SJVN Ltd Auditors Report.
The Members of SJVN LIMITED
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of SJVN LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows, the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone Ind AS financial statements").
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the state of a airs ( financial position) of the Company as at 31st March, 2019, and its profit/loss ( financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have ful lled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is su cient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most signi cance 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Information Other than the Standalone Financial Statements and Auditors Report Thereon
The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the standalone financial statements and our auditors report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Managements Responsibility for the Standalone Ind AS Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the state of a airs ( financial position), profit or loss ( financial performance including other comprehensive income), cash flows and statement of changes in equity of the Company in accordance with the accounting principles generally accepted in India, including Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with relevant rules issued there under.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or tofficease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Companys financial reporting process.
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to in uence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is su cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in order to design 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 has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company tofficease to continue as a going concern.
Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be in uenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit ndings, including any significant de ciencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Emphasis of Matter
We draw attention to the following matters in the Notes to the standalone Ind AS financial statements:
a) Note No. 2.30 to the standalone Ind AS financial statements in respect of accounting of sales on provisionally approved tariff .
b) Note No. 2.39 to the standalone Ind AS financial statements, regarding the uncertainty related to the outcome of the claims/ arbitration proceedings and lawsuit led by/ against the Company on/ by contractors and others. In some of the cases the arbitration award has been decided against the Company/ lost in lower courts and the company is pursuing the matter in higher courts. Management does not envisage any possible out flow in respect of decisions against the company other than those already provided for in the books of account.
c) Note 2.42 to the Ind AS financial statements, regarding the certain balances which are subject to reconciliation / confirmation and respective consequential adjustments.
Our opinion is not modi ed in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143 (11) of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. We are enclosing our report in terms of Section 143 (5) of the Act on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, in the "Annexure-B" on the directions issued by Comptroller and Auditor General of India.
3. As required by Section 143 (3) of the Act, we report that:
a) We have sought and obtained all the information and explanations which to the best of 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 the Company so far as it appears from our examination of those books.
c) The Balance Sheet, the Statement of Profit and Loss, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid Standalone Ind AS Financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act read with the relevant rules issued there under.
e) In view of the exemptions given vide Noti cation No. G.S.R. 463 (E) dated 5th June 2015 issued by the Ministry of Corporate A airs, the provisions of Section 164 (2) of the Companies Act, 2013 regarding disquali cation of directors, are not applicable to the company.
f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to the separate Report in "Annexure C".
g) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company have disclosed the impact of pending litigations on its financial position in Note No.2.39 to standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;
iii. There has been no delay in transferring amounts which were required to be transferred to Investor Education and Protection Fund by the Company.
|For A P R A & Associates LLP|
|FRN - 011078N / N500064|
|Date: 29th May 2019||Partner|
|Place: New Delhi||M.No.504395|
ANNEXURE- A" TO THE AUDITORS REPORT
(Referred to in Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of SJVN LIMITED for the year ended 31st March, 2019)
I. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its Fixed Assets except for inter unit transfers.
(b) As explained to us all the assets were got physically veri ed during the year by the management from outside agency. We were informed that no material discrepancies were noticed on such veri cation.
(c) Title deed of immovable properties were not shown to us except those which were acquired through acquisition order of Govt. at RHPS neither any conveyance deed nor any lease deed has been executed for forest land.
ii. The inventories of the company consists of stores and spare parts. We were informed that these have been physically veri ed during the year by the management through outside agencies. We were informed that no material discrepancies were noticed on such veri cation.
iii. According to the information and explanations given to us, the company has not granted any loans, secured or unsecured to companies, rms or other parties covered in the register maintained under section 189 of the Companies Act 2013. Accordingly, the provisions of clause 3 (iii) (a), (b) and (c) of the order are not applicable
iv. In our opinion and according to the information and explanations given to us, the company has complied with provisions of section 185 and 186 of the Companies Act, 2013, with respect to the loans, investments, guarantees and securities.
v. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public in terms of section 73 to 76 or any other provisions of the Companies Act, 2013 and rules made there under.
vi. The company has made and maintained cost accounts and records as specified by the Central Government under section 148 (1) of the Companies Act 2013. However, we have not made a detailed examination of these accounts and records with a view to determine whether they are accurate and complete.
vii. a) According to the information and explanations and records of the Company, the company is generally regular in depositing undisputed statutory dues including Provident Fund, Income tax, GST, Service tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other statutory dues with the appropriate authorities. There are no outstanding statutory dues for a period of more than six months from the date they became payable as on 31st March, 2019. We are informed that the provisions of Employees State Insurance Act are not applicable to the company.
