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NHPC Ltd.

BSE: 533098 Sector: Infrastructure
NSE: NHPC ISIN Code: INE848E01016
BSE 00:00 | 24 Apr 2020 NHPC Ltd
NSE 05:30 | 01 Jan 1970 NHPC Ltd

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OPEN 20.95
PREVIOUS CLOSE 20.80
VOLUME 160207
52-Week high 29.00
52-Week low 15.15
P/E 6.71
Mkt Cap.(Rs cr) 20,894
Buy Price 21.15
Buy Qty 5.00
Sell Price 21.25
Sell Qty 31.00
OPEN 20.95
CLOSE 20.80
VOLUME 160207
52-Week high 29.00
52-Week low 15.15
P/E 6.71
Mkt Cap.(Rs cr) 20,894
Buy Price 21.15
Buy Qty 5.00
Sell Price 21.25
Sell Qty 31.00

NHPC Ltd. (NHPC) - Auditors Report


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Company auditors report

To the Members of NHPC Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of NHPC Limited("the Company") which comprise the Balance Sheet as at March 31 2019 and theStatement of Profit and Loss (including Other Comprehensive Income) Statement of Changesin Equity and Statement of Cash Flows for the year then ended and Notes to the StandaloneFinancial Statements including a summary of significant accounting policies and OtherExplanatory Notes for the year ended on that date (hereinafter referred to as"Financial Statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and the accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 312019 and profit changes in equityand its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditors' Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have considered the matters described below to bethe Key Audit Matters for incorporation in our Report.

Key audit Matters Addressing the Key Audit Matters
1. Regulatory Deferral Account Balances and accruals of revenue pending tariff Notifications. Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the carrying the value of Regulatory Deferral Account Debit Balances include the following:
(a) Regulatory Deferral Account balances include accruals on account of interest cost and other attributable expenses pertaining to Subansiri Lower Project for the period from the date of interruption of work i.e. 16.12.2011 due to the matter pending before the National Green Tribunal as indicated in Note 34(22A). These expenses have been considered and carried forward as recoverable in terms of Central Electricity Regulatory Commission (CERC) Regulations. • Understanding and testing the design and operating effectiveness of controls as established by the management for accrual of income and determination of the amounts recoverable there against.
The amount involved in the project including the deferral account balances is material. Risk and uncertainties due to the matter being sub judice and pending for decision for a considerable period of time might affect the recovery thereof having significant impact on the affairs of the company. • Obtaining and understanding of the amount recoverable in terms of CERC Regulations and assessing testing and evaluating the reasonableness thereof keeping in view the significant judgements applied by the management for such assessments.
• The above includes the evaluation of the CERC guidelines and acceptance of the claim made by the Company in the past and the trend of disallowances on various count and adherences and compliances thereof by the management and rationale for assumptions taken under the given situation and business environment.
(b) Further as given in Note 34(22B) to 34(22E) Regulatory deferral account balances have been recognised in respect of certain other expenses aggregating to Rs 3225.27 crores on account of Wage Revision foreign exchange fluctuations depreciation on moderation of tariff deferred taxation etc. • Evaluating the various assumptions considered by the management for arriving at the value of Cash generating Unit specially in case of Subansiri Project and coverage thereof and adequacy thereof with respect to the carrying value of the Project in Progress and balances of Regulatory deferral Accounts.
(c) RS 515.05 Crores has been considered recoverable pending approval of tariff by the CERC and/ or approval of revised cost estimate in certain power stations and petitions filed with the CERC towards Energy Shortfall and reimbursement of additional impact of Goods and Service Tax (GST) due to change in law and included under Financial Assets Current- Other (Current) {Note 34 (20)} as on 31st March 2019.
The operating activities of the Company are subject to cost of service regulations whereby tariff charged for electricity generated is based on allowable capital and other cost and expenses and stipulated return there against.
Regulatory Deferral Accounts are based on the estimates with respect to recoverability thereof as per the current CERC Tariff Regulations on final approval and notifications.
Further in cases where Tariff rates are yet to be approved revenue is recognised considering current prevailing CERC Regulations.
The accruals made above in (a) to (c) above are vital to the business in which the Company is operating. In absence of specific notification and rate fixation these are based on the management's assumptions and estimates which are subject to finalisation of tariff by CERC.
2. Impairment Assessment of carrying amount of Property Plant and Equipment (PPE) and Capital Work in Progress (CWIP) Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the non provisioning of any CGU based on impairment testing include the following:
Certain Cash Generating Units (CGUs) of the company and subsidiaries were assessed for impairment as on 31st March 2019. This covers Property Plant and Equipments and Capital Work in Progress in respect of Subansiri Lower Project currently under interruption ( Note 2.2.7) and other projects as given in Note 34(18). This has been assessed that no significant change with an adverse effect on the company has taken place during the year or is expected to take place in the near future in the technological economic or legal environment in which the company and its subsidiaries and joint ventures operate. Based on the assessment the company has concluded that there exists no significant impairment indicator or any impairment in respect of the CGUs of the company and its subsidiary tested for impairment during FY 2018-19. Based on the above assessment no provision for impairment has been considered necessary by the Company. • Critical evaluation of internal and external factors impacting the entity and indicators of impairment (or reversal thereof) in line with Ind AS 38;
Impairment exercise undertaken which justifies the carrying amount of certain assets including the regulatory deferral account balances pertaining to Subansiri Lower Project as dealt with under para 1(a) above is significant and vital to the Company's operations. • Review of impairment valuation models used in relation to CGU to determine the recoverable amount by analysing the key assumptions used by management in this respect including:
- Consistency with respect to forecast for arriving at the valuation and assessing the potential impact of any variances;
- Price assumptions used in the models;
- Factoring of risk inherent to the CGUs in the Cash Flow projections or the discount rate.
- The assumption/estimation for the weighted average cost of capital and rate of discount for arriving at the value in use.
 

