SJVN Ltd Directors Report.

To

The Members of SJVN LIMITED

Report on the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of SJVN LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2020, and the Statement of Profit and Loss, Statement of Changes in Equity, and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 affairs (financial position) of the Company as at 31st March, 2020, and its profit/loss (financial performance including other comprehensive income), changes in equity and 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) specified under section 143(10) of the Companies Act, 2013. 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to the following matters in the Notes to the standalone financial statements:

a) Note No. 2.30 and 2.57 (V)to the standalone financial statements in respect of billing and accounting of sales on the basis of provisionally approved tariff.

b) Note No. 2.63 to the standalone financial statements which describes the assessment of the impact of Covid-19 pandemic by the management on the business and its associated financial risks.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance 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. For each matter below, description of how our audit addressed the matter is provided in that context. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter How our audit addressed the key audit matter
1. Contingent Liabilities and Provisions
There are a number of litigations pending before various forums against the Company and the managements judgement is required for estimating the amount to be disclosed as contingent liability and for creating the adequate amount of provision, wherever required. We have obtained an understanding of the Companys internal instructions and procedures in respect of estimation and disclosure of contingent liabilities and adopted the following audit procedures:
We identified this as a key audit matter because the estimates on which these amounts are based involve a significant degree of management judgment in interpreting the cases and it may be subject to management bias. (Refer Note No. 2.39 to the Standalone Financial Statements, read with the Accounting Policy No.1.17) - understood and tested the design and operating effectiveness of controls as established by the management for obtaining all relevant information for pending litigation cases;
- discussed with the management any material developments and latest status of legal matters;
- examined managements judgements and assessments whether provisions are required;
- considered the management assessments of those matters that are not disclosed as the probability of material outflow is considered to be remote;
- reviewed the adequacy and completeness of disclosures; Based on the above procedures performed, the estimation and disclosures of contingent liabilities and creation of provisions are considered to be adequate and reasonable.
2. Property, Plant & Equipment
There are areas where management judgement impacts the carrying value of property plant and equipment and their respective depreciation rates. These include the decision to capitalise or expense costs; the annual asset life review; the timeliness of the capitalisation of assets and the use of management assumptions and estimates for the determination or the measurement and recognition criteria for assets retired from active use. Due to the materiality in the context of the balance sheet of the Company and the level of judgement and estimates required, we consider this to be as area of significance. (Refer Note No. 2.1 to the Standalone Financial Statements, read with the Significant Accounting Policy No. 1.3) We assessed the controls in place over the fixed asset cycle, evaluated the appropriateness of capitalisation process Performed tests of details on costs capitalised, the timeliness and accuracy of the capitalisation of the assets and the de-recognition criteria for assets retired from active use.
In performing these procedures, we reviewed the judgements made by management including the nature of underlying costs capitalised; determination of realizable value of the assets retired from active use; the appropriateness of asset lives applied in the calculation of depreciation; the useful lives of assets prescribed in schedule II of the Companies Act, 2013 and the useful lives of certain assets as per the technical assessment of the management. We have observed that the management has regularly reviewed the aforesaid judgements and there are no material deficiencies in measurement and recognition of property, plant and equipment.
3. Capital work-in-progress (CWIP)
The company is involved in various capital works like construction of new power projects, installation of new plant and machinery, civil works etc. These projects/works take a substantial period of time to get ready for intended use and due to their materiality in the context of the balance sheet of the Company, this is considered to be an area which had the significant effect on the overall audit strategy and allocation of resources in planning and completing our audit. (Refer Note No.2.2 to the Standalone Financial Statements, read with the Significant Accounting Policy No. 1.4) We performed an understanding and evaluation of the system of internal control over the capital work-in-progress, with reference to identification and testing of key controls.
We assessed the progress of the project and the intention and ability of the management to carry forward and bring the asset to its state of intended use.
We assessed the timeliness and accuracy of capitalisation of assets when it is ready for the intended use.

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 Directors Report including Annexures, Management Discussion and Analysis, Business Responsibility Report, Report on Corporate Governance, Shareholders Information and other information in integrated Annual Report thereon but does not include the standalone financial statements and our auditors report.

The other information is expected 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 information and we do not and will 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 identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors report, 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.

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions, if required.

Responsibilities of Management and Those Charged with Governance for the Standalone 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 financial statements that give a true and fair view of the state of affairs(financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 financial statements that give a true and fair view and are . free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the companys financial reporting process.

