Mar 31, 2023
TO THE MEMBERS OF POWER GRID CORPORATION OF INDIA LIMITED
Opinion
We have audited the accompanying Standalone Financial Statements of Power Grid Corporation of India Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and notes to the financial statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").
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 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 March 2023, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the year ended 31 March 2023. These matters were addressed in the context of our audit of the standalone 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 |
How the matter was addressed in our audit |
1 |
Recognition of Revenue from Transmission Income Transmission Income is accounted for, based on tariff orders notified by the CERC. In case of transmission projects where final tariff orders are yet to be notified, transmission income is accounted for on provisional basis as per Tariff Regulations and Orders of the CERC in earlier cases. Difference, if any, is accounted for on issuance of final Tariff Orders by the CERC. As at each reporting date, transmission income also includes an accrual for services rendered to the customers but not yet billed i.e., Unbilled Revenue. |
Our audit approach involved: Obtaining an understanding of the CERC Tariff Regulations, Orders, Circulars, Guidelines and the Company''s internal circulars and procedures in respect of recognition and measurement of revenue from transmission of power. ⢠Evaluated and tested the effectiveness of the design of Internal controls relating to recognition and measurement of revenue from Transmission. ⢠Verified the transmission revenue based on the CERC Tariff Regulation, Orders, Circulars, Guidelines and the company''s internal circulars. |
Sr. No. |
Key Audit Matters |
How the matter was addressed in our audit |
This is considered as Key Audit Matter due to the nature and extent of estimates made as per CERC Tariff Regulations and contracts with customers for recognition of revenue. (Refer Note No. 35(b)(ii) Standalone Financial Statement) |
⢠Verified on test basis, the income recognised on provisional basis as per the regulatory guidelines and orders of the CERC in recent cases where tariff orders were issued, for the assets whose final orders are yet to be notified by CERC, based on the date of commercial operation (DOCO) letters issued by Regional technical heads, and capital cost, as certified by the Management. Based on the above procedure performed, the recognition and measurement of revenue from transmission of power is considered to be adequate and reasonable. |
|
2 |
Deferred Tax Assets relating to MAT credit entitlement The Company has considered MAT credit in anticipation of set off against the tax payable in future years and created Deferred Tax Asset for the same during the year. Corresponding to the said MAT Credit Entitlement, a Deferred Regulatory liability payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations has been recognized. We identified this as a key audit matter because of the importance of this matter to the intended users of the financial statements and its materiality and requirement of judgement in assessing future taxable profits for recognition of MAT credit entitlement. (Refer Note No.26 of Standalone financial statements.) |
Our audit approach involved: ⢠Reviewing the current status of availability of MAT credits. ⢠Assessing the related forecasts of future taxable profits, evaluated the reasonableness and consistency of the considerations/assumptions underlying the preparation of these forecasts. Based on the above procedures performed, the recognition and measurement of Deferred tax asset relating to MAT credit entitlement and corresponding Regulatory Deferral Liability towards customers, is considered to be adequate and reasonable. |
3 |
Assessment of Contingent liabilities in respect of certain litigations including land compensation, direct and indirect taxes, various claims filed by other parties not |
We have obtained an understanding of the Company''s procedure in respect of estimation and disclosure of contingent liabilities and adopted the following audit procedure: |
acknowledged as debt. There is a high level of judgement required in estimating the contingent liabilities. The company''s assessment of contingent liabilities is supported by the facts of the matter, Company''s judgement thereon, past experience and advices from legal and independent tax consultants wherever necessary. We identified the above area as Key Audit Matters in view of associated uncertainty relating to the outcome of these matters. (Refer Note No. 58 of Standalone financial statements) |
⢠Reviewing the current status and material developments of legal matters. ⢠Examining recent orders from competent authorities and/or communication received from various authorities, judicial forums and follow-up action thereon. ⢠Review and analysis of evaluation of the contentions of the company through discussions, collection of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues. Based on the above procedures performed, the estimation and disclosures of contingent liabilities is considered to be adequate and reasonable. |
The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholder''s Information, but does not include the standalone financial statements and our Auditor''s Report thereon. The other information as identified above is expected to be made available to us after the date of this Auditor''s Report.
Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone 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 financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
When we read those documents including annexures, if any thereon, if we conclude that there is a material misstatement therein, we shall communicate the matter to those charged with the governance.
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 financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone 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 responsible for overseeing the Company''s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the standalone 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 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 financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, 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 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 financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably 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 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.
1. As required by Section 143(3) of the Act, based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account;
d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act, read with the relevant rules issued thereunder;
e) In view of exemption given vide notification no. G.S.R. 463(e) dated June 5, 2015, issued by the Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of Directors, are not applicable to the Company;
f) With respect to the adequacy of the internal financial controls over financial reporting with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure ''1''. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls with reference to Standalone Financial Statements.
g) Pursuant to Notification No. GSR 463(e) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of Section 197 of the Companies Act, 2013, are not applicable to the Company, being a Government Company; and
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 Standalone financial statements - Refer Note 58 to the Standalone 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.
iv) (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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 Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever 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 the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement
v) (a) The final dividend proposed for the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.
(b) Interim dividend (including special dividend) declared and paid by the Company during the year is in accordance with Section 123 of the Act.
(c) As stated in note 59(b) to the financial statements, the Board of Directors of the Company has 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 accordance with Section 123 of the Act to the extent it applies to declaration of dividend.
vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from 01 April 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended 31 March 2023.
2. In terms of section 143(5) of the Companies Act, 2013, we give in Annexure ''2'', our report on the directions issued by the Comptroller and Auditor General of India.
3. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in Annexure ''3'' a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
For S. RAMANAND AIYAR & CO. For UMAMAHESWARA RAO & CO
Chartered Accountants Chartered Accountants
FRN:000990N FRN:004453S
R. Balasubramanian Rakesh Bhanu Amara
Partner Partner
M. No. 080432 M. No. 228411
UDIN: 23080432BGWPJV3448 UDIN: 23228411BGXSZT8800
For B M CHATRATH & CO LLP For PSD & ASSOCIATES
Chartered Accountants Chartered Accountants
FRN : 301011E/E300025 FRN : 004501C
Sanjay Sarkar Satish Chandra Sharma
Partner Partner
M. No. 064305 M. No. 072846
UDIN: 23064305BGQJSO8703 UDIN: 23072846BGYVZS7621
Place: Gurugram
Date: 19 May 2023
Mar 31, 2022
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying Standalone Financial Statements of Power Grid Corporation of India Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2022, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and notes to the financial statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").
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 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 March 2022, the profit & total comprehensive income, changes in equity and its cash flows for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
We draw attention to the following matter in the notes to the Standalone financial statements:
- In respect of provisional recognition of revenue from transmission assets for which final tariff orders are yet to be issued by the CERC [Refer Note No. 35(b)(ii)]
Our opinion is not modified in respect of the above matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the year ended 31 March 2022. These matters were addressed in the context of our audit of the standalone 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 |
How the matter was addressed in our audit |
1. |
Recognition of Revenue from Transmission Income Transmission Income is accounted for, based on tariff orders notified by the CERC. In case of transmission projects where final tariff orders are yet to be notified, transmission income is accounted for on provisional basis as per Tariff Regulations and Orders of the CERC in earlier cases. Difference, if any, is accounted for on issuance of final Tariff Orders by the CERC. As at each reporting date, transmission income also includes an accrual for services rendered to the customers but not yet billed i.e., Unbilled Revenue. This is considered as Key Audit Matter due to the nature and extent of estimates made as per CERC Tariff Regulations and contracts with customers for recognition of revenue. (Refer Note No. 35(b)(ii) Standalone Financial Statement) |
Our audit approach involved: Obtaining an understanding of the CERC Tariff Regulations, Orders, Circulars, Guidelines and the Company''s internal circulars and procedures in respect of recognition and measurement of revenue from transmission of power. ⢠Evaluated and tested the effectiveness of the design of Internal controls relating to recognition and measurement of revenue from Transmission. ⢠Verified the transmission revenue based on the CERC Tariff Regulation, Orders, Circulars, Guidelines and the company''s internal circulars. ⢠Verified on test basis, the income recognised on provisional basis as per the regulatory guidelines and orders of the CERC in recent cases where tariff orders were issued, for the assets whose final orders are yet to be notified by CERC, based on the date of commercial operation (DOCO) letters issued by Regional technical heads, and capital cost, as certified by the Management. Based on the above procedure performed, the recognition and measurement of revenue from transmission of power is considered to be adequate and reasonable. |
2. |
Deferred Tax Assets relatina to MAT credit |
Our audit approach involved: ⢠Reviewing the current status of availability of MAT credits. ⢠Assessing the related forecasts of future taxable profits, evaluated the reasonableness and consistency of the considerations/assumptions underlying the preparation of these forecasts. Based on the above procedures performed, the recognition and measurement of Deferred tax asset relating to MAT credit entitlement and corresponding Regulatory Deferral Liability towards customers, is considered adequate and reasonable. |
entitlement The Company has considered MAT credit in anticipation of set off against the tax payable in future years and created Deferred Tax Asset for the same during the year. Corresponding to the said MAT Credit Entitlement, a Deferred Regulatory liability payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations has been recognized. We identified this as a key audit matter because of the importance of this matter to the intended users of the financial statements and its materiality and requirement of judgement in assessing future taxable profits for recognisition of MAT credit entitlement. (Refer Note No.26 of Standalone financial statements.) |
||
3. |
Assessment of Contingent liabilities in respect of certain litiaations includina land compensation. |
We have obtained an understanding of the Company''s procedure in respect of estimation and disclosure of contingent liabilities and adopted the following audit procedure: ⢠Reviewing the current status and material developments of legal matters. ⢠Examining recent orders from competent authorities and/ or communication received from various authorities, judicial forums and follow-up action thereon. ⢠Review and analysis of evaluation of the contentions of the company through discussions, collection of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues. Based on the above procedures performed, the estimation and disclosures of contingent liabilities is considered to be adequate and reasonable. |
direct and indirect taxes. various claims filed by |
||
other parties not acknowledged as debt. There is a high level of judgement required in estimating the contingent liabilities. The company''s assessment of contingent liabilities is supported by the facts of the matter, Company''s judgement thereon, past experience and advices from legal and independent tax consultants wherever necessary. We identified the above area as Key Audit Matters in view of associated uncertainty relating to the outcome of these matters. (Refer Note No. 58 of Standalone financial statements) |
Information Other than the Standalone Financial Statements and Auditor''s Report Thereon
The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Business Responsibility Report, Corporate Governance and Shareholder''s Information, but does not include the standalone financial statements and our Auditor''s Report thereon. The other information as identified above is expected to be made available to us after the date of this Auditor''s Report.
Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone 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 financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
When we read those documents including annexures, if any thereon, if we conclude that there is a material misstatement therein, we shall communicate the matter to those charged with the governance.
Management''s Responsibility for the Standalone Financial Statements
The Company''s Board of Directors is responsible for the matters stated insection 134(5) of 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 including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generallyaccepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safe guardingthe assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Company''s abilityto 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 doso.
The Board of Directors are responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone 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 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 financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, 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 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 financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably 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 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 Section 143(3)of the Act, based on our audit we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account;
(d) In our opinion, the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act, read with the relevant rules issued thereunder;
(e) In view of exemption given vide notification no. G.S.R. 463(E) dated June 5, 2015, issued by the Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of Directors, are not applicable to the Company;
(f) With respect to the adequacy of the internal financial controls over financial reporting with reference to standalone financial statements of the company and the operating effectiveness of such controls, refer to our separate report in Annexure ''1''. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls with reference to Standalone financial statements.
(g) Pursuant to Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of Section 197 of the Companies Act, 2013, are not applicable to the Company, being a Government Company; and
(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 Standalone financial statements - Refer Note 58 to the Standalone 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.
iv) (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either
individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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 Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever 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 the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement
v) (a) The final dividend proposed for the previous year, declared and paid by the Company during the year is in accordance
with Section 123 of the Act, as applicable.
(b) Interim dividend (including special dividend) declared and paid by the Company during the year is in accordance with Section 123 of the Act.
(c) As stated in note 59(b) to the financial statements, the Board of Directors of the Company has 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 accordance with Section 123 of the Act to the extent it applies to declaration of dividend.
2. In terms of section 143(5) of the Companies Act, 2013, we give in Annexure ''2'', our report on the directions issued by the Comptroller and Auditor General of India.
3. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in Annexure ''3''a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
For T R CHADHA & CO LLP For UMAMAHESWARA RAO For B M CHATRATH & CO LLP For PSD & ASSOCIATES
Chartered Accountants & CO Chartered Accountants Chartered Accountants
FRN : 006711N/N500028 Chartered Accountants FRN : 301011E/E300025 FRN : 004501C
FRN:004453S
Neena Goel R R Dakshinamurthy Sanjay Sarkar Prakash Sharma
Partner Partner Partner Partner
M. No. 057986 M. No. 211639 M. No. 064305 M. No. 072332
UDIN: 22057986AJJJKS7958 UDIN: 22211639AJJLJO9329 UDIN: 22064305AJJILF8943 UDIN: 22072332AJJIHV7775 Place: Gurugram Place: Gurugram Place: Gurugram Place: Gurugram
Date: 21May 2022
Mar 31, 2021
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Power Grid Corporation of India Limited (âthe Companyâ), which comprise the Balance Sheet as at 31 March 2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and notes to the financial statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as âthe standalone financial statementsâ).
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 Companies Act, 2013 (âthe Actâ) 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 March 2021, the profit & total comprehensive income, changes in equity and its cash flows for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
We draw attention to the following matter in the notes to the Standalone financial statements:
- In respect of provisional recognition of revenue from transmission assets for which final tariff orders are yet to be issued by the CERC [Refer Note No. 35(b)]
Our opinion is not modified in respect of the above matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the year ended 31 March 2021. These matters were addressed in the context of our audit of the standalone 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 |
How the matter was addressed in our audit |
1 |
Recognition of Revenue from Transmission Income Transmission Income is accounted for based on tariff orders notified by the CERC. In case of transmission projects where final tariff orders are yet to be notified, transmission income is accounted for on provisional basis as per Tariff Regulations and Orders of the CERC in earlier cases. Difference, if any, is accounted for on issuance of final Tariff Orders by the CERC. As at each reporting date, transmission income also includes an accrual for services rendered to the customers but not yet billed i.e. Unbilled Revenue. |
Our audit approach involved: Obtaining an understanding of the CERC Tariff Regulations, Orders, Circulars, Guidelines and the Company''s internal circulars and procedures in respect of recognition and measurement of revenue from transmission of power. ⢠Evaluated and tested the effectiveness of the design of Internal controls relating to recognition and measurement of revenue from Transmission. ⢠Verified the transmission revenue based on the CERC Tariff Regulation, Orders, Circulars, Guidelines and the company''s internal circulars. |
This is considered as Key Audit Matter due to the nature and extent of estimates made as per CERC Tariff Regulations and contracts with customers for recognition of revenue. (Refer Note No. 35(b) Standalone Financial Statement) |
⢠Verified on test basis, the income recognised on provisional basis as per the regulatory guidelines and orders of the CERC in recent cases where tariff orders were issued, for the assets whose final orders are yet to be notified by CERC, based on the date of commercial operation (DOCO) letters issued by Regional technical heads, and capital cost, as certified by the Management. |
|
2 |
Deferred Tax Assets relating to MAT credit |
Our audit approach involved: ⢠Reviewing the current status of availability of MAT credits. ⢠Assessing the related forecasts of future taxable profits, evaluated the reasonableness and consistency of the considerations/assumptions underlying the preparation of these forecasts. ⢠Based on the above procedures performed, the recognition and measurement of Deferred tax asset relating to MAT credit entitlement and corresponding Regulatory Deferral Liability towards customers, is considered adequate and reasonable. |
entitlement The Company has considered MAT credit in anticipation of set off against the tax payable in future years and created Deferred Tax Asset for the same during the year. Corresponding to the said MAT Credit Entitlement, a Deferred Regulatory liability payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations has been recognized. We identified this as a key audit matter because of the importance of this matter to the intended users of the financial statements and its materiality and requirement of judgement in assessing future taxable profits for recognisition of MAT credit entitlement. (Refer Note No.26 of Standalone financial statements.) |
||
3 |
Assessment of Contingent liabilities in respect of certain litigations including land compensation, direct and indirect taxes, various claims filed bv |
We have obtained an understanding of the Company''s procedure in respect of estimation and disclosure of contingent liabilities and adopted the following audit procedure: ⢠Reviewing the current status and material developments of legal matters. ⢠Examining recent orders from competent authorities and/or communication received from various authorities, judicial forums and follow-up action thereon. ⢠Review and analysis of evaluation of the contentions of the company through discussions, collection of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues. |
other parties not acknowledged as debt. There is a high level of judgement required in estimating the contingent liabilities. The company''s assessment of contingent liabilities is supported by the facts of the matter, Company''s judgement thereon, past experience and advices from legal and independent tax consultants wherever necessary. We identified the above area as Key Audit Matters in view of associated uncertainty relating to the outcome of these matter. (Refer Note No. 58 of Standalone financial statements) |
The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Business Responsibility Report, Corporate Governance and Shareholder''s Information, but does not include the standalone financial statements and our Auditor''s Report thereon. The other information as identified above is expected to be made available to us after the date of this Auditor''s Report.
Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone 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 financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
When we read those documents including annexures, if any thereon, if we conclude that there is a material misstatement therein, we shall communicate the matter to those charged with the governance.
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 financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone 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 responsible for overseeing the Company''s financial reporting process.
Auditorâs Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone 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 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 financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, 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 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 financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably 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 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.
1. As required by the Companies (Auditor''s Report) Order, 2016 (âthe Orderâ) issued by the Central Government in terms of Section 143(11) of the Act, we give in Annexure â1â a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. In terms of section 143(5) of the Companies Act, 2013, we give in the Annexure â2â our report on the directions issued by the Comptroller and Auditor General of India.
3. As required by Section 143(3) of the Act, based on our audit we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account;
(d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act, read with the relevant rules issued thereunder;
(e) In view of exemption given vide notification no. G.S.R. 463(E) dated June 5, 2015, issued by the Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of Directors, are not applicable to the Company;
(f) With respect to the adequacy of the internal financial controls over financial reporting with reference to standalone financial statements of the company and the operating effectiveness of such controls, refer to our separate report in Annexure â3â. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls with reference to Standalone financial statements.
(g) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of Section 197 of the Companies Act, 2013, are not applicable to the Company, being a Government Company; and
(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 Standalone financial statements - Refer Note 58 to the Standalone 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.
Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants
FRN : 006711N/N500028 FRN : 004453S FRN : 301011E/E300025 FRN : 004501C
Partner Partner Partner Partner
M. No. 057986 M. No. 024860 M. No. 064305 M. No. 072846
UDIN: 21057986AAAAGF5951 UDIN: 21024860AAAAAQ1523 UDIN: 21064305AAAABQ6921 UDIN: 21072846AAAAAG4522 Place: Gurugram Place: Gurugram Place: Kolkata Place: Jaipur
Date: 17 June 2021
Mar 31, 2018
INDEPENDENT AUDITORS'' REPORT
To the Members of Power Grid Corporation of India Limited Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Power Grid Corporation of India Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and a summary of the significant accounting policies and other explanatory information (herein after referred to as "Standalone Ind AS Financial Statements").
Management''s Responsibility 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 including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards ("Ind AS") prescribed under Section 133 of the Act, read with relevant rules issued there under.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under and the Order issued under section 143 (11) of the Act.
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the 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 31st March 2018, its profit including other comprehensive income, its changes in equity and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the Standalone Ind AS Financial Statements:
(a) in respect of recognition of revenue from transmission assets for which final tariff orders are yet to be issued by the CERC [Refer Note No. 36 (b) (ii)]; and
(b) in respect of Balance confirmation, reconciliation and consequential adjustments, if any, of Trade Receivable and Recoverable and Trade and Other Payables which is carried out on an ongoing basis [Refer Note No. 46(a)].
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, 2016 ("the Order"), issued by the Central Government of India in terms of subsection (11) of Section 143 of the Act, we give in the Annexure ''1'' our report on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. In terms of section 143 (5) of the Companies Act, 2013, we give in the Annexure ''2''our report on the directions issued by the Comptroller and Auditor General of India.
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 purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(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 standalone Ind AS financial statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with the relevant rules issued there under;
(e) In view of exemption given vide notification no. G. S. R. 463(E) dated June 5, 2015, issued by Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of Directors, are not applicable to the Company;
(f) With respect to the adequacy of the internal financial controls with reference to standalone Ind AS financial statements of the company and the operating effectiveness of such controls, refer to our separate report in Annexure ''3''. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls with reference to standalone Ind AS financial statements.
(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements
- Refer Note No. 48 and 62 to the standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or Indian 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.
(i) a) The Company has generally maintained records, showing full particulars including quantitative details and situation of Fixed Assets (Property, Plant & Equipment).
b) The fixed assets (Property, Plant & Equipment) have been physically verified by external agencies during the year. In our opinion, frequency of verification is reasonable having regard to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.
c) In our opinion and according to information and explanations given to us and on the basis of an examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except:
No. of Cases |
Cost (Rs, in crore) |
Net Block (Rs, in crore) |
|
Leasehold Land |
10 |
69.83 |
61.59 |
Freehold Land |
30 |
230.05 |
230.05 |
Buildings (Flats in Mumbai) |
28 |
2.95 |
1.99 |
(ii) The inventories have been physically verified by external agencies during the year. In our opinion, frequency of verification is reasonable having regard to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.
(iii) According to the information and explanations given to us, the Company has not granted loans, secured or unsecured, during the year, to any companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. In view of the above, the clause 3(iii) (a), clause 3(iii) (b) and clause 3(iii) (c) of the Order are not applicable.
(iv) In our opinion and according to information and explanation given to us, the company has complied with provisions of section 185 and 186 of the Act in respect of loans, investments, guarantees and security.
(v) In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from the public in accordance with the provisions of the sections 73 to 76 or any other relevant provisions of the Act, and the rules framed thereunder. Accordingly, paragraph 3(v) of the order is not applicable to the company.
(vi) We have broadly reviewed the cost records maintained by the company specified by the Central Government under sub section (1) of section 148 of the Companies Act, 2013, in respect of Transmission & Telecom Operations of the Company and we are of the opinion that prima facie the prescribed records have been made and maintained. However, we have not made detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) a) According to the information and explanations given to us, the Company is generally regular in depositing undisputed statutory
dues with appropriate authorities including Provident Fund, Income Tax, Goods and Services Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Custom, Duty of Excise, Value Added Tax, Cess and other statutory dues applicable to the Company and that there are no undisputed statutory dues outstanding as at 31st March, 2018 for a period of more than six months from the date they became payable. As informed, provisions of the Employees State Insurance Act are not applicable to the Company.
b) According to information and explanations given to us, there are no disputed dues of Duty of Customs or Duty of Excise which have not been deposited. However, following disputed demands of Income Tax or Sales Tax or Service Tax or Value Added Tax or Cess dues have not been deposited:
Name of the Statute |
Nature of dues |
Amount* (Rs, in crore) |
Period to which the amount relates |
Forum where dispute is pending |
Income Tax Act, 1961 |
Income Tax |
2.23 |
FortheFY 2010-11 |
ITAT, Delhi |
Income Tax Act, 1961 |
Income Tax |
2.02 |
For the FY 2013-14 & 201415 |
CIT (A) Delhi |
Income Tax Act, 1961 |
Income Tax |
5.99 |
Jurisdictional Assessing Officers of TANs |
|
Income Tax Act, 1961 |
Income Tax |
4.16 |
Jurisdictional Assessing Officer, Delhi |
|
Chhattisgarh Entry Tax Act, 1976 |
Entry Tax |
71.44 |
For the FY 2012-13 to 2017-18 |
Chhattisgarh High Court |
Finance Act, 1994 |
Service Tax |
1.57 |
For the F.Y. 2003-04 |
CESTAT, Kolkata |
Bihar Value Added Tax,2005 |
Entry Tax |
12.00 |
For FY 2014-15 |
Chief Commissioner, Commercial Tax, Bihar |
Bihar Value Added Tax,2005 |
Entry Tax |
3.60 |
For FY 2015-16 |
Joint Commissioner, Commercial Tax (Appeals) |
Goa Building & Other Construction Workers Act & Rules thereunder |
Building & Other Construction Workers Cess |
0.04 |
For the F.Y. 2014-15 & 2015-16 |
|
J&K GST Act, 1962 |
Sales Tax |
7.76 |
From F.Y.1996-97 to 2001-02 |
Sales Tax Appellate Tribunal, J&K |
J&K GST Act, 1962 |
Sales Tax |
179.37 |
From F.Y.2002-03 to 2012-13 |
Dy./Addl. Commissioner of Sales Tax (appeals) Jammu, J&K |
Punjab Vat Act, 2005 (Entry Tax) |
Entry Tax |
9.64 |
From F.Y.2011-12 to 201314 |
Hon''able High Court Punjab 8 Haryana, |
Building & Other Construction Workers Cess Act, 1996 |
BOCW |
4.62 |
For FY 2007-08 |
Hon''able High Court Himacha Pradesh, Shimla |
UPVAT High Court |
Sales Tax Demand |
0.10 |
For F.Y. 2015-16 |
Hon''able Allahabad |
UPVAT |
Central Sales Tax |
0.01 |
For FY 2013-14 |
Dy. Commissioner, Commercial Tax, Allahabad |
Finance Act,1994 |
Service Tax |
0.05 |
FY 2015-16 & 2016-17 |
Commissioner of Central Tax, Hyderabad |
Total |
304.60 |
* Demand amount including interest, net of amount paid under protest.
