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Power Grid Corporation of India
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« Mar 13
Auditor's Report (Power Grid Corporation of India) Year End : Mar '14
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
Source : Dion Global Solutions Limited
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