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.
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.
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
(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
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
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
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
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
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
crore) amount relates
Punjab VAT Act, 2005 Entry Tax 9.64 2011-12 to 2013-14
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
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.
(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
(xiii) The company is not a chit fund or nidhi/ mutual benefit
fund/society. Accordingly, Clause (xiii) of paragraph 4 of the order is
(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
(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
No.000478N Firm Registration
No. 302114E Firm Registration
(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