(viii) In our opinion and according to the information and explanations given to us the Company has not defaulted during the year in repayment of loans to its financial institutions, bankers and dues to the Bond holders.
(ix) In our opinion on an overall basis and according to the information and explanations given to us, the company has applied the term loans including funds raised through bonds for the purpose they were obtained. The company has raised funds by issuance of debt instruments (bonds) during the year. The company has not raised money by way of initial public offer or further public offer during the year.
(x) According to the information and explanations given to us and as represented by the management, we have been informed that no case of fraud has been committed on or by the company during the year.
(xi) In view of exemption given vide notification no. G. S. R. 463(E) dated June 5, 2015, issued by Ministry of Corporate Affairs, provisions of Section 197 read with Schedule V of the Act regarding managerial remuneration are not applicable to the Company. Accordingly, paragraph 3(xi) of the order is not applicable to the company.
(xii) The company is not a Nidhi Company as prescribed under section 406 of the Act. Accordingly, paragraph 3(xii) of the order is not applicable to the company.
(xiii) According to the information and explanations given to us and as represented by the management, all transactions with the related parties are in compliance with sections 177 and 188 of the Act, where applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the applicable Indian Accounting Standards.
(xiv) According to the information and explanations given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) is not applicable to the company.
(xv) According to the information and explanations given to us and based on our examination of the records of the company, the company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) is not applicable to the company.
(xvi) According to the information and explanations given to us the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi) is not applicable to the company.
S. No. |
Directions |
Auditors'' Comments |
Action taken by management |
Impact on standalone Ind AS financial statements |
1. |
Whether the company has clear title / lease deeds for freehold and leasehold land respectivelyRs, If not, please state the area of the freehold and leasehold land for which title / lease deeds are not available. |
The Company is having clear title/deeds for freehold, leasehold land and buildings/flats except 268.50 hectares of freehold land valuing Rs,230.05 crore, 133.25 hectares of leasehold land valuing Rs,69.83 crore and 21674 sq.feet offlats valuing Rs,2.95 crore. |
The company is taking appropriate steps for getting clear title for such freehold and leasehold land. |
Nil |
2. |
Whether there are any cases of waiver / write off of debts / loans / interest etc. If yes, the reasons thereof and the amount involved. |
According to the information and explanations given to us, there are no cases of waiver / write off of debts / loans / interest etc. except Rs,0.87 crore recoverable from Kalinga Bidyut Prasaran Nigam Pvt. Ltd. (wholly owned subsidiary company) waived off towards amount recoverable for expenses made on its behalf. |
Charged to the Statement of Profit & Loss |
Profit for the year is lower by Rs,0.87 crore and Other current financial assets are lower by Rs,0.87 crore. |
3. |
Whether proper records are maintained for inventories lying with third parties & assets received as gift, grant(s) from the Govt, or other authorities. |
The company has maintained adequate records in respect of inventories lying with third parties and grant(s) received from the Govt, or other authorities. No assets have been received by the company as gift from Govt, or other authorities. |
Proper records are maintained |
Nil |
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the act")
We have audited the internal financial controls with reference to Ind AS financial statements of the company as at 31st March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls with reference to Ind AS financial statements, based on the internal controls over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls with reference to Ind AS financial statements that were operating effectively for ensuring the orderly and efficient conduct of business, including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditors'' Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls with reference to Ind AS financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Control over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to Ind AS financial statements was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls with reference to Ind AS financial statements included obtaining an understanding of internal financial controls with reference to Ind AS financial statements, assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal controls based on the assessed risk. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system with reference to Ind AS financial statements.
Meaning of Internal Financial Controls with reference to Ind AS financial statements
A company''s internal financial control with reference to Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control with reference to Ind AS financial statements includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company''s assets that could have a material effect on the standalone Ind AS financial statements.
Inherent Limitations of internal Financial Controls with reference to Ind AS financial statements
Because of the inherent limitations of internal financial controls with reference to Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to Ind AS financial statements to future periods are subject to the risk that the internal financial controls with reference to Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system with reference to Ind AS financial statements and such internal financial controls with reference to Ind AS financial statements were operating effectively as at 31st March, 2018, based on the internal financial controls over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For S. K. Mittal & Co. For R. G. N. Price & Co.
Chartered Accountants Chartered Accountants
FRN : 001135N FRN : 002785S
(CA Gaurav Mittal) (CA R. Rangarajan)
Partner Partner
M. No. 099387 M. No. 041883
For Kothari & Co. For Parakh & Co.
Chartered Accountants Chartered Accountants
FRN : 301178E FRN : 001475C
(CA Amitav Kothari) (CA Indra Pal Singh)
Partner Partner
M. No. 016639 M. No. 410433
Place : New Delhi
Date : 29th May, 2018
Mar 31, 2017
We have audited the accompanying standalone Ind AS financial statements of Power Grid Corporation of India Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (herein after referred to as âstandalone Ind AS Financial Statementsâ).
Managementâs Responsibility for the Standalone Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (âInd ASâ) prescribed under Section 133 of the Act, read with relevant rules issued there under.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorsâ Responsibility
Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the 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 including the Ind AS, of the state of affairs (financial position) of the company as at 31st March 2017, its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the Standalone Ind AS Financial Statements:
(a) Note No. 37 (b) (ii) in respect of recognition of revenue from transmission assets for which final tariff orders are yet to be issued by the CERC; and
(b) Note No. 47(a) in respect of Balance confirmation, reconciliation and consequential adjustments, if any, of Trade Receivable and Recoverable and Trade and Other Payables.
Our opinion is not modified in respect of these matters.
Other Matters
(a) The comparative financial information of the company for the transition date opening balance sheet as at 1st April 2015, included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor auditors whose report dated 30th May 2015, for the year ended 31st March 2015, expressed a qualified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the company on the transition to the Ind AS, which have been audited by us.
(b) The comparative financial information of the company for the year ended 31st March 2016, included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by us and our report expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the company on the transition to the Ind AS, which have been audited by us.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), issued by the Central Government of India in terms of subsection (11) of Section 143 of the Act, we give in the Annexure Rs.1â a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. In terms of sub section (5) of section 143 of the Companies Act, 2013, we give in the Annexure Rs.2â a statement on the directions issued under the aforesaid section by the Comptroller and Auditor General of India.
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 purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows, and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with the relevant rules issued thereunder;
(e) In view of exemption given vide notification no. G. S. R. 463(E) dated June 5, 2015, issued by Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of Directors, are not applicable to the 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 in Annexure Rs.3â.
(g) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 49 and 63 to the standalone Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. The company has provided requisite disclosures in the standalone Ind AS financial statements as to holding as well as dealings in Specified Bank Notes during the period from 8th November 2016 to 30th December 2016, on the basis of information available with the company. Based on audit procedures, and relying on managementâs representations we report that disclosures are in accordance with books of accounts maintained by the company and as produced to us by the management. Refer Note 16.
As referred to in our Independent Auditorsâ Report to the members of the Power Grid Corporation of India Limited, on the standalone Ind AS financial statements for the year ended 31st March, 2017, we report that:
(i) a) The Company has generally maintained records, showing full particulars including quantitative details and situation of Fixed Assets (Property, Plant & Equipment).
b) The fixed assets (Property, Plant & Equipment) have been physically verified by external agencies during the year. In our opinion, frequency of verification is reasonable having regard to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.
c) In our opinion and according to information and explanations given to us and on the basis of an examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except:
No. of Cases |
Cost (Rs.In crores) |
Net Block (Rs.in crores) |
|
Leasehold Land |
10 |
51.86 |
42.15 |
Freehold Land |
22 |
159.75 |
159.75 |
Buildings (Flats in Mumbai) |
28 |
2.95 |
2.31 |
(ii) The inventories have been physically verified by external agencies during the year. In our opinion, frequency of verification is reasonable having regard to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.
(iii) According to the information and explanations given to us, the Company has granted unsecured loans to wholly owned subsidiaries covered in the register maintained under section 189 of the Companies Act, 2013 (âthe Actâ).
a) The terms and conditions on which loans have been granted to the borrower companies covered under section 189 of the Act are not, prima facie, prejudicial to the interest of the company.
b) The schedule of repayment of principal and payment of interest has been stipulated and the repayments and receipts are regular.
c) There are no overdue amounts of more than 90 days in respect of loans granted to the companies listed in the register maintained under section 189 of the Act.
(iv) In our opinion and according to information and explanation given to us, the company has complied with provisions of section 185 and 186 of the Act in respect of loans, investments, guarantees and security.
(v) In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from the public in accordance with the provisions of the sections 73 to 76 or any other relevant provisions of the Act, and the rules framed thereunder. Accordingly, paragraph 3(v) of the order is not applicable to the company.
(vi) We have broadly reviewed the cost records maintained by the company specified by the Central Government under sub section (1) of section 148 of the Companies Act, 2013, in respect of Transmission & Telecom Operations of the Company and we are of the opinion that prima facie the prescribed records have been made and maintained. However, we have not made detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) a) According to the information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues with appropriate authorities including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Custom, Duty of Excise, Value Added Tax, Cess and other statutory dues applicable to the Company and that there are no undisputed statutory dues outstanding as at 31st March, 2017 for a period of more than six months from the date they became payable. As informed, provisions of the Employees State Insurance Act are not applicable to the Company.
b) According to information and explanations given to us, there are no disputed dues of Duty of Customs or Duty of Excise which have not been deposited. However, following disputed demands of Income Tax or Sales Tax or Service Tax or Value Added Tax or Cess dues have not been deposited:
Name of the Statute |
Nature of dues |
Amount* (Rs. in crore) |
Period to which the amount relates |
Forum where dispute is pending |
Income Tax Act, 1961 |
Income Tax |
4.00 |
For the F.Y. 2004-05, 2005-06 & 2010-11 |
ITAT, Delhi |
Income Tax Act, 1961 |
Income Tax |
2.37 |
For the F.Y. 2012-13 & 2013-14 |
CIT (A) Delhi |
Income Tax Act, 1961 |
Income Tax |
6.16 |
Jurisdictional Assessing Officers of TANs |
|
Income Tax Act, 1961 |
Income Tax |
0.03 |
Jurisdictional Assessing Officer, Delhi |
|
Chhattisgarh Entry Tax Act, 1976 |
Entry Tax |
67.94 |
For the F.Y. 2012-13, 2013-14, 2014-15, 2015-16 & 2016-17 |
Asst. Commissioner, Commercial Tax, Durg |
Finance Act, 1994 |
Service Tax |
1.57 |
For the F.Y. 2003-04 |
CESTAT, Kolkata |
Goa Building & Other Construction Workers Act & Rules thereunder |
BOCW |
0.04 |
For the F.Y. 2014-15 & 201516 |
--- |
Building and Other Construction Workers Welfare Cess Act, 1996 |
BOCW |
4.23 |
For the F. Y. 2007-08 |
Honâable High Court, Himachal Pradesh, Shimla |
Income Tax Act, 1961 |
Interest on TDS on Perks |
0.03 |
For F.Y.2010-11, 2011-12 |
CIT (Appeal), Shillong |
J&K GST Act, 1962 |
Sales Tax |
47.87 |
From F.Y.1996-97 to 2001-02 |
Sales Tax Appellate Tribunal, J&K |
J&K GST Act, 1962 |
Sales Tax |
115.38 |
From F.Y.2002-03 to 2011-12 |
Dy. Commissioner of Sales Tax (appeals) Jammu, J&K |
Punjab Vat Act, 2005 (Entry Tax) |
Entry Tax |
9.64 |
From F.Y.2011-12 to 2013-14 |
Honâable High Court Punjab & Haryana, |
UP VAT |
Sales Tax Demand |
0.10 |
For F.Y. 2016-17 |
Honâable Allahabad High Court |
Total |
259.36 |
* Demand amount including interest, net of amount paid under protest.
(viii) In our opinion and according to the information and explanations given to us the Company has not defaulted during the year in repayment of loans to its financial institutions, bankers and dues to the Bond holders.
(ix) In our opinion on an overall basis and according to the information and explanations given to us, the company has applied the term loans including funds raised through bonds for the purpose they were obtained. The company has raised funds by issuance of debt instruments (bonds) during the year. The company has not raised money by way of initial public offer or further public offer during the year.
(x) According to the information and explanations given to us and as represented by the management, we have been informed that no case of fraud has been committed on or by the company during the year.
