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Adani Power

BSE: 533096|NSE: ADANIPOWER|ISIN: INE814H01011|SECTOR: Power - Generation & Distribution
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« Mar 15
Auditor's Report (Adani Power) Year End : Mar '16
We have audited the accompanying standalone financial statements of
 ADANI POWER LIMITED (the Company), which comprise the Balance Sheet
 as at 31st March, 2016, the Statement of Profit and Loss and 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
 prescribed under section 133 of the Act.
 
 This responsibility also includes maintenance of adequate accounting
 records in accordance with the provisions of the Act for safeguarding
 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.
 
 Auditor''s 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
 thereunder and the Order under section 143 (11) of the Act.
 
 We conducted our audit of the standalone 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 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 qualified audit opinion on the
 standalone financial statements.
 
 Basis for Qualified Opinion
 
 We draw attention to Note 32 to the standalone financial statements
 regarding the basis on which the Company has continued to recognise
 total revenue of Rs.3,619.49 crores on account of Compensatory Tariff
 for three years period ended 31st March, 2016 (Rs.919.02 crores and
 Rs.857.35 crores recognized during current year and previous year
 respectively), which is predicated on the assessment by the Management
 that the Company will be able to ultimately recover the equivalent
 amount towards impact of the Force Majeure Events pursuant to the order
 of the Appellate Tribunal for Electricity dated 7th April 2016, as more
 fully described in the said Note.
 
 Since the Central Electricity Regulatory Commission, as directed by the
 aforesaid order, is yet to assess the impact of Force Majeure Events
 and give such relief as may be available under the Power Purchase
 Agreements, appropriateness of continuation of the revenue recognition
 for and up to the year, and other consequential effects on the
 financial statements, can only be determined on completion of the said
 assessment, and final outcome of the litigations.
 
 Qualified Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, except for the possible effects of the matter
 described in the Basis for Qualified opinion paragraph above, the
 aforesaid standalone financial statements give the information required
 by the Act in the manner so required and give a true and fair view in
 conformity with the accounting principles generally accepted in India,
 of the state of affairs of the Company as at 31st March, 2016, and its
 profit and its cash flows for the year ended on that date.
 
 Report on Other Legal and Regulatory Requirements
 
 1.  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) Except for the possible effects of the matter described in the Basis
 for Qualified Opinion paragraph above, 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) Except for the possible effects of the matter described in the Basis
 for Qualified Opinion paragraph above, in our opinion, the aforesaid
 standalone financial statements comply with the Accounting Standards
 prescribed under section 133 of the Act.
 
 e) The matter described in the Basis for Qualified Opinion paragraph
 above, in our opinion, may have an adverse effect on the functioning of
 the Company.
 
 f) On the basis of the written representations received from the
 directors as on 31st March, 2016 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.
 
 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 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 A. Our report
 expresses a qualified opinion on the adequacy and operating
 effectiveness of the Company''s internal financial controls over
 financial reporting.
 
 i) With respect to the other matters to be included in the Auditor''s
 Report in accordance with Rule 11 of the Companies (Audit and Auditors)
 Rules, 2014, in our opinion and to the best of our information and
 according to the explanations given to us:
 
 (i) The Company has disclosed the impact of pending litigations on its
 financial position in its standalone financial statements.
 
 (ii) Except for the possible effects of the matter described in Basis
 for Qualified Opinion paragraph, 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 were no amounts which were required to be transferred to
 the Investor Education and Protection Fund by the Company.
 
 2. As required by the Companies (Auditor''s Report) Order, 2016 (the
 Order) issued by the Central Government in terms of Section 143(11) of
 the Act, we give in Annexure B a statement on the matters specified
 in paragraphs 3 and 4 of the Order.
 
 (Referred to in paragraph 2 under ''Report on Other Legal and Regulatory
 Requirements'' section of our report of even date)
 
 (i) In respect of fixed assets
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 (b) Some of the fixed assets were physically verified during the year
 by the Management in accordance with a programme of verification, which
 in our opinion provides for physical verification of all the fixed
 assets at reasonable intervals. According to the information and
 explanations given to us, no material discrepancies were noticed on
 such verification
 
 (c) According to the information and explanations given to us and the
 records examined by us and based on the examination of the registered
 sale deed / transfer deed / conveyance deed provided to us, we report
 that, the title deeds, comprising all the immovable properties of land
 and acquired buildings which are freehold, are held in the name of the
 Company as at the balance sheet date. In respect of immovable
 properties of land that have been taken on lease and disclosed as fixed
 asset in the financial statements, the lease agreements are in the name
 of the Company, where the Company is the lessee in the agreement.
 
 (ii) As explained to us, the inventories were physically verified
 during the year by the Management at reasonable intervals and no
 material discrepancies were noticed on physical verification
 
 (iii) The Company has not granted any loans, secured or unsecured, to
 companies, firms, Limited Liability Partnerships or other parties
 covered in the register maintained under section 189 of the Companies
 Act, 2013
 
 (iv) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 185 and 186 of the Companies Act, 2013 in respect of grant of loans,
 making investments and providing guarantees and securities, as
 applicable.
 
 (v) According to the information and explanations given to us, the
 Company has not accepted any deposits from the public to which the
 directives issued by the Reserve Bank of India and the provisions of
 section 73 to 76 or any other relevant provisions of the Act and the
 Companies (Acceptance of Deposit) Rules, 2014, as amended, would apply.
 Accordingly, paragraph 3(v) of the Order is not applicable to the
 Company.
 