Auditors Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 influence the economic decisions of users taken on the basis of these 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 financial statements, whether due to fraud or error, design and perform audit it procedures responsive to those risks, and obtain audit evidence that is sufficient 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 control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(I) of the Companies Act, 2013, 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 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 to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies 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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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 (including Other Comprehensive Income), 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 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 Notification No. G.S.R. 463 (E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, the provisions of Section 164 (2) of the Companies Act, 2013 regarding disqualification 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) As per Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, section 197 of the Act is not applicable to the Government Companies. Accordingly, reporting in accordance with requirement of provisions of section 197(16) of the Act is not applicable on the Company.

h) 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 has disclosed the impact of pending litigations on its financial position in its standalone financial statements. Refer Note No. 2.39 to the standalone 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.

“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, 2020)

I. (a) The company has generally maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) As per information and explanation provided to us on the basis of our examination of the records of the company, physical verification of fixed assets is carried out once ina year which in our opinion is reasonable having regard to the size of the company and nature of its business. However, physical verification of the fixed assets was not carried out during the year.

(c) According to the information and explanations given to us, the title deeds of all the immovable properties are held in the name of the company except the following:

Description of Asset No. of cases Area in Acres Gross block as on 31.03.2020 Net block as on 31.03.2020 Remarks (If Any)
(Rs.Lakh) (Rs.Lakh)
Building 1 _ 15 3 Title deed is yet to be executed.

ii. As per information and explanation provided to us on the basis of our examination of the records of the company, the physical verification of inventory is carried out once in a year. The discrepancies noticed on physical verification of inventory have been properly dealt with in the books of account. However, physical verification of the inventory was not carried out during the year.

iii. According to the information and explanations given to us, the company has not granted any loans, secured or unsecured to companies, firms 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, 2020. We are informed that the provisions of Employees State Insurance Act are not applicable to the company.

(b) According to the information and explanations given to us, there are no 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.

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. In our opinion and according to the information and explanations given to us, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the Order is not applicable to the Company.

x. To the best of our knowledge and according to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

xi. In view of the exemptions given vide in terms of Notification No. G.S.R. 463 (E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, the provisions of Section 197 read with schedule V to the Companies Act, 2013 regarding managerial remuneration, are not applicable to the company.

xii. In our opinion and according to the information and explanations given to us, the company is not a Nidhi Company as prescribed under Section 406 of the Act. Accordingly, paragraph 3(xii) of the Order is not applicable to the company.

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, 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 standalone financial statements, as required by the applicable accounting standards.

xiv. According to the information and explanations given to us, 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. According to the information and explanations given to us, the company is not required to be registered under schedule 45-1A of the Reserve Bank of India Act 1934.

ANNEXURE-B

COMPLIANCE CERTIFICATE

We have conducted the audit of annual accounts of "SJVN LIMITED" for the year ended 31st March, 2020 in accordance with the directions/sub directions issued by the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013 and certify that we have complied with all the directions/sub-directions issued to us.

“ANNEXURE-B” 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, 2020)

Directions Actions Taken Impact on Financial Statements
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, the Company has a system in place to process all the accounting transactions through IT system and for this purpose SAP-ERP has been implemented by the Company. Period end Financial Statements are compiled offline based on balances and transactions generated from such SAP-ERP system. NIL
We have neither been informed nor we have come across during the course of our audit any accounting transactions which have been processed outside the IT system having impact on the integrity of the accounts.
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 companys 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. NIL
3. Whether funds received/ receivable for specific schemes from Central/State agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation. According to information and explanations given to us and based on our audit, the Company has not received any funds from Central/ State agencies for specific schemes. NIL

“ANNEXURE C” TO THE AUDITORSREPORT

(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, 2020.

Opinion

We have audited the internal financial controls over financial reporting of SJVN LIMITED ("the Company") as at March 31, 2020 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

In our opinion and to the best of our information and according to the explanations given to us,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, 2020, 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, there are following issues in Internal Financial Control:

 

(i) In Charanka Solar Power Project, the contractor has to ensure capacity utilization factor (CUF) at 19%. During the year, there was a shortage in minimum CUF by 5.60% which amounts to 23,95,363 kWh units, accordingly the amount recoverable from contractor on account of under utilization of capacity has been shown as contingent asset instead of imposing Liquidated Damages (LD) following the principle of conservatism (Refer Note No. 2.40 to standalone financial statement).

