Lanco Infratech Ltd has seen certain audit qualifications with regard to its step-down subsidiary Lanco Kondapalli Power Ltd, which has resulted in a revision of its annual financial statement.

In a regulatory statement filed with the stock exchanges, the auditors have drawn attention to Note 52 of the consolidated statement, where Lanco Kondapalli has capitalised borrowing costs amounting to ₹159.63 crore and ₹601.36 crore for the year ended March 2016.

However, the auditors said the capitalisation of such expenses is not in accordance with the relevant accounting standards.

Further, they noted that the depreciation expense for the year ended March 2016 is higher by ₹8.21 crore. Had the expenditure not been capitalised and depreciation not charged, the loss of the group for the year ended March 2016, and cumulatively up to March 31, 2016, would have been higher by ₹89.20 crore and ₹349.42 crore, respectively.

Non-availability of gas Responding to the qualifications, the company management stated that due to non availability of gas the asset was eligible for capitalisation and the lenders of the project had approved the interest during construction. Further, referring to Note 38 of the results, the auditors have said Lanco Resources International Pte Ltd and its subsidiaries, whose consolidated assets reflect ₹11,022 crore as of March 31, 2016, registered total revenue of ₹1185 crore and profit of ₹5.92 crore.

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