the Ministry of Corporate

Affairs, provisions of section 197 of the Act regarding
managerial remuneration are not applicable, as it is a
Government Company.

h) 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 financial
statements - Refer Disclosure Note 34 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;

iii. There has been no delay in transferring amounts,
required to be transferred, to the Investor
Education and Protection Fund by the Company-
Refer Disclosure Note 47(b) to the standalone Ind
AS financial statements;

iv. a) The Company has represented that, to the

best of it''s knowledge and belief, other than
as disclosed in the notes 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(s) or entity(ies), including
foreign entities (“Intermediaries”), with the
understanding, whether recorded in writing
or otherwise, that the Intermediary shall,
whether, directly or indirectly lend or invest
in other persons or entities identified in any
manner whatsoever by or on behalf of the
company (“Ultimate Beneficiaries”) or provide
any guarantee, security or the like on behalf of
the Ultimate Beneficiaries;

b) The Company has represented, that, to the
best of it''s knowledge and belief, other than
as disclosed in the notes to the accounts, no
funds have been received by the company
from any person(s) or entity(ies), including
foreign entities (“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 by or on behalf of the Funding
Party (“Ultimate Beneficiaries”) or provide any
guarantee, security or the like on behalf of the
Ultimate Beneficiaries;

c) Based on such audit procedures that we have
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 (a) and (b)
contain any material mis-statement.

v. Regarding dividend declared or paid by the
company during the year;

a) The final dividend proposed in the previous
year, declared and paid by the Company
during the year is compliance with Section
123 of the Act, as applicable.

b) The interim dividend declared and paid by
the Company during the year is in compliance
with Section 123 of the Act.

vi. Based on our examination, which includes test
checks, the company has used accounting software
Tally ERP for maintaining its books of account for
the financial year ended 31^st March 2025 which
has a feature of recording audit trail (edit log)
facility. The audit trail facility has been operating
throughout the year for all transactions recorded in
the software. During the course of our audit we did
not come across any instance of audit trail feature
being tampered with. Further the same has been
preserved as per the statutory requirements.

For O P Totla & Co.

Chartered Accountants

FRN : 000734C

CA. Naveen Kumar Somani

Partner

M. No. : 429100

UDIN : 25429100BMKSQE6003

Place : New Delhi

Date : 28^th April, 2025

---

Mar 31, 2024

We have audited the Standalone Ind AS Financial Statements of Indian Railway Finance Corporation Limited (“the Company”), which comprise the Balance Sheet as at 31^st March, 2024 and the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity, and the Statement of Cash Flows for the year then ended, and Notes to the Standalone Ind AS Financial Statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as “Standalone Ind AS Financial Statements”).

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 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 31^st March, 2024 and the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our Audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. 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 together with the ethical requirements that are relevant to our audit of the standalone Ind AS financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, 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.

Emphasis of Matters

We draw attention to the following matters relevant to the standalone Ind AS financial statements:

1. Attention is drawn to Note No. 46(iv), wherein adjustment for prior period errors has been done due to incorrect classification of lease rentals between capital recovery and lease income in respect of lease of rolling stocks whose primary lease period has completed. As a result of this, the lease receivables and retained earnings as of April 1^st, 2022 were each overstated by H6,202.79 Million and as at March 31^st, 2023 by H7,901.36 Million. This error has been corrected and comparative figures of each affected line item of financial statements has been restated accordingly.

2. We draw attention to Note- 41(d) of the standalone Ind AS financial statements which depicts no fresh acquisition and leasing of rolling stock assets during the year ended 31^st March, 2024.

Our opinion is not modified in respect of matters stated above. Key Audit Matters

Key audit matters are those matters that, in our professional judgement, 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.

Sr. No.	Key Audit Matters	Auditor’s Response
i)	Lease Income and Lease Receivables	Principal audit procedures performed included the following:
	The primary business of company involves financial leasing	• We have obtained an understanding of the processes and
	of rolling stock assets, railway infrastructure assets and	controls for finalization of lease terms and conditions and
	national projects.	formulation of lease agreement.