(ii) In Sadla, there was substantial delay in the operationalization of the project and it became fully operational w.e.f. 18th April, 2019 (scheduled to be operational w.e.f. 25-11-2017). As per terms of agreement, In Sadla Wind Power Project, liquidated damages are required to be imposed on the contractor on account of performance deficiency. During the year, there was performance deficiency and amount recoverable on account of same has been shown as contingent asset instead of imposing liquidated damages following principle of conservatism. (Refer Note No. 2.40 to the standalone financial statements).

(iii) Presently the Investment in TDRs/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.

Managements Responsibility for Internal Financial Controls

The Board of Directors of the company is responsible for establishing and maintaining internal financial controls based onthe 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 efficient 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.

Auditors Responsibility

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 Act2013, 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 sufficient 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 thosepolicies 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 to error 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.

ANNEXURE-XII

Managements reply on Statutory Auditors Observations on Internal Financial Control-Annexure-C to the Auditors, Reports

Auditors Observations Managements Reply
(i) In Charanka Solar Power Project, the contractor has to ensure capacity utilization factor (CUF) at 19%. During the year, there was a shortage in minimum CUF by 5.60% which amounts to 23,95,363 kWh units, accordingly the amount recoverable from contractor on account of under utilization of capacity has been shown as contingent asset instead of imposing Liquidated Damages (LD) following the principle of conservatism (Refer Note No. 2.40 to standalone financial statement). As per the agreement, O&M Contract is operational w.e.f. 17.04.2019. The Loss of energy is to be calculated on yearly basis. The Contractor is required to explain the reasons for shortfall within reasonable time. In this case reasonable time generally considered as 3-4 months i.e. upto 16.08.2020. The Contractor has already been intimated about the recovery on account of generation loss which has been refuted by the Contractor. Contractor has been asked to explain the reasons for non- performance which is still awaited. Pending explanation/ reasons from the contractor, the same has been shown under contingent asset and will be accounted for on the settlement of the issue.
(ii) In Sadla, there was substantial delay in the operationalization of the project and it became fully operational w.e.f. 18th April, 2019 (scheduled to be operational w.e.f. 25-11-2017). As per terms of agreement, In Sadla Wind Power Project, liquidated damages are required to be imposed on the contractor on account of performance deficiency. During the year, there was performance deficiency and amount recoverable on account of same has been shown as contingent asset instead of imposing liquidated damages following principle of conservatism. (Refer Note No. 2.40 to the standalone financial statements). As per the agreement, O&M Contract is operational w.e.f. 18.04.2019. The operational loss is to be calculated on yearly basis i.e from 18.04.2019 to 17.04.2020. The Loss has been already intimated to the Contractor. The Contractor has refuted the claim and communicated for invoking the arbitration. Since the amount is under dispute, the same has been shown as contingent asset.
(iii) Presently the Investment in TDRs/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. Process of E-bidding for investment of surplus fund was incorporated in ERP system but could not be implemented due to some technical issue. However, new E-bidding system will be implemented in the current financial year. In the meantime, the investment in TDR/FDR by the company is being made on the basis of email received from various banks. Fax System has been already discontinued by the company. A dedicated email account has been opened exclusively for collecting quotation from the bank for investment purpose in TDR/FDR. No other communications are being sent from this email account.

ANNEXURE-XV

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTS OF SJVN LIMITED

FOR THE YEAR ENDED 31 MARCH 2020

The preparation of financial statements of SJVN Limited for the year ended 31 March 2020 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditor appointed by the Comptroller and Auditor General of India under section 139 (5) of the Act is responsible for expressing opinion on the financial statements under section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under section 143 (10) of the Act This is stated to have been done by them vide their Audit Report dated 29 June 2020.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit of the financial statements of SJVN Limited for the year ended 31 March 2020 under Section 143 (6) (a) of the Act. This supplementary audit has been carried out independently without access to the working papers of the statutory auditor and is limited primarily to inquiries of the statutory auditor and company personnel and a selective examination of some of the accounting records.

On the basis of my supplementary audit nothing significant has come to my knowledge which would give rise to any comment upon or supplement to statutory auditors report under section 143 (6) (b) of the Act.

For and on behalf of the
Comptroller & Auditor General of India
Place : New Delhi (D.K. Sekar)
Dated : 21 August 2020 Director General of Audit (Energy), Delhi