(xi) In view of exemption given vide notification no. G. S. R. 463(E) dated June 5, 2015, issued by Ministry of Corporate Affairs, provisions of Section 197 read with Schedule V of the Act regarding managerial remuneration are not applicable to the Company. Accordingly, paragraph 3(xi) of the order is not applicable to the company.
(xii) The company is not a Nidhi Company as prescribed under section 406 of the Act. Accordingly, paragraph 3(xii) of the order is not applicable to the company.
(xiii) According to the information and explanations given to us and as represented by the management, all transactions with the related parties are in compliance with sections 177 and 188 of the Act, where applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the applicable Indian Accounting Standards.
(xiv) According to the information and explanations given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) is not applicable to the company.
(xv) According to the information and explanations given to us and based on our examination of the records of the company, the company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) is not applicable to the company.
(xvi) According to the information and explanations given to us the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi) is not applicable to the company.
For S. K. Mittal & Co. For Parakh & Co. For Kothari & Co. For R. G. N. Price & Co.
Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants
FRN : 001135N FRN : 001475C FRN : 301178E FRN : 002785S
(CA S. K. Mittal) (CA Indra Pal Singh) (CA Manaswy Kothari) (CA R. Rangarajan)
Partner Partner Partner Partner
M. No. 008506 M. No. 410433 M. No. 064601 M. No. 041883
Place : New Delhi
Date : 29th May, 2017
Mar 31, 2016
We have audited the accompanying standalone financial statements of
Power Grid Corporation of India Limited ("the Company"), which comprise
the Balance Sheet as at 31st March, 2016, the Statement of Profit and
Loss, the Cash Flow Statement for the year then ended, and a summary of
the significant accounting policies and other explanatory information,
Management''s Responsibility for the Standalone 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 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 Rule 7 of the
Companies (Accounts) Rules, 2014. 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 financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
there under.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company''s Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
financial statements.
Opinion
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:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2016;
(b) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date;
(c) in the case of the Cash Flow Statement, of the cash lows for the
year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the
Financial Statements:
(a) Note No. 2.25(b) in respect of provisional recognition of revenue
from transmission charges.
(b) Note No. 2.34(a) in respect of Balance confirmation, reconciliation
and consequential adjustments, if any, of Trade Receivable and
Recoverable and Trade and Other Payables.
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, 2016 ("the
Order"), issued by the Central Government of India in terms of sub-
section (11) of Section 143 of the Act, we give in the Annexure ''1'' a
statement on the matters specified in paragraphs 3 and 4 of the Order,
to the extent applicable.
2. In terms of sub section (5) of section 143 of the Companies Act,
2013, we give in the Annexure''2'' a statement on the directions issued
under the aforesaid section by the Comptroller and Auditor General of
India.
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
purposes of our audit;
b. In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books;
c. The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account;
d. 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;
e. On the basis of the written representations received from the
directors as on 31st March, 2016, and taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March,
2016, from being appointed as a director in terms of section 164(2) of
the Act.
f. With respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating effectiveness
of such controls, refer to our separate report in Annexure ''3''.
g. With respect to the other matters to be included in the Auditor''s
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements  Refer Note 2.38 and
2.52 to the financial statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses;
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure to the Independent Auditors'' Report
Annexure 1''
As referred to in our Independent Auditors'' Report to the members of
the Power Grid Corporation of India Limited (''the Company''), on the
standalone financial statements for the year ended 31st March, 2016, we
report that:
(i) a) The Company has generally maintained records, showing full
particulars including quantitative details and situation of Fixed
Assets.
b)The fixed assets have been physically verified by external agencies
during the year. In our opinion, frequency of verification is
reasonable having regard to the size of the Company and nature of its
business. No material discrepancies were noticed on such verification.
c) In our opinion and according to information and explanations given
to us and on the basis of an examination of the records of the Company,
the title deeds of immovable properties are held in the name of the
Company except:
No. of Cases Gross Block Net Block Remarks
Leasehold Land 12 49.57 42.39 -
Freehold Land 36 212.60 212.60 -
Buildings 28 7.27 2.64 Flats in
Mumbai
(ii) The inventories have been physically verified by external agencies
during the year. In our opinion, frequency of verification is
reasonable having regard to the size of the Company and nature of its
business. No material discrepancies were noticed on such verification.
(iii) According to the information and explanations given to us, the
Company has granted unsecured loans to wholly owned subsidiaries
covered in the register maintained under section 189 of the Companies
Act, 2013 (''the Act'').
a) The terms and conditions on which loans have been granted to the
borrower companies covered under section 189 of the Act are not, prima
facie, prejudicial to the interest of the company.
b) The schedule of repayment of principal and payment of interest has
been stipulated and the repayments and receipts are regular.
c) There are no overdue amounts of more than 90 days in respect of
loans granted to the companies listed in the register maintained under
section 189 of the Act.
(iv) In our opinion and according to information and explanation given
to us, the company has complied with provisions of section 185 and 186
of the Act in respect of loans, investments, guarantees and security.
(v) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposit from the public
in accordance with the provisions of the sections 73 to 76 or any other
relevant provisions of the Act, and the rules framed thereunder.
Accordingly, paragraph 3(v) of the order is not applicable to the
Company.
(vi) We have broadly reviewed the cost records maintained by the
Company specified by the Central Government under sub section (1) of
section 148 of the Companies Act, 2013, in respect of Transmission &
Telecom Operations of the Company and we are of the opinion that prima
facie the prescribed records have been made and maintained. We have,
however, not made detailed examination of the cost records with a view
to determine whether they are accurate or complete.
(vii) a) According to the information and explanations given to us, the
Company is generally regular in depositing undisputed statutory dues
with appropriate authorities including Provident Fund, Income Tax,
Sales Tax, Wealth Tax, Service Tax, Duty of Custom, Duty of Excise,
Value Added Tax, Cess and other statutory dues applicable to the
Company and that there are no undisputed statutory dues outstanding as
at 31st March, 2016 for a period of more than six months from the date
they became payable. As informed, provisions of the Employees State
Insurance Act are not applicable to the Company.
b) According to information and explanations given to us, there are no
disputed dues of Duty of Customs or Duty of Excise which have not been
deposited. However, following disputed demands of Income Tax or Sales
Tax or Service Tax or Value Added Tax or Cess dues have not been
deposited:
Name of the Nature of Amount* Period to which the
Statute dues (Rs.in
Crore) amount relates
Income Tax Act, 1961 Income Tax 10.23 2004-05, 2005-06,
2008-09,2009-10,
2010-11
Income Tax Act, 1961 Income Tax 10.86 2008-09, 2009-10,
2011-12,2012-13
Income Tax Act, 1961 Income Tax 8.74 2007-08 to 2014-15
Income Tax Act, 1961 Income Tax 1.15 2006-07,2007-08,
2008-09,2012-13,
2015-16
Finance Act, 1994 Service Tax 1.57 2003-04
Finance Act, 1994 Service Tax 1.89 2007-08,2008-09
J&K GST Act, 1962 Sales Tax 50.88 1995-96 to 2001-02
J&KGSTAct, 1962 Sales Tax 72.99 2002-03 to 2010-11
Punjab Vat Act, 2005 Entry Tax 9.64 2011-12 to 2013-14
Building and Other
Construction Workers Cess 3.85 2007-08
Welfare Cess
Act, 1996
Total 171.80
Name of the Statute Forum where dispute is pending
Income Tax Act, 1961 ITAT, Delhi
Income Tax Act, 1961 CIT(A)Delhi
Income Tax Act, 1961 Jurisdictional Assessing Officers of TANs
Income Tax Act, 1961 Jurisdictional Assessing Officer, Delhi
Finance Act, 1994 CESTAT, Kolkata
Finance Act, 1994 Commissioner (Central Excise), Bhubaneswar
J&K GST Act, 1962 Sales Tax Appellate Tribunal, J&K
J&K GST Act, 1962 Dy. Commissioner of Sales Tax (appeals)
Jammu, J&K
Punjab Vat Act, 2005 Hon''able High Court Punjab & Haryana,
Building and other
Construction Workers Hon''able High Court, Himachal Pradesh,
Welfare Cess Act, 1996 Shimla
* Demand amount including interest, net of amount paid under protest.
(viii) In our opinion and according to the information and explanations
given to us the Company has not defaulted during the year in repayment
of loans to its financial institutions, bankers and dues to the Bond
holders.
(ix) In our opinion on an overall basis and according to the
information and explanations given to us, the Company has applied the
term loans including funds raised through bonds for the purpose they
were obtained. The Company has raised funds by issuance of debt
instruments (bonds) during the year. The Company has not raised money
by way of initial public offer or further public offer during the year.
(x) According to the information and explanations given to us and as
represented by the management, we have been informed that no case of
frauds has been committed on or by the Company during the year.
(xi) According to the information and explanations given to us
managerial remuneration has been paid or provided in accordance with
the requisite approval mandated by the provisions of section 197 read
with schedule V to the Act.
(xii) The Company is not a Nidhi Company as prescribed under section
406 of the Act. Accordingly, paragraph 3(xii) of the order is not
applicable to the Company.
(xiii) According to the information and explanations given to us and as
represented by the management, all transactions with the related
parties are in compliance with sections 177 and 188 of the Act, where
applicable and the details have been disclosed in the financial
statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and
based on our examination of the records of the Company, the Company has
not made any preferential allotment or private placement of shares or
fully or party convertible debentures during the year.
(xv) According to the information and explanations given to us and
based on our examination of the records of the Company, the Company has
not entered into non-cash transactions with directors or persons
connected with them.
(xvi) According to the information and explanations given to us the
Company is not required to be registered under section 45 IA of the
Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi) is not
applicable to the Company.
For S.K. Mittal
& Co. For Parakh &
Co. For Kothari
& Co. For R.G.N.Price
& Co.
Chartered
Accountants Chartered
Accountants Chartered
Accountants Chartered
Accountants
Firm Regn No.
001135N Firm Regn No.
001475C Firm Regn No.
301178E Firm Regn No.
002785S
(CA. M.K.
Juneja) (CA Indra Pal
Singh) (CA.Manaswy
Kothari) (CA. R.Rangarajan)
Partner Partner Partner Partner
M.No. 013117 M.No. 410433 M.No. 064601 M.No. 041883
Place: New Delhi
Date: 26th May, 2016
Mar 31, 2015
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of
Power Grid Corporation of India Limited ("the Company"), which comprise
the Balance Sheet as at 31st March, 2015, the Statement of Profit and
Loss, the Cash Flow Statement for the year then ended, and a summary of
the significant accounting policies and other explanatory information.
Management''s Responsibility for the Standalone 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 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 Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding 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 financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
there under.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company''s Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion.
Basis for Qualified Opinion
i) The company has not made any adjustment in respect of revenue of Rs.
144.91 crore recognized for the period 01.07.2010 to 31.08.2011 in
respect of Barh-Balia Transmission line, wherein company appeal is
pending with Hon''ble Supreme Court against the order of Appellate
Tribunal for Electricity (ATE) to re-determine the Date of Commercial
Operation (DOCO) refer note 2.38. Pending decision of Hon''ble Supreme
Court, and determination of DOCO by CERC and in view of uncertainty
involved, in our opinion, provision should have been made for the
revenue recognized for the period under dispute. This has resulted in
increase of Profit before tax for the year by Rs. 109.70 crore and
increase in Current Assets by Rs. 109.70 crore.
ii) The Company has not made any provision in respect of outstanding
dues of Rs. 15.64 crore from one of the medium term open access
customers, which is under liquidation, under an order of the Hon''ble
High Court at Calcutta, refer note 2.39. Moreover, no favourable order
has been received in respect of Company''s petition before the Central
Electricity Regulatory Commission for allowing the recovery of such
dues from other beneficiaries. As the recovery of such dues is
doubtful,in our opinion, the provision should have been made in the
accounts. This has resulted in increase of Profit before tax for the
year by Rs. 11.84 crore and increase in Current Assets by Rs. 11.84
crore.
iii) Furthermore, as a result of non-provisions mentioned in our
qualification Nos. i) and ii) stated above, there are impact on various
heads in the financial statements, the aggregate impact of all the
above is as under:
Sl. Particulars Increase Decrease
(Rs. Crore) (Rs. Crore)
1 Revenue from operation 37.45
2 Employee Benefit Expenses 1.56
3 Transmission, administration and
other expenses 160.55
4 Profit Before Tax 121.54
5 Tax Expenses 8.15
6 Profit After Tax 129.69
7 Reserves & Surplus and Shareholders''
Fund 129.69
8 Short-term Provisions 5.75
9 Capital work in progress 0.84
10 Trade Receivable 160.55
11 Other Current Assets 37.45
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in the Basis for Qualified Opinion paragraph, the 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:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2015;
(b) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date;
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date. Emphasis of Matter
We draw attention to Note No. 2.25(b) to the financial statements, in
respect of provisional recognition of revenue from transmission
charges. Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2015 ("the
Order"), issued by the Central Government of India in terms of sub-
section (11) of Section 143 of the Act, we give in the Annexure''l''a
statement on the matters specified in paragraphs 3 and 4 of the Order,
to the extent applicable.