Sr. No.	Key Audit Matters	Auditor’s Response
	The company borrows funds from financial market and finances the acquisition/creation of railway assets and then lease out the same to Ministry of Railways (MoR) as finance lease. The lease period is typically for 30 years, comprising a primary period of 15 years followed by a secondary period of 15 years. As part of the lease, recovery of the principal component and interest is effected during the primary lease period and at the end of the lease period, assets are transferred to the MoR at a nominal price. The company adopts cost plus lease arrangement which ensures a net interest margin for company. We have identified assessment of lease income as a key audit matter because income from leased asset contributes a significant portion to the total income of the company.	• We have examined the lease agreement for determination of identifiable assets, lease term, internal rate of return, moratorium periods etc. • We have verified the measurement and recognition of lease rentals into lease income and lease receivables in the statement of profit and loss and balance sheet. • We have reviewed the measurement and recognition of various other expenses related to borrowed funds recovered/ paid from/to MoR and adjusted with the lease income. • We have reviewed the adequacy of disclosures with respect to lease income and lease receivable assets in the financial statements. Our audit procedure did not identify any significant material exception other than Para 1 of Emphasis of Matter.

Information Other than the Standalone Ind AS Financial Statements and Auditor’s Report thereon

The Company''s Board of Directors are responsible for the other information. The other information comprises the Directors'' report, Corporate Governance report, Business responsibility report and Management Discussion and Analysis etc. in the Annual report but does not include the standalone Ind AS financial statements and our report thereon. Such other information is expected to be made available to us after the date of this Auditor''s Report.

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 identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

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 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, total comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting standards specified under section 133 of the Act read with relevant rules, as amended.

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 implementation and maintenance of 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 statement 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 is 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are 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 Standalone Ind AS 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 control 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 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 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 misstatement in the standalone Ind AS financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonable 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 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

1. Reconciliation & Balance Confirmation from Ministry of Railway (MoR) has been completed upto Financial (FY) 2022-23 and effect of such reconciliation has been accounted for in Financial Year 2023-24. Reconciliation of account of MoR for FY 2023-24 is to be completed.

2. The comparative financial information of the Company for the year ended 31^st March, 2023 included in these standalone Ind AS financial statements, are based on the standalone Ind AS financial statements for the year ended 31^st March, 2023 audited by predecessor auditor, KBDS & Co. Chartered Accountants, whose report for the year ended 31^st March, 2023 dated 25^th May, 2023 expressed

unmodified opinion on those standalone Ind AS financial statements. Reliance has been placed by us on the said standalone Ind AS financial statements and the report issued thereupon.

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 of India in terms of Section 143(11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in “Annexure - A” a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

2. On the basis of information and explanations given to us by the company we are enclosing our report in “Annexure - B” on the directions/ sub-directions issued by Comptroller and Auditor General of India in terms of Section 143(5) of the Act.

3. 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, the Statement of Profit and Loss including other comprehensive income, the statement of changes in equity and the statement of cash flow dealt with by this Report are in agreement with the books of account;

d) In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rules.

e) In terms of Notification no. G.S.R. 463 (E) dated 05^th June, 2015 issued by the Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualifications of the Directors are not applicable, as it is a Government Company.

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 as referred in “Annexure - C” of Audit Report.

g) Pursuant to Notification no. G.S.R. 463 (E) dated 5^th June, 2015 issued by the Ministry of Corporate

Affairs, provisions of section 197 of the Act regarding managerial remuneration are not applicable, as it is a Government Company.

h) 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 financial statements - Refer Disclosure Note 34 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 38 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-Refer Disclosure Note 47(b) to the standalone Ind AS financial statements;

iv. a) The Company has represented that, to the

best of it''s knowledge and belief, other than as disclosed in the notes 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(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b) The Company has represented, that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“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 by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

c) Based on such audit procedures that we have 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 (a) and (b) contain any material mis-statement.

v. Regarding dividend declared or paid by the

company during the year;

a) The final dividend proposed in the previous year, declared and paid by the Company during the year is compliance with Section 123 of the Act, as applicable.

b) The interim dividend declared and paid by the Company during the year is in compliance with Section 123 of the Act.

c) The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General

Meeting. The amount of dividend proposed is in compliance with section 123 of the Act, as applicable.

vi. Based on our examination, which includes test checks, the company has used accounting software Tally ERP for maintaining its books of account for the financial year ended 31^st March 2024 which has a feature of recording audit trail (edit log) facility. The audit trail facility has been operating throughout the year for all transactions recorded in the software. During the course of our audit we did not come across any instance of audit trail feature being tampered with. Further the same has been preserved as per the statutory requirements.

For O P Totla & Co.