Further as per our observation, the Company has not accounted for and paid GST on the following transactions during the year under audit:
|Name of the Statute||Nature of the Transaction||Taxable Amount (Rs. Lakh)|
|GST||Food expenses recovered from employees||56.96|
|GST||Recovery towards private use of vehicles by employees||2.45|
b) According to the information and explanations given to us, dues of income tax, GST, wealth tax, service tax, custom duty, excise duty, value added tax, cess and other material statutory dues that have not been deposited on account of any dispute are given below:
|Name of the Statute||Nature of the Dues||Amount (Rs. in Lakh)||Forum where dispute is pending|
|Income Tax Act, 1961||Income Tax||2,578||CIT(A)|
viii. Based upon the audit procedure performed and information and explanation given to us by the management, the company has not defaulted in repayment of loans and borrowing to any financial institution, banks, government or dues to debenture holders.
ix. The company has not raised money by way of initial public offer or further public offer and the term loans.
x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information/ explanation given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we have been informed of any such cases by the management.
xi. In view of the exemptions given vide in terms of Noti cation No. G.S.R. 463 (E) dated 5th June 2015 issued by the Ministry of Corporate A airs, the provisions of Section 197 read with schedule V to the Companies Act, 2013 regarding managerial remuneration, are not applicable to the company.
xii. The company is not a Nidhi Company.
xiii. All the transactions with the related parties are in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable and the details have been disclosed in the Note No. 2.47 to the financial statements, as required by the applicable accounting standards.
xiv. The company has not made any preferential allotment or private placements of shares or fully or partly convertible debentures during the year.
xv. In our opinion and according to the information and explanations given to us, the company has not entered into any non-cash transaction with Directors or persons connected with him.
xvi. The company is not required to be registered under schedule 45-1A of the Reserve Bank of India Act 1934.
|For A P R A & Associates LLP|
|FRN - 011078N / N500064|
|Date: 29th May 2019||Partner|
|Place: New Delhi||M.No.: 504395|
"ANNEXURE-B" TO THE AUDITORS REPORT
Annexure referred to in paragraph 2 of our report of even date to the members of SJVN LIMITED on the accounts for the year ended 31st March, 2019.
|Sr. No.||Directions||Actions Taken||Impact on Financial Statements|
|1||Whether the Company has system in place to process all the accounting transactions through IT systemRs. 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.||Yes||NIL|
|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 If yes, the financial impact may be stated. companys inability to repay the loanRs.||No such case come across during the audit.||NIL|
|3||Whether funds received/receivable for specific schemes from Central/State agencies were properly accounted for/utilized as per its term and conditionsRs. List the cases of deviation.||No such case come across during the audit.||NIL|
"ANNEXURE- C" TO THE AUDITORS REPORT
(Referred to in paragraph 3 (f) under Report on Other Legal and Regulatory Requirements section of our report of even date)
Report on the Internal Financial Controls under Clause (i) of sub -section 3 of section 143 of the Companies Act, 2013 ("the Act") for the year ended 31st March, 2019.
We have audited the internal financial controls over financial reporting of SJVN LIMITED ("the Company") as at March 31, 2019 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The companys Management is responsible for establishing and maintaining internal financial controls based on the Internal Control over financial reporting criteria established by the Company considering the essential components of Internal control stated in the Guidance Note on Audit of the Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate Internal Financial Controls that were operating effectively for ensuring the orderly and e cient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with Guidance note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standard on Auditing, issued by ICAI and deemed to be prescribed under section 143 (10) of the Companies Act 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those standards and the Guidance Note require that we Comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate Internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the Internal financial controls system over financial reporting and their operating effectiveness, our audit of internal financial controls over financial reporting included obtaining and understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error.
We believe that the audit evidence we have obtained is su cient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable details, accurately and fairly reflect the transactions and disposition of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statement in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitation of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due tofferror or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company has in all material respect, an adequate internal financial controls systems over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the Company Considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. However, the following de ciencies were observed during audit:
(i) Four Contracts were awarded to M/s Inox Wind Ltd. to the tune ofRs.36223 lakh for installation and maintenance of 25 WEGs of 2 MW each at Sadla, which were scheduled to be installed by 25-11-2017. PPA agreement for 38 MW (19 WEGs) was signed by SJVN Ltd. on 02-01-2018. Till 31.03.2019, out of 25 WEGs only 19 WEGs have been installed. This has resulted in blocking of huge investment and loss of revenue on daily basis. There are various issue in relation to contract with M/s Inox Wind Ltd: - There is a delay in Installation of project by Inox Wind Ltd.
- LDs have not been imposed and deferred.
- As per terms of contract no direct Payments can be made to Sub - Contractor but the Company has made some direct payments.
(ii) There is weakness in GST compliances. In respect of some transactions like Canteen Expenses recovered from Employees and recovery towards private use of vehicles from employees, the company is not paying GST/Service tax.
(iii) Presently the Investment in TDRs and FDRs by Organization is done based on email/fax received from various FI/Banks. To inculcate the accountability in system, good number of organizations has moved from Manual to E-Bidding, Reverse Bidding process, which not only fetch better rate of interest but also brings transparency in system.
|For A P R A & Associates LLP|
|FRN - 011078N / N500064|
|Date: 29th May 2019||Partner|
|Place: New Delhi||M.No.504395|