2. In terms of sub section (5) of section 143 of the Companies Act,
2013, we give in the Annexure ''2'' a statement on the directions issued
under the aforesaid section by the Comptroller and Auditor General of
India.
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 appears from our examination of those
books
c. The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d. Except for the effects of the matter described in the Basis for
Qualified Opinion paragraph, in our opinion, the Balance Sheet,
Statement of Profit and Loss and Cash Flow Statement comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014;
e. The matter described in the Basis for Qualified Opinion paragraph
above, in our opinion, may not have an adverse effect on the
functioning of the Company.
f. On the basis of written representations received from the directors
as on 31st March, 2015, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March, 2015, from
being appointed as a director in terms of Section 164(2) of the Act.
g. The qualification relating to the maintenance of accounts and other
matters connected therewith are as stated in the Basis for Qualified
Opinion paragraph above.
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, 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 2.38, 2.39
and 2.52 to the financial statements.
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure ''1'' referred to in our Independent Auditors'' Report to the
members of the Power Grid Corporation of India Limited, on the
standalone financial statements for the year ended 31st March, 2015, we
report that:
(i) a) The Company has generally maintained records, showing full
particulars including quantitative details and situation of Fixed
Assets.
b) The fixed assets have been physically verified by external agencies
during the year and discrepancies, though not material, noticed on such
verification have been reconciled/ adjusted in the books of account. In
our opinion, frequency of verification is reasonable having regard to
the size of the Company and nature of its assets.
(ii) a) Physical verification of inventories has generally been
conducted on periodic intervals. In our opinion system and frequency of
verification is reasonable.
b) In our opinion, the procedures of physical verification of
inventories, followed by the Management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
c) In our opinion, the Company has maintained proper records of its
inventory. The discrepancies noticed on physical verification of the
inventories, though not material, have been properly dealt with in the
books of account.
(iii) During the year the Company has granted unsecured loans amounting
to Rs. 229.70 crore to two wholly owned subsidiaries covered in the
register maintained under section 189 of the Companies Act, 2013 (''the
Act''). Outstanding balance as on 31st March 2015 is Rs. 229.70 crore.
a) Principal amount and interest are not yet due as per the terms of
the loans.
b) Since receipt of principal amount and interest are not due, question
of overdue amount of more than rupee one lakh does not arise.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems, commensurate
with the size of the Company and the nature of its business, with
regard to purchase of inventory and fixed assets and income from sales
of goods and services. During the course of our audit we have not
observed any continuing failure to correct major weaknesses in the
underlying internal control systems. However process of contract
closing work needs to be expedited.
(v) Since the Company has not accepted any deposit from public, the
question of compliance with the directives issued by the Reserve Bank
of India and the provisions of Section 73 to 76 or other relevant
provisions of the Companies Act, 2013, and rules framed there under,
does not arise.
(vi) We have broadly reviewed the cost records maintained by the
company specified by the Central Government under sub section (1) of
Section 148 of the Companies Act, 2013, in respect of Transmission &
Telecom Operations of the Company and we are of the opinion that prima
facie the prescribed records have been made and maintained. We have,
however, not made detailed examination of the cost records with a view
to determine whether they are accurate or complete.
(vii) a) According to the information and explanations given to us, the
Company is regular in depositing undisputed statutory dues with
appropriate authorities including Provident Fund, Income Tax, Sales
Tax, Wealth Tax, Service Tax, Duty of Custom, Duty of Excise, Value
Added Tax, Cess and other statutory dues applicable to the Company and
that there are no undisputed statutory dues outstanding as at 31st
March, 2015 for a period of more than six months from the date they
became payable. As informed, provisions of the Employees State
Insurance Act are not applicable to the Company.
b) According to information and explanations given to us, there are no
disputed dues of Wealth Tax or Duty of Customs or Duty of Excise which
have not been deposited. However, following disputed demands of Income
Tax or Sales Tax or Service Tax or Value Added Tax or Cess dues have
not been deposited:
Name of the Statute Nature of Amount* Period to which the
amount
dues (Rs. in
Crore) relates
Income Tax Act, 1961 Income Tax 15.49 2004-05, 2005-06,
2007-08, 2008-09,
2009-10, 2010-11
Income Tax Act, 1961 Income Tax 0.08 2005-06, 2007-08
Income Tax Act, 1961 Income Tax 9.49 2008-09, 2009-10,
2011-12
Finance Act, 1994 Service Tax 1.57 2003-04
Finance Act, 1994 Service Tax 1.89 2007-08, 2008-09
J&K GST Act, 1962 Sales Tax 50.71 1995-96 to 2001-02
J&K GST Act, 1962 Sales Tax 57.75 2002-03 to 2009-10
Punjab Vat Act, 2005 Entry Tax 9.64 2011-12 to 2013-14
MP Entry Tax Act, 1976 Entry Tax 20.67 2011-12, 2014-15
Building and Other Cess 3.46 2007-08
Construction Workers
Welfare Cess Act, 1996
Total 170.75
Name of the Statute Forum where dispute is pending
Income Tax Act, 1961 ITAT, Delhi
Income Tax Act, 1961 DCIT, Delhi
Income Tax Act, 1961 CIT (A) Delhi
Finance Act, 1994 CESTAT, Kolkata
Finance Act, 1994 Commissioner (Central Excise),
Bhubaneswar
J&K GST Act, 1962 Sales Tax Appellate Tribunal, J&K
J&K GST Act, 1962 Dy. Commissioner of Sales Tax
(appeals) Jammu, J&K
Punjab Vat Act, 2005 Hon''ble High Court Punjab & Haryana
MP Entry Tax Act, 1976 Hon''ble High Court M.P., Jabalpur
Building and other
Construction workers welfare
Cess Act, 1996 Hon''ble High Court, Himachal Pradesh,
Shimla
* Demand amount including interest, net of amount paid under protest.
c) According to the information and explanations given to us, the
amount which was required to be transferred to investor education and
protection fund in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules made there under has been
transferred to such fund within time.
(viii) The Company does not have accumulated losses at the end of
financial year and has not incurred any cash loss in the financial year
under audit, and also in the immediately preceding financial year.
(ix) On the basis of audit procedures adopted by us and according to
the records, the Company has not defaulted in repayment of dues to any
financial institution or bank or bondholders.
(x) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xi) In our opinion on an overall basis and according to the
information and explanations given to us, the company has applied the
term loans for the purpose they were obtained.
(xii) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
year.
Annexure ''2'' referred to in our Independent Auditors'' Report to the
members of Power Grid Corporation of India Limited, on the standalone
financial statements for the year ended 31st March, 2015.
On the directions issued by the Comptroller and Auditor General of
India under sub section (5) of Section 143 of the Companies Act, 2013,
based on the verification of records of the Company and information and
explanations given to us, we report that:
a) The Company has not been selected for disinvestment during the year.
b) There is no case of waiver/write off of loans/ interest, however non
recoverable advances of Rs. 0.56 crore and bad debts Rs. 14.06 crore,
against which provisions were made in earlier years have been written
off during the year, on account of normal business practice.
c) The Company has maintained adequate records in respect of
inventories lying with third parties. No assets have been received by
the Company as gift from Government or other authorities.
d) Age wise analysis of pending legal/arbitration cases as provided by
the management, are as under:
Sl. Category Number of Number Number
No Cases prior of Cases of Cases
to year 2000 between between
2000-2005 2005-2010
1 Land acquisition 12 6 26
2 Tree & crop Compensation 56 126 1036
3 Arbitration 6 7 16
4 Contractual 0 0 2
5 Tax related 1 2 2
6 Civil Misc 10 10 21
Total 85 151 1103
Category Number Total Total Amount
of Cases Number of (Rs. in Crore)
between Cases
2010-2015
Land acquisition 133 177 1983.10
Tree & Crop Compensation 1494 2712 1311.70
Arbitration 22 51 267.00
Contractual 0 2 132.00
Tax related 3 8 296.60
Civil Misc 216 257 86.00
Total 1868 3207 4076.40
As per information and explanations given, in view of the size and
nature of its business, the company is having large number of legal /
arbitration cases including Tree & Crop compensation and Land
Acquisition cases.
Pendency is mainly due to legal process of the Courts/Arbitrators.
In our opinion the Company has in place an adequate monitoring
mechanism for expenditure on such legal cases.
For S.K.MEHTA & CO. For CHATTERJEE & CO. For SAGAR & ASSOCIATES
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Registration
No.000478N Firm Registration
No. 302114E Firm Registration
No. 003510S
(CA Puneet Harjai) (CA S.K.Chatterjee) (CA D. Manohar)
Partner Partner Partner
Membership No.095715 Membership No.003124 Membership No.029644
Place of Signature: New Delhi
Date: 30th May, 2015
Mar 31, 2014
We have audited the accompanying financial statements of Power Grid
Corporation of India Limited ("the Company"), which comprise the
Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss
and the Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act") read with the general circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013. This
responsibility includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. we conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements. we believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the 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:
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2014;
(b) In the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter
We Draw Attention To:
Note 2.25(a) & 2.25(c) of the financial statements, in respect of the
provisional recognition of revenue from transmission charges. our
opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) order, 2003 ("the
order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956, we give in
the Annexure a statement on the matters specified in paragraphs 4 and 5
of the order.
2. As required by section 227(3) of the Act, we report that:
a. We have 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 appears from our examination of those
books;
c. The Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d. In our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in sub-section (3C) of section 211 of the Companies Act, 1956 read
with the General Circular 15/2013 dated 13th September, 2013 of the
Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013; and
e. In pursuance to the notification No. GSR 829(E) dated 21.10.2003,
issued by the department of Company Affairs; clause (g) of sub-section
(1) of section 274 of the Companies Act, 1956 pertaining to
disqualification of directors is not applicable to a Government
Company.
Annexure to the Independent Auditors'' Report Re.: Power Grid
Corporation of India Limited Annexure referred to in our report of even
date for the year ended 31st March, 2014.
(i) a) The Company has generally maintained records, showing full
particulars including quantitative details and situation of Fixed
Assets.
b) The fixed assets have been physically verified by external agencies
during the year and discrepancies, though not material, noticed on such
verification have been reconciled/ adjusted in the books of account. In
our opinion, frequency of verification is reasonable.
c) During the year the company has not disposed off substantial part of
its Fixed Assets.
(ii) a) Physical verification of inventories and construction stores
has generally been conducted on periodic intervals. In our opinion
system and frequency of verification is reasonable.
b) In our opinion, the procedures of physical verification of
inventories, followed by the Management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
c) In our opinion, the Company has maintained proper records of its
inventory. The discrepancies noticed on physical verification of the
inventories have been properly dealt with in the books of account.
(iii) According to the information and explanations given to us, the
Company has neither granted nor taken any loans, secured or unsecured
to / from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act, 1956.
In view of above, other paragraphs of clause (iii) of paragraph 4 of
the order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems, commensurate
with the size of the Company and the nature of its business, with
regard to purchase of inventory and fixed assets and income from sales
of services and goods. during the course of our audit we have not
observed any continuing failure to correct major weaknesses in the
underlying internal control systems. However process of contract
closing work needs to be expedited.
(v) According to the information and explanations given to us, there
are no contracts or arrangements during the year referred to in section
301 of the Companies Act 1956, to be entered in the register maintained
under that section. In view of above, other paragraphs of clause (v) of
paragraph 4 of the order are not applicable.
(vi) Since the Company has not accepted any deposit from the public,
the question of compliance with the directives issued by the Reserve
Bank of India and the provisions of section 58A, 58AA and other
relevant provisions of the Companies Act, 1956, and rules framed there
under, does not arise.
(vii) In our opinion, the Company has an internal audit system
commensurate with its size and nature of business.
(viii) We have broadly reviewed the cost records maintained by the
company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209 (1) (d) of the
Companies Act, 1956, in respect of Transmission & Telecom operations of
the Company and we are of the opinion that prima facie the prescribed
records have been made and maintained. we have, however, not made
detailed examination of the cost records with a view to determine
whether they are accurate or complete.