Chartered Accountants

FRN : 000734C

CA. Naveen Kumar Somani

Partner

M. No. : 429100

UDIN : 24429100BKADAP5200

Place : New Delhi

Date : 20^th May, 2024

---

Mar 31, 2023

Indian Railways Finance Corporation Limited,

Report on the Audit of the Standalone Financial Statements

OPINION

We have audited the standalone financial statements of Indian Railway Finance Corporation Limited (“the Company”), which comprise the balance sheet as at 31st March, 2023 and the statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity, and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

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 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 31st March,2023 and the profit and total comprehensive income, changes in equity, and its cash flows for the year ended on that date.

BASIS FOR OPINION

We conducted our Audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there-under, 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.

EMPHASIS OF MATTERS

We draw attention towards:

1. Reconciliation & Balance confirmation from Ministry of Railway (MoR) have been done up to Financial Year (FY)- 2021-22 and effect of such reconciliation has been accounted for in Financial Year-2022-23. Reconciliation of account of MoR for FY-2022-23 yet to be completed. Please refer to Note 46.

2. In respect of Advance against Project Assets, Utilization Certificates have been received time-to-time from Ministry of Railway (MoR) periodically. Please refer to Note No-46

We have determined the matters described below to be the Key Audit Matters to be communicated: -

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of financial statements of the audit period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

S. NO.	Key Audit Matters	Auditor’s Response
1.	The government has introduced new section 115BAA by the Taxation Law (Amendment) Ordinance, 2019 w.e.f FY 2019-20, which provides an option to opt for a income tax rate of 22%, Surcharge 10% & Health and Education Cess at 4% by any domestic company. By opting this total effective tax rate will be at 25.17% (under normal provision of income tax) as against earlier effective tax rate of 34.95% (under normal provision of income tax). However, the earlier effective tax rate under MAT was 21.55% which was applicable on the company.	After adoption of Section 115BAA, the Company will be outside the scope and applicability of MAT Provision under section 115JB of Income Tax Act, 1961. The taxable income of the company is Nil due to set off of unabsorbed depreciation and claiming of depreciation on leased assets of current year. Please refer Note No. 31.
2	Compliance in respect of SEBI (LODR) regulation 2015	The number of independent directors on the board was less than half of the total strength of the Board as required under SEBI (LODR) regulation,2015 and the DPE guidelines.

Responsibilities of Management and Those Charged with Governance for the 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 financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards 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 implementation and maintenance of 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 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 control 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 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 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 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 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 misstatement in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonable 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 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.

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 of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, 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, 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 read with mentioned under the emphasis of matter;

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) There is no branch office of the company;

d) The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, Statement of changes of Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account;

e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f) In terms of Notification No. GSR 463(E) dated 05.06.2015 issued by Ministry of Corporate Affairs, Government of India, provisions of Sub-section 2 of Section 164 of the Act, are not applicable to the Company, being a government company.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, as referred to “Annexure B” of Audit Report.

h) The company being the government company owned by the Central Govt., therefore section 197 (16) of the Companies Act 2013 shall not apply vide Notification no. GSR 463(E) dated 5th June 2015.

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, and Companies (Audit and Auditors) Amendment Rules 2021, 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 financial statements - Refer Disclosure Note 34 to the 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 38 to the 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- Refer Disclosure Note 47(b) to the financial statements;

iv. a. The Company has represented that, to the

best of it''s knowledge and belief, other than as disclosed in the notes 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(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b. The Company has represented, that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“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 by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

c. Based on such audit procedures that we have 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 (a) and (b) contain any material mis-statement.

v. The dividend declared or paid during the year by the company is in compliance with section 123 of the Companies Act, 2013.

For KBDS & CO

Chartered Accountants Firm Registration No: 323288E

Sd/-

(CA Bhawesh Kumar )

Partner

M. No: 096587

UDIN: 23096587BGQKFC9560 Date: 25.05.2023 Place: Delhi

---

Mar 31, 2022

Indian Railways Finance Corporation Limited,

We have determined the matters described below to be the Key Audit Matters to be communicated:-

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of financial statements of the audit period. These matters were addressed in the context of out audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Report on the Audit of the Standalone Financial Statements

OPINION

We have audited the standalone financial statements of Indian Railway Finance Corporation Limited (“the Company”), which comprise the balance sheet as at 31st March, 2022 and the statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity, and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

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 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 31st March,2022 and the profit and total comprehensive income, changes in equity, and its cash flows for the year ended on that date.