 (vi) The maintenance of cost records has been specified by the Central
 Government under section 148(1) of the Companies Act, 2013. We have
 broadly reviewed the cost records maintained by the Company pursuant to
 the Companies (Cost Records and Audit) Rules, 2014, as amended and
 prescribed by the Central Government under sub-section (1) of Section
 148 of the Companies Act, 2013, and are of the opinion that, prima
 facie, the prescribed cost records have been made and maintained. We
 have, however, not made a detailed examination of the cost records with
 a view to determine whether they are accurate or complete
 
 (vii) According to the information and explanations given to us, in
 respect of statutory dues
 
 (a) The Company has generally been regular in depositing undisputed
 statutory dues, including Provident Fund, Employees'' State Insurance,
 income-tax, Sales Tax, Service Tax, Customs Duty Excise Duty, Value
 Added Tax, cess and other material statutory dues applicable to it to
 the appropriate authorities.
 
 (b) There were no undisputed amounts payable in respect of Provident
 Fund, Employees'' State insurance, Income-tax, Sales Tax, Service Tax,
 Customs Duty, Excise Duty, Value Added Tax, cess and other material
 statutory dues in arrears as at 31st March, 2016 for a period of more
 than six months from the date they became payable
 
 (c) Details of dues of Income-tax, Service Tax and Custom Duty which
 have not been deposited as on 31st March, 2016 on account of disputes
 are given below:
 
 Name of Statute         Nature of           Forum where Dispute is
                         Dues                Pending
 
 Income Tax Act, 1961    Income Tax          Income Tax Appellate
                                             Tribunal 
 
 Income Tax Act, 1961    Income Tax          Commissioner Income Tax
                                            (Appeals) 
 
 Finance Act, 1994       Service Tax         Customs, Excise Service
                                             Tax Appellate Tribunal 
 
 Customs Act, 1962       Custom Duty         High Court of Gujarat
 
 Name of Statute         Period to which the      Amount Involved
                         Amount Relates          (Rs. In crores)
 
 Income Tax Act, 1961    Assessment Year              10.09
                         2010-11
 
 Income Tax Act, 1961    Assessment Year              22.82*
                         2011-12
 
 Finance Act, 1994       2008-09                       5.11
 
 Customs Act, 1962       July, 2015 to 15th           54.95**
                         February, 2016
 
 * Net of H14.04 crores adjusted by the tax authorities against refunds
 due to the Company.
 
 ** Pursuant to the Order of the Hon''ble High Court of Gujarat dated
 11th February, 2016, the recovery of this amount has been stayed.
 
 There are no dues of Sales Tax, Excise Duty or Value Added Tax that
 have not been deposited as at 31st March, 2016 on account of disputes.
 
 (viii) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of loans or
 borrowings to financial institutions, banks and dues to debenture
 holders, except as under:
 
 Lender                                Amount of default
                                       as at the          Period of 
                                                          default as
                                       balance sheet 
                                       date               at the 
                                                          balance sheet
                                      (Rs. In crores)     date
 
 Bank Of India                             49.62             01 day
 
 Deutsche Bank                             27.57             01 day
 
 Standard Chartered Bank                   33.08             01 day
 
 State Bank Of India                       27.57             01 day
 
 The Royal Bank Of Scotland NV             27.57             01 day
 
 The Company has not taken any loans from the Government.
 
 (ix) In our opinion and according to the information and explanations
 given to us, money raised by way of term loans have been applied by the
 Company during the year for the purposes for which they were raised or
 as per purposes revised with appropriate approvals, other than
 temporary deployment pending application of proceeds. The Company has
 not raised moneys by way of initial public offer or further public
 offer (including debt instruments) during the year.
 
 (x) To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no fraud on the
 Company by its officers or employees has been noticed or reported
 during the year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not paid any managerial remuneration to
 its directors, including managing director and whole-time director, and
 its manager.
 
 (xii) The Company is not a Nidhi Company and hence reporting under
 clause (xii) of paragraph 3 of the Order is not applicable.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the Company is in compliance with Section 188 and 177 of
 the Companies Act, 2013, where applicable, for all transactions with
 the related parties and the details of related party transactions have
 been disclosed in the financial statements etc.  as required by the
 applicable accounting standards.
 
 (xiv) According to the information and explanations given to us, the
 Company has made preferential allotment of shares during the year. In
 respect of the issue, we further report that:
 
 (a) the requirement of Section 42 of the Companies Act, 2013, as
 applicable, have been complied with; and
 
 (b) the amounts raised have been applied by the Company during the year
 for the purposes for which the funds were raised, other than temporary
 deployment pending application
 
 (xv) In our opinion and according to the information and explanations
 given to us, during the year the Company has not entered into any
 non-cash transactions with its directors or persons connected with him
 and hence provisions of section 192 of the Companies Act, 2013 are not
 applicable.
 
 (xvi) The Company is not required to be registered under section 45-I
 of the Reserve Bank of India Act, 1934.
 
                                         For Deloitte Haskins & Sells
 
                                                Chartered Accountants
 
                                     (Firm''s Registration No. 117365W)
 
                                                       (Samir R. Shah)
 
 Place: Ahmedabad                                            (Partner)
 
 Date: 3rd May, 2016                           (Membership No. 101708)
Source : Dion Global Solutions Limited
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