(ix) a) According to the information and explanations given to us, the
Company is regular in depositing undisputed statutory dues with
appropriate authorities including Provident Fund, Investor Education
and Protection Fund, Income Tax, Sales Tax, wealth Tax, Service Tax,
Custom duty, Excise duty, Cess and other statutory dues applicable to
the Company and that there are no undisputed statutory dues outstanding
as on 31st March, 2014 for a period of more than six months from the
date they became payable. As informed, provisions of the Employees
State Insurance Act are not applicable to the Company.
b) According to information and explanations given to us, following
disputed demands of Income Tax / Sales Tax / Customs duty / wealth Tax
/ Service Tax / Excise duty / Cess dues have not been deposited:
Name of the Statute Nature of Amount Period to which the
Dues (Rs.in
crore) amount relates
Punjab VAT Act, 2005 Entry Tax 9.64 2011-12 to 2013-14
(Entry Tax)
J&K GST Act 1962 Sales Tax 33.99 1992-93 to 2001-02
J&K GST Act 1962 Sales Tax 31.56 2002-03 to 2008-09
Finance Act, 1994 Service Tax 1.57 2004-05
Finance Act, 1994 Service Tax 1.89 2007-08 & 2008-09
Income Tax Act, 1961 Income Tax 153.76 2010-11
Income Tax Act, 1961 Income Tax 162.47 2004-05 to 2009-10
Total 394.88
Name of the statue Forum where the dispute is pending
Punjab VAT Act, 2005
(Entry Tax) Hon''ble High Court, Punjab & Haryana
J&K GST Act 1962 Sales Tax Appellate Tribunal, J&K State,
J&K GST Act 1962 Dy. Commissioner of
Sales Tax (Appeals), Jammu.
Finance Act, 1994 CESTAT, Kolkata
Finance Act, 1994 Commissioner of Central Excise, Customs &
Service Tax, Bhubaneswar.
Income Tax Act, 1961 Commissioner of Income Tax (Appeals), Delhi.
Income Tax Act, 1961 Income Tax Appellate Tribunal, Delhi.
Total
(x) The Company does not have accumulated losses at the end of
financial year and has not incurred any cash loss in the financial year
under audit, and also in the immediately preceding financial year.
(xi) on the basis of audit procedures adopted by us and according to
the records, the Company has not defaulted in repayment of dues to any
financial institution or bank or bondholders.
(xii) The company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.
(xiii) The company is not a chit fund or nidhi/ mutual benefit
fund/society. Accordingly, Clause (xiii) of paragraph 4 of the order is
not applicable.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, debentures, and other investments. Accordingly, Clause (xiv) of
paragraph 4 of the order is not applicable.
(xv) In the case of Power Link Transmission Limited, wherein the
Company has pledged its shares in favour of financial institutions for
financial assistance obtained by the said company, as per the terms and
conditions of Joint Venture agreement. According to the information and
explanations given to us, except the above, the Company has not given
any guarantee for loans taken by others from banks or financial
institutions. In our opinion and to the best of our information and
according to explanations given to us, the terms and conditions of the
above share pledge agreement are not, prime facie, prejudicial to the
interest of the company.
(xvi) In our opinion on an overall basis and according to the
information and explanations given to us, the company has applied the
term loans for the purpose they were obtained.
(xvii) In our opinion, on an overall basis, and according to the
information and explanations given to us, the company has not used the
funds raised on short term basis for long term investment.
(xviii) The Company has not made any preferential allotment of shares
to parties and Companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(xix) The Company has not issued any debentures. However, in respect of
certain bonds amounting to Rs.1999.20 crore, security/ charge is yet to
be created.
(xx) The end use of money raised by Follow-on Public offer (FPo) during
the year as stated in the Red Herring Prospectus (RHP) filed with SEBI
is disclosed in the Note 2.34 to the Financial Statements. Proceeds
utilized during the year have been duly verified by the monitoring
agency IFCI Ltd. Unutilized FPo proceeds are kept with Banks as Term
deposits for utilization in future.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For S. K. MEHTA & CO. For CHATTERJEE & CO. For SAGAR & ASSOCIATES
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Registration
No.000478N Firm Registration
No. 302114E Firm Registration
No. 003510S
(CA Rohit Mehta) (CA R.N.Basu) (CA B.Aruna)
Partner Partner Partner
Membership No.091382 Membership No.050430 Membership No.216454
Place of Signature: New Delhi
Dated : 29th May, 2014
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of Power Grid
Corporation of India Limited ("the Company"), which comprise the
Balance Sheet as at March 31, 2013, and the Statement of Profit and
Loss and Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management''s Responsibilityfor the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
ofthe Companies Act, 1956 ("the Act"). This responsibility includes the
design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that give
a true and fair view and are free from material misstatement, whether
due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation ofthe financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the 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 generallyaccepted in
India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
(b) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(c) inthe case of the Cash Flow Statement, of the cash flows forthe
year ended on that date.
Emphasis of Matters
We draw attention to:
Note 2.25(a) & 2.25(c) of the financial statements, in respect of the
provisional recognition of revenue from transmission charges.
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required under the provisions of Companies (Auditor''s Report)
Order, 2003 ("the Order") issued by the Central Government of India in
terms of sub-section (4A) of section 227 ofthe Companies Act, 1956, we
give in the Annexure a statement on the matters specified in paragraphs
4 and 5 of the Order.
2. As required by section 227(3) of the Companies Act, 1956, we report
that:
a. we have 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 appears from our examination of those
books;
c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in sub-section (3C) of section 211 of the Companies Act, 1956;
e. in pursuance to the notification No. GSR 829(E) dated 21.10.2003,
issued by the Department of Company Affairs; clause (g) of sub- section
(1) of section 274 of the Companies Act, 1956 pertaining to
disqualification of Directors is not applicable to a Government
Company.
Annexure to the Independent Auditors'' Report
Re: PowerGrid Corporation of India Limited
Annexure referred to in our report of even date for the year ended 31st
March, 2013
(i) a) The Company has generally maintained records of Fixed Assets,
showing full particulars including quantitative details and situation
of Fixed Assets.
b) The fixed assets have been physically verified by external agencies
during the year and discrepancies, though not material, noticed on such
verification have been reconciled/ adjusted in the books of account. In
our opinion, frequency of verification is reasonable.
c) During the year the company has not disposed off substantial part of
its Fixed Assets.
(ii) a) Physical verification of inventories lying with the company has
been conducted during the year by the external agencies. In respect of
material lying with contractors, company is having system of obtaining
confirmation from contractors on periodic basis. Inour opinion system
and frequency of verification is reasonable.
b) The procedures of physical verification of inventories, followed by
the Management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
c) The Company has maintained proper records of inventory. The
discrepancies noticed on physical verification of the inventories have
been properly dealt with in the books of account.
(iii) According to the information and explanations given to us, the
Company has neither granted nor taken any loans, secured or unsecured
to / from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act, 1956.
In view of above, other paragraphs ofclause (iii) of paragraph 4 ofthe
Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems, commensurate
with the size ofthe Company and the nature of its business, with regard
to purchase of inventory and fixed assets and income from sales of
services and goods. During the course of our audit we have not observed
any continuing failure to correct major weaknesses in the underlying
internal control systems. However process of contract closing work
needs to be expedited.
(v) According to the information and explanations given to us, there
are no contracts or arrangements during the year referred to in section
301 ofthe Companies Act 1956, to be entered in the register maintained
under that section. In view of above, other paragraphs of clause (v) of
paragraph 4 of the Order are not applicable.
(vi) Since the Company has not accepted any deposit from the public,
the question of compliance with the directives issued by the Reserve
Bank of India and the provisions of section 58A, 58AA and other
relevant provisions of the Companies Act, 1956, and rules framed there
under, does not arise.
(vii) In our opinion, the Company has an internal audit system
commensurate with its size and nature of business.
(viii) We have broadly reviewed the cost records maintained by the
company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209 (1) (d) ofthe
Companies Act, 1956, in respect of Transmission & Telecom Operations of
the Company and we are of the opinion that prima facie the prescribed
records have been made and maintained. We have, however, not made
detailed examination of the cost records with a view to determine
whether they are accurate or complete.
(ix) a) According to the information and explanations given to us, the
Company is regular in depositing undisputed statutory dues with
appropriate authorities including Provident Fund, Investor Education
and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax,
Custom Duty, Excise Duty, Cess and other statutory dues applicable to
the Company and that there are no undisputed statutory dues outstanding
as on 31st March, 2013 for a period of more than six months from the
date they became payable. As informed, provisions of the Employees
State Insurance Act are not applicable to the Company,
b) According to information and explanations given to us, following
disputed demands of Income Tax / Sales Tax / Customs Duty / Wealth
Tax/Service Tax / Excise Duty / Cess dues have not been deposited:
Amount Period to which the
Name of the Statute Nature of dues (Rs. in
crore) amount relates
Punjab VAT Act,
2005 (Entry Tax) Entry Tax 8.78 2011-12 to 2012-13
J&K GST Act 1962 Sales Tax 33.98 1992-93 to 2001-02
J&K GST Act 1962 Sales Tax 18.51 2002-03 to 2007-08
J&K VAT Act 2005 Sales Tax 0.15 2008-09
Finance Act 1994 Service Tax 1.57 2004-05
Finance Act 1994 Service Tax 1.89 2007-08 & 2008-09
Income Tax Act 1961 Income Tax 5.04 2008-09& 2009-10
Income Tax Act 1961 Income Tax 157.43 2004-05 to 2007-08
Total 227.35
Name of the Statute Forum where the dispute is pending
Punjab VAT Act,
2005 (Entry Tax) Honbl. High Court, Punjab & Haryana
J & K GST Act 1962 J&K State, Sales Tax Appellate Tribunal
J & K GST Act 1962 Dy. Commissioner of Sales Tax (Appeals),
Jammu, J&K State
J & K VAT Act 2005 Dy. Commissioner of Sales Tax (Appeals),
Jammu, J&K State
Finance Act 1994 CESTAT, Kolkata
Finance Act 1994 Commissioner of Central Excise, Customs &
Service Tax, Bhubaneswar.
Income Tax Act 1961 Commissioner of Income Tax (Appeals),Delhi.
Income Tax Act 1961 Income Tax Appellate Tribunal, Delhi.
(x) The Company does not have accumulated losses at the end of
financial year and has not incurred any cash loss in the financial year
under audit, and also in the immediately preceding financial year.
(xi) On the basis of audit procedures adopted by us and according to
the records, the Company has not defaulted in repayment of dues to any
financial institution or bank or bondholders.
(xii) The company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.
(xiii) The company is not a chit fund or nidhi/ mutual benefit
fund/society. Accordingly, Clause (xiii) of paragraph 4 of the Order is
not applicable.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, debentures, and other investments. Accordingly, Clause (xiv) of
paragraph 4 of the Order is not applicable.
(xv) In the case of Power Link Transmission Limited, wherein the
Company has pledged its shares in favour of financial institutions for
financial assistance obtained by the said company, as per the terms and
conditions of Joint Venture agreement. According to the information and
explanations given to us, except the above, the Company has not given
any guarantee for loans taken by others from banks or financial
institutions. In our opinion and to the best of our information and
according to explanations given to us, the terms and conditions ofthe
above share pledge agreement are not, prime facie, prejudicial to the
interest ofthe company.
(xvi) In our opinion on an overall basis and according to the
information and explanations given to us, the company has applied the
term loans for the purpose they were obtained.
(xvii) In our opinion, on an overall basis, and according to the
information and explanations given to us, the company has not used the
funds raised on short term basis for long term investment.
(xviii) The Company has not made any preferential allotment of shares
to parties and Companies covered in the register maintained under
section 301 ofthe Companies Act, 1956.
(xix) The Company has not issued any debentures. However, in respect of
certain bonds raised during the year amounting to Rs.1990 crore,
security/ charge is yet to be created.
(xx) The end use of money raised by Follow-on Public Offer (FPO) during
the year 2010-11 as stated in the draft prospectus filed with SEBI and
offer document are disclosed in the Note 2.34 to the financial
statements. For the interim period the FPO proceeds were kept with
Banks as Term Deposits and ultimately utilized for the stated end use
and the same has been duly verified by the monitoring agency IFCI Ltd.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For S.K.MEHTA & CO. For CHATTERJEE & CO. For SAGAR & ASSOCIATES
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Registration
No.000478N Firm Registration
No. 302114E Firm Registration
No. 003510S
(CA Jyoti Bagga) (C A R.N.Basu) (C A B.Srinivasa Rao)
Partner Partner Partner
Membership No.087002 Membership No.050430 Membership No.202352
Place of Signature: Gurgaon
Date: 28th May, 2013
Mar 31, 2012
1. We have audited the attached Balance Sheet of Power Grid
Corporation of India Limited as at 31st March, 2012, and the Statement
of Profit and Loss and also the Cash Flow Statement for the year ended
on that date annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with Auditing Standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003, issued
by the Central Government of India in terms of sub section (4A) of
section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
Order.
4. We draw attention to Note No. 2.25(a) & 2.25(c) in respect of
provisional recognition of revenue from transmission charges.