 

• Reviewed the Government policy and approval for setting up the Projects decision of the Board and the efforts and steps being undertaken in this respect.
Evaluation of the impairment involves assessment of value in use of the Cash Generating Units (CGUs) and requires significant judgements and assumptions about the future cash flow forecasts forecast production forecast volumes prices and discount rate.
3. Contingent Liabilities - against claim from Contractors (Note 34.1(a)(i)) Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the Contingent Liabilities include the following:
 

Various claims lodged by the Contractors against Capital Works have been disclosed under Contingent Liability. This includes matters under arbitration and/ or before the Court which have been decided against the Company out of which certain amounts have been paid/deposited pursuant to the NITI Aayog directions.

 

• Obtained the status of the case from the legal department and their view on the matter;

Claims made against the Company are significant. These are pending for decision before arbitration or other judicial forums and consequential and possible impact thereof and provisions/disclosure required have been based on the management's assessment of the probability of the occurrence of the liability. • Evaluated the contractual terms and conditions and management's rationale for the adequacy of the provision so far made and the amount remaining unprovided against the demands made against the Company;
• Meeting with management and reading/ reviewing the correspondences Memos and Notes on related matters.
• Reliance has been placed on the legal views and decisions on similar matters and probability of the liability arising therefrom pending final judgement/ decisions;
• Reviewed the appropriateness and adequacy of the disclosure by the management as required in terms of the requirement of IND AS 37 "Provisions Contingent Liabilities and Contingent Assets".
4. Expenditure incurred on Survey and Investigation Projects upto 31.03.2019 Our audit procedures based on which we arrived at the conclusion regarding carrying the amount of expenditure incurred on survey and Investigation Projects incurred include the following:
Expenditure of Rs 1419.98 Crores as given in Note 2.2.2 (including Rs 132.06 Crores for the year) has been incurred for conducting survey and investigation on projects. Out of this Rs 666.05 Crores (including RS 60.52 Crores during the year) have been provided for on account of uncertainty with respect to clearances approval for implementing the Projects leaving Rs 753.93 Crores which has been carried forward as Capital Work in Progress. • Obtained the status of the Projects under Survey and Investigation stage as provided by the management and the reason thereof of keeping them in abeyance including the cases where there are order of appropriate authority or Court to the effect.
In the event of related Projects not being undertaken amounts spent on survey and investigations which are material will no longer be eligible to be carried forward as Capital Work in Progress. • Understanding and testing the design and operating effectiveness of controls as established by the management for accounting the expenses incurred for survey and investigation projects and the policy followed for making provisions/ write off for such expenses given the nature of business of the Company.
• Evaluating the management's rationale with respect to possible abandonment of such projects in future and/ or expected economic use of the same.

Information other than the Financial Statements and Auditors' Report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report including Annexuresto Directors' Report Management Discussion and Analysis Report Business ResponsibilityReport and Report on Corporate Governance but does not include the standalone financialstatements and our auditors' report thereon. The other information as stated above isexpected to be made available to us after the date of this auditors' report.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated.