BASIS FOR OPINION

We conducted our Audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there-under, 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.

EMPHASIS OF MATTERS

We draw attention towards:

1. Reconciliation & Balance confirmation from Ministry of Railway (MoR) have been done for the FY- 2016-17, 201718 & 2018-19 for lease rental receivable. Reconciliation & Balance confirmation from MoR for the FY-2019-20, 2020-21 and 2021-22 are yet to be completed. Please Refer to Note-6 & 33.

2. In respect of Advance against Project Assets, Utilization Certificates have been received from time-to-time from the Ministry of Railway (MoR). Please refer to Note-46.

S.No.	Key Audit Matters	Auditor’s Response
1.	The government has introduced new section 115BAA by the Taxation Law (Amendment) Ordinance, 2019 w.e.f F.Y 2019-20, which provides an option to opt for a income tax rate of 22%, Surcharge 10% & Health and Education Cess at 4% by any domestic company. By opting this total effective tax rate will be at 25.17% (under normal provision of income tax) as against earlier effective tax rate of 34.95% (under normal provision of income tax). However, the earlier effective tax rate under MAT was 21.55% which was applicable on the company.	After adoption of Section 115BAA, the taxable income under the normal provision income tax may become NIL. Further after adoption of section 115BAA, the company will be outside the scope and applicability of MAT Provision under section 115JB of Income Tax Act, 1961. Hence, no tax liability may be there for the F.Y 2021-22 on the company. Hence, no tax provision has been created for the year ended 31.03.2022.
2.	Compliance in respect of SEBI (LODR) regulation 2015	The number of independent directors on the board was less then half of the total strength of the Board as required under SEBI (LODR) regulation,2015 and the DPE guidelines.

• Identify and assess the risks of material misstatement of the 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.

Responsibilities of Management and Those Charged with Governance for the 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 financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards 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 implementation and maintenance of 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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:

• Obtain an understanding of internal control 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 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 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 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 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 misstatement in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonable 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.

f) In terms of Notification No. GSR 463(E) dated 05.06.2015 issued by Ministry of Corporate Affairs, Government of India, provisions of Sub-section 2 of Section 164 of the Act, are not applicable to the Company, being a government company.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, as referred to “Annexure B” of Audit Report.

h) The company being the government company owned by the Central Govt., therefore section 197 (16) of the Companies Act 2013 shall not apply vide Notification no. GSR 463(E) dated 5th June 2015.

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, and Companies (Audit and Auditors) Amendment Rules 2021, 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 financial statements - Refer Disclosure Note 34 to the 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 38 to the 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- Refer Disclosure Note 47(b) to the financial statements;

iv. a. The Company has represented that, to the

best of it''s knowledge and belief, other than as disclosed in the notes 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(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever

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 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.

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 of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, 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, 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 read with mentioned under the emphasis of matter .

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) There is no branch office of the company.

d) The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, Statement of changes of Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account.

e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

the circumstances; nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material mis-statement.

by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b. The Company has represented, that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“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 by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

c. Based on such audit procedures that we have considered reasonable and appropriate in

v. The dividend declared or paid during the year by the company is in compliance with section 123 of the Companies Act, 2013.

For KBDS & Co.

Chartered Accountants

Firm Reg. No: 323288E

Sd/-

(CA Dashrath Kumar Singh)

Partner

M. No. - 060030

UDIN: 22060030AJMDLH6491

Place: Gandhinagar, Gujrat

Date: 20.05.2022.

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Mar 31, 2021

Indian Railways Finance Corporation Limited,

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Indian Railway Finance Corporation Limited (“the Company”), which comprise the balance sheet as at 31^st March, 2021 and the statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity, and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

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 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 31st March , 2021, and the profit and total comprehensive income, changes in equity, and its cash flows for the year ended on that date.

the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there-under, 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.

Emphasis of Matters

We draw attention towards Amount payable to or receivable from Ministry of Railways in respect of Liabilities and Assets against transactions of Financial Statement are subject to reconciliation and confirmation by the Ministry of Railways ( MoR). Please refer to Note 46(d).