5. Further to our comments in the annexure referred to in paragraph 3
above, we report that:
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
b) In our opinion, proper books of account as required by law, have
been kept by the Company, so far as appears from our examination of
those books;
c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report are in compliance with
the Accounting Standards referred to in Sub-Section (3C) of Section 211
of the Companies Act, 1956;
e) Being a Government Company, pursuant to the Notification no. GSR
829(E) dated 21.10.2003, issued by the Department of Company Affairs;
clause (g) of sub-section (1) of section 274 of Companies Act, 1956
pertaining to disqualification of Directors is not applicable to the
Company;
f) In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements, read
together with Accounting Policies and Notes on Accounts annexed thereto
give the information required by the Companies Act, 1956, in the manner
so required, and give a true and fair view in conformity with the
accounting principles generally accepted in India :
i) in the case of Balance Sheet, of the state of affairs of the Company
as at 31st March, 2012;
ii) in the case of Statement of Profit and Loss, of the profit of the
Company for the year ended on that date; and
iii) in the case of Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure to the Auditors' Report
RE: POWER GRID CORPORATION OF INDIA LIMITED
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE
(i) a) The Company has generally maintained records of Fixed Assets,
showing full particulars including quantitative details and situation
of Fixed Assets.
b) The fixed assets have been physically verified by external agencies
during the year and discrepancies, though not material, noticed on such
verification have been reconciled/ adjusted in the books of account. In
our opinion, frequency of verification is reasonable.
c) During the year the company has not disposed off substantial part of
its Fixed Assets.
(ii) a) Physical verification of inventories lying with the company has
been conducted during the year by the external agencies. In respect of
material lying with contractors, company is having system of obtaining
confirmation from contractors on periodic basis. In our opinion system
and frequency of verification is reasonable.
b) The procedures of physical verification of inventories, followed by
the Management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
c) The Company has maintained proper records of inventory. The
discrepancies noticed on physical verification of the inventories have
been properly dealt with in the books of account.
(iii) According to the information and explanations given to us, the
Company has neither granted nor taken any loans, secured or unsecured
to / from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act, 1956.
In view of above, other paragraphs of clause (iii) of paragraph 4 of
the Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems, commensurate
with the size of the Company and the nature of its business, with
regard to purchase of inventory and fixed assets and income from sales
of services. During the course of our audit we have not observed any
continuing failure to correct major weaknesses in the underlying
internal control systems. However process of contract closing work
needs to be further expedited.
(v) According to the information and explanations given to us, there
are no contracts or arrangements during the year referred to in section
301 of the Companies Act 1956, to be entered in the register maintained
under that section. In view of above other paragraphs of clause (v) of
paragraph 4 of the Order are not applicable.
(vi) Since the Company has not accepted any deposit from the public,
the question of compliance with the directives issued by the Reserve
Bank of India and the provisions of section 58A, 58AA and other
relevant provisions of the Companies Act, 1956, and rules framed there
under, does not arise.
(vii) The Company has an Internal Audit system. In our opinion, the
scope and coverage of Internal Audit are commensurate with the size and
nature of its business.
(viii) We have broadly reviewed the cost records maintained by the
company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209 (1)(d) of the
Companies Act, 1956, in respect of Transmission & Telecom Operations of
the Company and we are of the opinion that prima facie the prescribed
records have been made and maintained. We have, however, not made
detailed examination of the cost records with a view to determine
whether they are accurate or complete.
(ix) a) According to the information and explanations given to us, the
Company is regular in depositing undisputed statutory dues with
appropriate authorities including Provident Fund, Investor Education
and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax,
Custom Duty, Excise Duty, Cess and other statutory dues applicable to
the Company and that there are no undisputed statutory dues outstanding
as on 31st March, 2012 for a period of more than six months from the
date they became payable. As informed, provisions of the Employees
State Insurance Act are not applicable to the Company.
b) According to information and explanations given to us, following
disputed demands of income tax / sales tax / customs duty / wealth tax
/ service tax / excise duty / cess dues have not been deposited:
Nature of dues Amount Forum where the disputes
are pending
(Rs. in crore)
Entry Tax 0.02 Appellate Board, Commercial
Tax Department, Madhya Pradesh
Entry Tax 1.05 Dy. Commissioner (Appeals),
Commercial Tax Department,
Madhya Pradesh
Entry Tax 11.40 Joint Commissioner of
Commercial Tax
(Appeal), Patna
Entry Tax 5.98 Honbl. High Court, Punjab
& Haryana
Sales Tax 33.89 J&K State, Sales Tax
Appellate Tribunal
Sales Tax 18.51 Dy. Commissioner of Sales
Tax (Appeal), Jammu, J&K State
Service Tax 1.57 Commissioner of Central
Excise, Patna
Diversion Tax (For
non-agriculture
use of land) 2.23 S D O, Itarsi
Income Tax 160.84 Commissioner of Income
Tax (Appeals), Delhi.
Income Tax 2.60 Income Tax Appellate
Tribunal, Delhi.
Total 238.09
(x) The Company does not have accumulated losses at the end of
financial year and has not incurred any cash loss in the financial year
under audit, and also in the immediately preceding financial year.
(xi) On the basis of audit procedures adopted by us and according to
the records, the Company has not defaulted in repayment of dues to any
financial institution or bank or bondholders.
(xii) The company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.
(xiii) The company is not a chit fund or nidhi/ mutual benefit
fund/society. Accordingly, Clause (xiii) of paragraph 4 of the Order is
not applicable.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, debentures, and other investments. Accordingly, Clause (xiv) of
paragraph 4 of the Order is not applicable.
(xv) In the case of Power Link Transmission Limited, wherein the
Company has pledged its shares in favour of financial institutions for
financial assistance obtained by the said company, as per the terms and
conditions of Joint Venture agreement. According to the information and
explanations given to us, except the above, the Company has not given
any guarantee for loans taken by others from banks or financial
institutions. In our opinion and to the best of our information and
according to explanations given to us, the terms and conditions of the
above share pledge agreement are not, prime facie, prejudicial to the
interest of the company.
(xvi) In our opinion on an overall basis and according to the
information and explanations given to us, the company has applied the
term loans for the purpose, they were raised during the year.
(xvii) In our opinion, on an overall basis, and according to the
information and explanations given to us, the company has not used the
funds raised on short term basis for long term investment.
(xviii) The Company has not made any preferential allotment of shares
to parties and Companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(xix) The Company has not issued any debentures. However, in respect of
certain bonds raised during the year amounting to Rs. 2,655 crore
security/ charge is yet to be created.
(xx) The end use of money raised by Follow-on Public Offer during the
year 2010-11 as stated in the draft prospectus filed with SEBI and
offer document are disclosed in the Note No. 2.34 to the financial
statements and the same has been duly verified by us.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For S. K. MEHTA & CO. For CHATTERJEE & CO. For SAGAR & ASSOCIATES
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Registration
No. 000478N Firm Registration
No. 302114E Firm Registration
No. 003510S
(S.K. Mehta) (S.K. Chatterjee) (V. Vidyasagar Babu)
Partner Partner Partner
Membership No. 010870 Membership No. 003124 Membership No. 027357
Place: New Delhi
Dated: 29th May, 2012
Mar 31, 2011
1. we have audited the attached Balance Sheet of Power grid
Corporation of India Ltd. as at March 31, 2011, and the Profit and Loss
Account and also the Cash Flow Statement for the year ended on that
date annexed thereto. These financial statements are the responsibility
of the Company's management. our responsibility is to express an
opinion on these financial statements based on our audit.
2. we conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free from material mis-statements. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. we believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditor's Report) order, 2003, read
with Companies (Auditor's Report) (Amendment) order, 2004 issued by the
Central government of India in terms of section 227 (4A) of the
Companies Act, 1956, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said order.
4. we draw attention to Note No. 14 (b), (c) and (d) of Schedule 28 Ã
Notes on Accounts regarding provisional recognition of transmission
charges.
5. Further to our comments in the annexure referred to in paragraph 4
above, we report that:
a) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit.
b) In our opinion, proper books of account as required by law have been
kept by the Company, so far as appears from our examination of the
books.
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
d) In our opinion, subject to our observations in paragraph 3 above,
the Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report comply with the Accounting Standards referred
to in Sub- Section (3C) of Section 211 of the Companies Act, 1956.
e) In pursuance to the notification No. gSR 829(E) dated 17.7.2003,
issued by the Department of Company Affairs; clause (g) of sub-section
(1) of section 274 of Companies Act, 1956 pertaining to
disqualification of Directors is not applicable to a government
Company.
f) In our opinion and to the best of our knowledge and according to
information and explanation given to us, the said financial statements,
read together with the Notes on Accounts given in Schedule 28 and
Accounting Policies annexed thereto, in so far as these are not
inconsistent with the Electricity Act, 2003, give the information
required by the Companies Act, 1956, in the manner so required, and
give a true and fair view in conformity with the accounting principles
generally accepted in India :
i) in the case of Balance Sheet, of the state of affairs of the Company
as at 31st March, 2011.
ii) in the case of Profit and Loss Account, of the profit for the year
ended on that date; and
iii) in the case of Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure to the Auditors' report
re: Power Grid Corporation of India Limited
annexure referred to in Paragraph 3 of our report of even Date
1. a) The Company has generally maintained records of Fixed Assets,
showing full particulars including quantitative details and situation
of Fixed Assets.
b) The assets have been physically verified by external agencies during
the year and discrepancies, though not material, noticed on such
verification have been reconciled / adjusted in the books of account.
In our opinion, frequency of verification is reasonable.
c) During the year the company has not disposed off substantial part of
its Fixed Assets.
2. a) Physical verification of inventory has been conducted by
external agencies during the year, except for the materials lying with
contractors. In our opinion frequency of verification is reasonable.
b) The procedures of physical verification of inventories, followed by
the Management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
c) The Company has maintained proper records of inventory. The
discrepancies noticed on physical verification of the inventory have
been properly dealt with in the books of account except material lying
with contractors where verification is not undertaken.
3. The Company has neither granted nor taken any loans, secured or
unsecured to / from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems, commensurate
with the size of the Company and the nature of its business, with
regard to purchase of inventory and fixed assets and income from
transmission, telecom and consultancy activities. During the course of
our audit we have neither come across nor have been informed of any
continuing failure to correct major weaknesses in the underlying
internal control systems except in the matter of closing of contracts.
5. According to the information and explanation given to us, there are
no contracts or arrangements referred to in section 301 of the
Companies Act 1956, during the year, to be entered in the register
maintained under that section . Accordingly Clause (v) of paragraph 4
of the order is not applicable.
6. Since the Company has not accepted any deposit from the public, the
question of compliance with the directives issued by the Reserve Bank
of India and the provisions of section 58-A, 58-AA and other relevant
provisions of Companies Act, 1956, and rules framed thereunder, does
not arise.
7. The Company has an Internal Audit system. In our opinion, the scope
and coverage of Internal Audit are commensurate with the size and
nature of its business.
8. The Central government has prescribed maintenance of Cost Records
under Section 209 (1)(d) of the Companies Act, 1956 in respect of
Transmission & Telecom operations of the Company. we have broadly
reviewed the Records prepared by the Company and are of the opinion
that, prima facie, the prescribed records have been made and
maintained.
9. a) According to the information and explanation given to us, the
Company is regular in depositing undisputed statutory dues with
appropriate authorities including Provident Fund, Income Tax, Sales
Tax, wealth Tax, Service Tax, Custom Duty, Excise Duty and other
statutory dues applicable to the Company and that there are no
undisputed statutory dues outstanding as on 31.3.2011 for a period of
more than six months from the date they became payable.
As informed, the provisions of the Employees State Insurance Act are
not applicable to the Company. Unclaimed bonds of Rs.0.07 crore and
unclaimed dividend of Rs.4.31 crore which has not exceeded the time limit
prescribed under Section 205C of the Companies Act, 1956 are lying as
liability towards Investor Education & Protection Fund.
b) According to information and explanation given to us, following
disputed demands of income tax / sales tax / customs duty / wealth tax
/ service tax / excise duty / cess dues have not been deposited:
Particulars Amount Forum Where Pending
(Rs. in
crore)
Entry Tax 0.01 Appellate Board, Commercial Tax Department,
Madhya Pradesh
Entry Tax 12.44 Dy. Commissioner (Appeals), Commercial Tax
Department, Madhya Pradesh
Entry tax 11.40 Joint Commissioner of Commercial Tax
(Appeal), Patna
Sales Tax 18.15 Assistant Commissioner, Commercial Tax
Department, Madhya Pradesh
Sales Tax 33.89 J&K State Sales Tax Appellate Tribunal
Sales Tax 16.09 Dy. Commissioner of Sales Tax (Appeal),
Jammu, J&K State
Service Tax 1.57 Commissioner of Central Excise, Patna
Education Cess 0.82 Dehgam Nagar Palika, Dehgam
Diversion Tax
(for non- 2.23 S D o, Itarsi
agriculture use
of land)
Income Tax
(TDS) on 38.41 High Court, Kolkata
perquisites
Income Tax &
Interest 1.13 Commissioner of Income Tax ( Appeals),
New Delhi.
