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Power Grid Corporation of India
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« Mar 12
Auditor's Report (Power Grid Corporation of India) Year End : Mar '13
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
Source : Dion Global Solutions Limited
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