When we read the other information as stated above and if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance and describe necessary actions required as per applicable laws andregulations.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone financial statementsthat give a true and fair view of the state of affairs (financial position) Profit orLoss (financial performance including other comprehensive income) changes in equity andcash flows of the Company in accordance with the accounting principles generally acceptedin India including the Indian accounting Standards specified under section 133 of theAct.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith Standard on Auditing (SAs) will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol;

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system with reference to financial statements inplace and the operating effectiveness of such controls;

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management;

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern; and

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Other Matter

The standalone financial statements of the Company for the year ended March 31 2018were audited by the then joint auditors of the Company two of whom were predecessor auditfirms and they had expressed an unmodified audit Report vide their report dated May 282018 on such standalone financial Statements.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

i. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

ii. Based on the verification of books of account of the Company and according toinformation and explanations given to us we give below a report on the Directions issuedby the Comptroller and Auditor General of India in terms of Section 143 (5) of the Act:

Directions Reply
1 Whether the Company has system in place to process all the accounting transactions through IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. According to the information and explanations given to us and based on our audit all accounting transactions are routed through ERP system implemented by the Company. Period end Financial Statements are compiled offline based on balances and transactions generated from ERP system.
We have neither been informed nor we have come across during the course of our audit any accounting transactions having impact on the integrity of the accounts along with the financial implications which have been processed outside the IT system.
2 Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/ interest etc. made by a lender to the Company due to the Company's inability to repay the loan? If yes the financial impact may be stated. According to information and explanations given to us and based on our audit there is no case of restructuring of an existing loan or cases of waiver/write off of debts / loans / interest etc. made by lender to the Company.
 

3 Whether funds received/receivable for specific schemes from Central/State agencies were properly accounted for/utilized as per its terms and conditions? List the cases of deviation.

 

According to information and explanations given to us and based on our audit the Company has accounted for and utilized the funds received for specific schemes from Central/ State agencies as per the terms and conditions of the schemes.

iii. Further to our comments in the annexure referred to in the paragraph above asrequired by Section 143(3) of the Act we report that:

a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c) the Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome)the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account;

d) in our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended;

e) in terms of Notification no. G.S.R. 463 (E) dated 05th June 2015 issued by theMinistry of Corporate Affairs provisions of Section 164(2) of the Act regardingdisqualifications of the Directors are not applicable as it is a government Company;

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal control; and

g) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its standalone financial statements - Refer Note no. 34 para 1 to thestandalone financial statements;

ii. The Company has made provision as required under the applicable law or IndianAccounting Standards for material foreseeable losses if any on long-term contracts. TheCompany did not have any derivative contracts; and

iii. There has been no delay in transferring amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.

The financial statements for the year ended March 31 2019 (the financial statements)have been approved by the Board of Directors of the Company on May 27 2019 and our reportof even date (earlier report) on the same was issued.

This Independent Auditors' Report (the report) has been issued in supersession of ourearlier report pursuant to the provisional comments made by Comptroller and AuditorGeneral of India (C&AG) on the Financial Statements after revising the amount ofdisputed dues of cess reported under Para (vii)c of the Annexure 'A' [a statement on thematters specified in paragraph 3 and 4 of the Companies (Auditors' Report) Order 2016]forming part of Other Legal and Regulatory requirements section of earlier report. Therevision relates to the disclosure of the figures in the Annexure 'A' to the report andthereby our opinion on the financial statements as given in the earlier report remainunaltered and our audit procedure on subsequent event remain restricted to date of ourearlier report.

For Arora Vohra & Co. For DSP & Associates For Lodha & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm's ICAI Registration No.: 009487N Firm's ICAI Registration No.:006791N Firm's ICAI Registration No.:301051E
PREM C. BANSAL SANJAY JAIN R P SINGH
Partner Partner Partner
M. No. 083597 M. No. 084906 M. No. 052438
Place : Ludhiana Place : New Delhi Place : Kolkata
Date : 23rd July 2019 Date : 22nd July 2019 Date : 23rd July 2019
UDIN: 19083597AAAAAL8589 UDIN: 19084906AAAAFE9695 UDIN: 19052438AAAAAR3351

ANNEXURE "A" TO THE AUDITORS' REPORT OF EVEN DATE:

i) a. The Company has maintained proper records showing full particulars includingquantitative details and situations of Fixed Assets.

b. As per the information and explanations given to us and on the basis of ourexamination of the records of the Company the Tangible Fixed Assets except Land incertain Units have been physically verified by the management/ outside agencies in aphased manner which in our opinion is reasonable having regard to the size of Companyand nature of its business. The reconciliation of physically verified assets with the bookrecords in certain cases is in progress. Discrepancies noticed on the physicalverification and consequential adjustments are carried out on completion ofreconciliation. According to information and explanations given by the management and inour opinion the same are not material.