Income Tax &
Interest 4.84 Income Tax Appellate Tribunal, Delhi.
10. The Company does not have accumulated losses at the end of
financial year and has not incurred any cash loss in the financial year
under audit, and also in the immediately preceding financial year.
11. on the basis of audit procedures adopted by us and according to the
records, the Company has not defaulted in repayment of dues to any
financial institution or bank or bondholders.
12. The company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. The company is not a chit fund or nidhi/mutual benefit
fund/society. Accordingly, Clause xiii of paragraph 4 of the order is
not applicable.
14. In our opinion, the Company is not dealing in or trading in shares,
debentures, and other investments. Accordingly, Clause xiv of paragraph
4 of the order is not applicable.
15. As informed to us, the Company has not given any guarantee for
loans taken by others from banks or financial institutions, except in
the case of Powerlink Transmission Limited, wherein it has pledged its
shares in favour of financial institutions for financial assistance
obtained by the said company, as per the terms and conditions of Joint
venture Agreement. In our opinion and to the best of our information
and according to explanation given to us, the terms and conditions of
share pledge agreement are not, prime facie prejudicial to the interest
of the company.
16. In our opinion on an overall basis and according to the information
and explanation given to us, the company has applied the term loans for
the purpose, they were raised during the year.
17. In our opinion, on an overall basis, and according to the
information and explanation given to us, the company has not used the
funds raised on short term basis for long term investment.
18. The Company has not made any preferential allotment of shares to
parties and Companies covered in the register maintained under section
301 of the Act during the year.
19. The Company has not issued the debentures during the year.
20. we have verified the end use of money raised by Follow-on Public
offer during the year as stated in the prospectus filed with SEBI,
offer document and as disclosed in the note no. 17 of Notes on Accounts
to the financial statements.
21. According to the information and explanations given to us, no fraud
on or by the Company has been noticed or reported during the course of
our audit.
For A.R. & Co.
Chartered Accountants
Firm Regn No.002744C
Sd/-
(Prabuddha Gupta)
Partner
Membership No.400189
For S R I Associates
Chartered Accountants
Firm Regn No.305109E
Sd/-
( I. Pasha )
Partner
Membership No.013280
For Umamaheswara Rao & Co.
Chartered Accountants
Firm Regn No. 004453S
Sd/-
(A. Siva Prasad)
Partner
Membership No.213675
Place : New Delhi.
Dated : 24th May, 2011.
Mar 31, 2003
We have audited the attached Balance Sheet of Power Grid Corporation of
India Ltd., as at March 31, 2003 and the annexed Profit and Loss
Account of the company for the year ended on that date together with
the Schedules annexed thereto and cash flow statement for the year
ended on that date. These financial statements are the responsibility
of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free from material mis-statements. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
We report as follows:
1. The Company is governed by the Electricity (Supply) Act, 1948. The
Company is also governed by the Electricity Regulatory Commissions Act,
1998. The provisions of the said Acts read with the rules thereunder,
have prevailed wherever the same have been inconsistent with the
provisions of the Companies Act, 1956.
2. As required by the Manufacturing and Other Companies (Auditors
Report) Order, 1988, issued by the Central Government in terms of
section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure
a statement on the matters specified in paragraphs 4 and 5 of the said
Order.
3. On the basis of written representations received from the
directors, and taken on record by the Board of Directors, we report
that none of the directors is disqualified as on March 31, 2003 from
being appointed as a director in terms of clause (g) of sub- section
(1) of section 274 of the Companies Act, 1956.
4. The impact of change in accounting policies during the year :
i) Surcharge, which was hitherto accounted for on receipt basis is now
accounted for on receipt / certainty of receipt. This change in policy
has resulted in increase in other income and profit by Rs. 19229 lacs.
ii) The company has capitalised w.e.f. 01.04.1999 certain insurance
spares which were previously treated as inventory resulting in increase
in fixed assets and decrease in current assets by Rs. 1878 lacs. This
change has also resulted in increase in depreciation by Rs. 50 lacs,
prior period depreciation by Rs. 182 lacs and decrease in profit by Rs.
232 lacs.
iii) Levelling, clearing and grading charges of land which were
hitherto included in the cost of land are now being capitalised as part
of the cost of the buildings retrospectively. This change has resulted
in increase in the cost of Building and decrease in the cost of land by
Rs. 2556 lacs. This change has also resulted in increase in
depreciation by Rs. 67 lacs, prior period depreciation by Rs. 738 lacs
and decrease in profit by Rs. 805 lacs.
5. i) Restoration of deposits of Rs. 11206 lacs, as referred to in
Note no. 81(a) and 811(a) in Schedule 18, has resulted in overstating
capital reserve and understating loan fund to such extent. In our
opinion, the methodology of write back of front-end fee, restoration of
deposit and showing external liability as capital reserve is not
correct.
ii) Rs. 9400 lacs are deposits with CANFINA, as referred to in Note no.
81 (a) in Schedule 18, against which, though the Company holds an adhoc
provision of Rs. 5000 lacs, we are unable to express an opinion about
the extent of recoverability.
iii) Rs. 1806 lacs are deposits with ABFSL, as referred to in Note no.
8 II (a) in Schedule 18 which, though according to the management are
good and recoverable, we are unable to express an opinion about the
extent of recoverability.
iv) Set-off of maturity value of bonds of Rs. 1576.66 lacs during the
year 1998- 99, as referred to in Note no. 8 Kb) in Schedule 18, against
deposits with CANFINA, has resulted in understatement of liabilities
and current assets to such extent
Pending settlement of the above matters, the resultant net effect on
the accounts is not ascertainable.
6. i) Pending disposal of appeal filed by the Company against the CERC
orders before the Honble Delhi High Court, the transmission income for
the year has been accounted for provisionally on the basis of tariff
determined as per CERC norms (Note no. 14(a) in Schedule 18), the
consequential effect of which is not ascertainable.
ii) Depreciation on fixed assets has been provided at the rates
specified in the tariff notification issued by CERC (Note no. 15 in
Schedule 18), resulting in understatement of depreciation and
overstatement of profit for the year by Rs. 46106 lacs.
iii) The Government of India Scheme of April, 2002, for one time
settlement of State Electricity Boards dues to the Company as on
September 30, 2001 (Note no. 20 in Schedule 18), when implemented, may
result in securitisation of Sundry Debtors retrospectively by issue of
bonds.
7. Further to our comments in the annexure referred to in paragraph 2
above, we report that :
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit.
b) In our opinion, proper books of account as required by law have been
kept by the company, so far as appears from our examination of the
books.
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
d) In our opinion, subject to our observations vide paragraph 1 above,
the Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report comply with the Accounting Standards referred
to in Sub-Section (3C) of Section 211 of the Companies Act, 1956.
e) Subject to our observations referred in paragraph 6 (ii) above
resulting in overstatement of profit by Rs. 46106 lacs, and in
paragraphs 5 (i) to (iv), 6 (i) and 6 (iii) the consequential effect of
which is not ascertainable, in our opinion and to the best of our
information and according to the explanations given to us, the said
financial statements, read together with the Notes on Accounts given in
Schedule 18 and Accounting Policies, in so far as these are not
inconsistent with the Electricity (Supply) Act, 1948 and the
Electricity Regulatory Commissions Act, 1998, give the information
required by the Companies Act, 1956, in the manner so required, and
give a true and fair view in conformity with the accounting principles
generally accepted in India;
i) in the case of Balance Sheet, of the state of affairs of the Company
as at March 31, 2003;
ii) in the case of Profit and Loss Account, of the profit for the year
ended on that date; and
iii) in the case of Cash Flow Statement, of the cash flows of the
company for the year ended on that date.
ANNEXURE TO THE AUDITORS REPORT
ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR REPORT OF EVEN DATE
i) The Company has generally maintained record of Fixed Assets.
However, such record do not, in few cases, give full particulars
including location of Fixed Assets. The assets have been physically
verified by external agencies at reasonable intervals and discrepancies
noticed on such verification, though not material, have not been
reconciled / adjusted.
ii) None of the Fixed assets of the company have been revalued during
the year.
iii) Physical verification of stores and spares has been conducted at
reasonable intervals, except for materials lying with contractors.
iv) The procedure of physical verification of stores, followed by the
company, is reasonable and adequate in relation to the size of the
company and the nature of its business.
v) Material discrepancies noticed on physical verification in the stock
of stores and spares have been properly dealt with in the accounts,
except materials lying with contractors, where verification is not
undertaken.
vi) In our opinion and on the basis of our examination of the stock
records, the valuation of stock is fair and proper in accordance with
the normally accepted accounting principles, and is on the same basis
as in the earlier years.
vii) The company has not taken any loans from companies, firms or other
parties listed in the register maintained under section 301 of the
Companies Act, 1956. We were informed that there are no Companies under
the same management.
viii) The Company has not given any loans, secured or unsecured, to
parties listed in the register maintained under section 301 of the
Companies Act, 1956.
ix) The company has given deposits of Rs 9400 lacs to Canbank Financial
Services Ltd (CANFINA) and Rs. 1806 lacs to Andhra Bank Financial
Services Ltd (ABFSL), who have not repaid the principal amount and
interest thereon. The company, however, holds an adhoc provision of Rs.
5000 lacs against deposit with CANFINA. In case of other loans and
advances, in the nature of loans, given by the company, the repayment
of loan and interest, wherever applicable, are generally as stipulated.
x) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures,
commensurate with the size of the company and the nature of its
business, with regard to purchase of stores, components, plant and
machinery, equipments and other assets, and for the sale of power.
xi) According to the information and explanation given to us, there are
no transactions of purchase/sale of goods, materials and services made
in pursuance of contracts or arrangements entered in the register
maintained under section 301 of the Companies Act, 1956, aggregating
during the year to Rs 50000/- (Rupees fifty thousand only) or more, in
respect of each party.
xii) According to the information and explanations given to us, the
Company has a system of determining unserviceable and damaged stores
and the Company makes necessary adjustments in the accounts for any
such stores.
xiii) Since the Company has not accepted any deposit from the public,
the question of compliance with the guidelines issued by the Reserve
Bank of India and the provisions of section 58-A of Companies Act,
1956, and rules framed thereunder, does not arise.
xiv) The Company does not have any by-product. In our opinion,
reasonable records have been maintained by the Company for sale and
disposal of scrap.
xv) The company has an Internal Audit system. In our opinion, the scope
and coverage of Audit are commensurate with the size and nature of its
business. However, the compliance and implementation mechanism needs to
be further strengthened.
xvi) The Central Government has prescribed maintenance of Cost Records
under Section 209 (1 )(d) of the Companies Act, 1956 in respect of
Transmission Operations of the Company. We have broadly reviewed the
Cost Records prepared by the Company and are of the opinion that, prima
facie, the prescribed records have been maintained.
xvii) The Company is regular in depositing Provident Fund dues with the
appropriate authority. As informed, the provisions of the Employees
State Insurance Act are not applicable to the Company.
xviii) According to the information and explanations given to us, there
are no undisputed amounts payable in respect of Income Tax, Wealth Tax,
Sales Tax, Customs Duty and Excise Duty which have remained outstanding
as at March 31, 2003, for a period of more than six months from the
date they became payable.
xix) According to the information and explanations given to us and the
records of the company examined by us, no personal expenses have been
charged to revenue account, other than those payable under contractual
obligations or in accordance with generally accepted business
practices.
xx) The Company is not a sick industrial company within the meaning of
section 3(1 )(o) of the Sick Industrial Companies (Special Provisions)
Act, 1985.
xxi) In regard to the Companys activities relating to Transmission of
Power, Telecom, Consultancy, Project Management, Supervision and
Contracts:-
a) The Company has a reasonable system of recording receipts, issues
and consumption of materials, stores, and allocating materials consumed
to the relative jobs (including construction of infrastructure for
providing transmission services) commensurate with the size and nature
of its business.
b) The Company has reasonable system of allocation of man hours
consumed, to respective activities.
c) The Company has a reasonable system of authorisation at proper
levels, and adequate system of internal control on issue and allocation
of stores and labour to jobs.
d) The Company has a reasonable system of recording receipts, issues
and consumption of materials and stores, commensurate with the size and
the nature of its business.
xxii) In regard to the companys activities relating to the trading,
since the company does not deal with tangible goods, the question of
determination of damaged goods does not arise.
For Hingorani M & Co. For Venugopal & Chenoy For D.R Sen & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
(Pardeep Kumar) (P.V.Sri Hari) (A.K. Sinha)
Partner Partner Partner
Place : Gurgaon
Date : 27th June, 2003.