We have determined the matters described below to be the Key Audit Matters to be communicated:-

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of financial statements of the audit period. These matters were addressed in the context of out audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of

Sr. No.	Key Audit Matters	Auditor’s Response
1	The government has introduced new section 115BAA by the Taxation Law (Amendment) Ordinance, 2019 w.e.f F.Y. 2019-20, which provides an option to opt for a income tax rate of 22%, Surcharge 10% & Health and Education Cess at 4% by any domestic company. By opting this total effective tax rate will be at 25.17% (under normal provision of income tax) as against earlier effective tax rate of 34.95% (under normal provision of income tax). However, the earlier effective tax rate under MAT was 21.55% which was applicable on the company.	After adoption of Section 115BAA, the taxable income under the normal provision income tax may become NIL. Further after adoption of section 115BAA, the company will be outside the scope and applicability of MAT Provision under section 115JB of Income Tax Act, 1961. Hence, no tax liability may be there for the F.Y 2020-21 on the company. Hence, no tax provision has been created for the year ended 31.03.2021.

2	In terms of the revised arrangement with the Ministry of Railways, the contractors appointed for undertaking Railway Infrastructure Projects funded by the Company to be leased to Indian Railways, have started raising the invoices in the name of the Company for the expenditures incurred / payments made to Suppliers and Vendors by Ministry of Railway (MoR) for the aforesaid projects with effect from May 1, 2020. Accordingly, the Company is entitled to claim Goods and Service Tax (GST) Input Tax Credit (ITC) from 1st May, 2020. Earlier ITC credit was not claimed and availed by IRFC Ltd on Railway Projects.	• A total sum of Rs. 5,05,509.51 million has been incurred towards expenditure made / payments made to suppliers and vendors in respect of Railway Infrastructure Projects as per the details received from the Ministry of Railways during the period from 1st May , 2020 to 31st March , 2021. • The Company is entitled to claim GST Input Tax Credit (ITC) of Rs 53,770.59 million on the aforesaid expenditures incurred on the Railway Infrastructure Projects. Please refer Note 13.
3	Prior period adjustments have been done during the Financial period ended Sept 2020 to the extent of Rs. 7071.18 million on account of previous years transactions.	The prior period adjustments of Rs. 7071.18 million arising during the year ended 31st March, 2021 has been duly adjusted in the years to which it pertains. Out of the total sum of Rs.7071.18 million, the sum of Rs. 605.49 million, Rs. 1462.42 million, Rs.844.02 Million and Rs. 5003.27 million pertains to the years ending 31st March, 2018, 31st March, 2019, 31st March, 2020 and 31st March, 2021 respectively. As a result of the aforesaid adjustment, there is reduction in ‘’Retained Earnings ‘’ by Rs.6,626.82 million. Correspondingly, there is a decrease in ‘Amount Recoverable from Ministry of Railways on account of Exchange Rate Variation’ by Rs. 6,242.29 Million, increase ‘Tax Refund Receivable’ by Rs. 444.36 million, increase in Interest Accrued but not due on Borrowings by Rs.828.95 million and decrease in Other Payables by Rs. 0.06 million.
4	Compliance in respect of Companies Act for Appointment of Independent Director	Appointment of Independent Director: As per sub section 4 of Section 149 of Companies Act 2013, every listed company is mandatorily required to have at least one-third of the total number of directors as independent directors which comes to two independent directors . But presently , only one independent director is available in Board of directors.

Responsibilities of Management and Those Charged with Governance for the 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 financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards 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 implementation and maintenance of 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 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 control 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 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 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 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 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 misstatement in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonable 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 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.

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 Companies Act, 2013, 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, 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 except mentioned under the head of Basis for Opinion above.

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) There is no branch office of the company.

d) The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, Statement of changes of Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f) In terms of Notification No. GSR 463(E) dated 05.06.2015 issued by Ministry of Corporate Affairs, Government of India, provisions of Sub-section 2 of Section 164 of the Act, are not applicable to the Company, being a government company.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, as referred to “Annexure B” of Audit Report.

h) The company being the government company wholly owned by the Central Govt., therefore section 197 (16) of the Companies Act 2013 shall not apply vide Notification no. GSR 463(E) dated 5th June 2015.

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, 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 financial statements - Refer Note 34 to the 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 38 to the 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.

For KBDS & Co.

Chartered Accountants Firm Reg. No: 323288E

Sd/-

(CA Dashrath Kumar Singh)

Partner

M. No. - 060030 UDIN: 21060030AAAAEK2554 Date: 29.06.2021 Place: New Delhi