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
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
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
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 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
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
(Rs. in crore)
Entry Tax 0.02 Appellate Board, Commercial
Tax Department, Madhya Pradesh
Entry Tax 1.05 Dy. Commissioner (Appeals),
Commercial Tax Department,
Entry Tax 11.40 Joint Commissioner of
Entry Tax 5.98 Honbl. High Court, Punjab
Sales Tax 33.89 J&K State, Sales Tax
Sales Tax 18.51 Dy. Commissioner of Sales
Tax (Appeal), Jammu, J&K State
Service Tax 1.57 Commissioner of Central
Diversion Tax (For
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
(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 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
No. 000478N Firm Registration
No. 302114E Firm Registration
(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