c. According to the information and explanations given to us the records examined byus and based on the Title/ Lease deeds provided to us we report that the title/ Leasedeeds comprising all the freehold/ leasehold immovable properties of land and buildingare held in the name of the Company as on the balance sheet date except for the followingwhere the title/lease deeds are not available with the Company:

Nature Area in Hectares Gross block (at actual cost) as at 31.03.2019 (Rs In Crore) Net block as at 31.03.2019 (Rs In Crore)
Freehold land 109.85 6.73 6.73
Leasehold Land 519.68 251.28 236.84
Building under Lease 17.01 16.64

ii) As informed the inventories of the Company except for inventories in transit havebeen physically verified by the management/ outside agencies during the year. In ouropinion and according to the information and explanations given to us the frequency ofsuch verification is reasonable. The discrepancies noticed on physical verification ofinventories as compared to book records were not material and the same have been properlydealt with in the books of account.

iii) According to the information and explanations given to us by the Management theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under section189 of the Act except unsecured loan granted during the previous year to a Company.

i. In our opinion the terms and conditions of grant of such loans are not prima facieprejudicial to the interest of the Company.

ii. In respect of Loan so granted by the Company the schedule of repayment ofprincipal and Interest has been stipulated. Unsecured loan of ' 6 Crores which though duefor repayment during the year was not repaid by the borrower. The borrower has requestedfor extension of the repayment schedule the approval of which is under process by theCompany. However repayment of the interest is regular.

iii. in respect of such loan there is an overdue amount of ' 6 Crore for more thanninety days. As informed to us and based on the explanations given the Company has takenreasonable steps for recovery of the principal.

iv) In our opinion and according to information and explanations given to us theCompany has in respect of loans investments guarantees and security complied with theprovisions of section 185 and 186 of the Act.

v) The Company has not accepted any deposits within the meaning of sections 73 to 76 orany other relevant provisions of the Act. In respect of overdue earnest money deposits andsecurity deposits Management is of the view that overdue earnest money deposits andsecurity deposits of suppliers/contractors appearing in the books are in the nature ofretention money for performance of contracts for supply of goods and services andaccordingly not to be treated as deemed deposits by virtue of amendment in rule 2 subrule (1) clause (c) of the Companies (Acceptance of Deposits) Amendment Rules 2016.

vi) We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records under Section148 (1) of the Act in respect of the Company's products to which the said rules are madeapplicable and are of the opinion that prima facie the prescribed records have beenmaintained. We have however not made a detailed examination of the said records with aview to determine whether they are accurate or complete.

vii) a. According to the information and explanations given to us during the year theCompany has generally been regular

in depositing with appropriate authorities undisputed statutory dues includingProvident Fund Investor Education Protection fund Employees' State Insurance IncomeTax Sales Tax Wealth Tax Goods and Service Tax Service tax Custom Duty Excise DutyValue Added Tax Cess and other material statutory dues as applicable to it.

b. There were no undisputed amounts payable in respect of Provident Fund InvestorEducation Protection fund Employees' State Insurance Income Tax Sales Tax Wealth TaxService tax Custom Duty Excise Duty Value Added Tax Cess and other material statutorydues in arrear as at March 31 2019 for a period of more than six months from the datethey become payable.

c. According to the information and explanations given to us the details of disputeddues of sales tax income tax customs duty wealth tax excise duty service tax andCess if any as at March 31 2019 are as follows:

Name of Statute Nature of Duties Amount (Rs in Crores) Financial Year to which it pertains Deposit under Protest (Rs in Crores) Forum at which case is pending
Sales Tax Acts/VAT Acts Sales Tax/VAT 288.13 1994-95 0.19 J & K Sales Tax Appellate Tribunal
1.6 2008- 09 2009- 10 &2010- 11 to 2014-15 1.42 Assistant Excise & Taxation Commissioner Kullu
19.58 2004-05 to 2012-13 15.29 West Bengal Taxation Tribunal Kolkata
15.08 2012- 13 to 2013- 14 0 CTO Baramulla
25.71 2005-06 to 2007-08 25.71 Deputy Commissioner of Commercial Taxes Sikkim.
Finance Act 1996 Service Tax 22.07 2008-09 to 2011-12 & 2012-13 to 2014-15 22.07 CESTAT Kolkata
101 2013-14 to 2016-17 0 Additional Director General (Adjudication) Director General of GST Intelligence New Delhi
16.13 2004-05 to 2008-09 1.7 Assistant Commissioner of GST Faridabad
0.03 2005-06 0 Service Tax Department Patna
West Bengal Tax on Entry of Goods into Local Areas Act 2012 Entry Tax 1.14 2012-13 to 2017-18 0 Kolkata High Court
Jammu and Kashmir Entry Tax on Goods Act 2000 Entry Tax 0.25 2013-14 0.25 Dy. Commissioner Commercial Taxes Appeal Jammu
The Jammu & Kashmir Urban Immovable Property Tax Act 1962 Property Tax 0.21 1991-92 to 1996- 97 &1997- 98 to 2001-02. 0.014 State Sales Tax Appellate Tribunal Jammu
Uttarakhand Water Tax on Electricity Generation Act 2012 Water Cess 107.89 2015-16 to 2018-19 High Court of Uttarakhand Nainital
Uttarakhand Green Energy Cess Act 2014 Green Energy Cess 45.93 2015-16 to 2018-19 High Court of Uttarakhand Nainital
Building and Other Construction Workers Welfare Cess Act 1996 BOCW Cess 9.24 2010-11 9.24 Labour Officer cum cess assessing officer Chamba Himachal Pradesh

viii) In our opinion and on the basis of information and explanations given to us bythe management we are of the opinion that the Company has not defaulted in repayment ofdues to financial institutions banks Governments or debenture holders.

ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offerduring the year. The Company has raised money by issue of debt instruments during theyear. This includes the amount raised through 8.12 % Semi annual 10 year unsecurednon-cumulative redeemable non-convertible taxable "Government of India fully servicedBonds- Series -I" to meet the funding requirement of Government of India for thescheme of Power System Development Fund during the year. On the basis of our examinationand according to the information and explanations given to us money raised by way of termloans have been applied for the purpose for which the loans were obtained.

x) Based on our audit procedures and as per the information and explanations given tous by the management no fraud by the Company or any fraud on the Company by any personincluding its officers/ employees has been noticed or reported during the year.

xi) As per notification number G.S.R. 463 (E) dated 5th June 2015 issued by Ministryof Corporate Affairs section 197 of the Act as regards the managerial remuneration is notapplicable to the Company since it is a Government Company.

xii) The Company is not a Nidhi Company and hence reporting under paragraph 3(xii) ofthe Order is not applicable to the Company.

xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Standalone Financial Statements as required by theapplicable accounting standards.

xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly clause 3 (xiv) of the Order is not applicable to the Company.

xv) According to the information and explanations given to us and as represented to usby the management and based on our examination of the records of the Company the Companyhas not entered into non-cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable.

xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Arora Vohra & Co. For DSP & Associates For Lodha & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm's ICAI Registration No.: 009487N Firm's ICAI Registration No.:006791N Firm's ICAI Registration No.:301051E
PREM C. BANSAL SANJAY JAIN R P SINGH
Partner

M. No. 083597

Partner

M. No. 084906

Partner

M. No. 052438

Place : Ludhiana Place : New Delhi Place : Kolkata
Date : 23rd July 2019 Date : 22nd July 2019 Date : 23rd July 2019
UDIN: 19083597AAAAAL8589 UDIN: 19084906AAAAFE9695 UDIN: 19052438AAAAAR3351

ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph (f) under 'Report on Other Legal and Regulatory Requirements'of our report of even date)

Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Act

We have audited the internal financial controls with reference to financial statementsof NHPC Limited ("the Company") as at March 312019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theAct to the extent applicable to an audit of internal financial controls. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrol with reference to financial statements was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditors'judgement including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A Company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A Company's internal financialcontrol with reference to financial statements includes those policies and procedures that(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorisations of management and directors of the Company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the Company's assets that could have a material effect on thestandalone financial statements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlswith reference to financial statements and such internal financial controls with referenceto financial statements were operating effectively as at March 31 2019 based on theinternal control with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For Arora Vohra & Co. For DSP & Associates For Lodha & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm's ICAI Registration No.: 009487N Firm's ICAI Registration No.:006791N Firm's ICAI Registration No.:301051E
PREM C. BANSAL SANJAY JAIN R P SINGH
Partner Partner Partner
M. No.083597 M. No. 084906 M. No. 052438
Place : Ludhiana Place : New Delhi Place : Kolkata
Date : 23rd July 2019 Date : 22nd July 2019 Date : 23rd July 2019
UDIN: 19083597AAAAAL8589 UDIN: 19084906AAAAFE9695 UDIN: 19052438AAAAAR3351


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