SJVN Ltd Auditors Report.

To

The Members of SJVN Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SJVN Limited (the Company), which comprise the Balance Sheet as at 31st March 2017, the Statement of Profit and Loss, Cash Flow Statement for the year, a summary of significant accounting policies and other explanatory information.

Managements Responsibility for the 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 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 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 the 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.

Auditors Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the standalone Ind AS financial statement in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the standalone Ind As financial statements that give a true & fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

Subject to our qualification/reservations reported hereunder, 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 affairs (financial position) of the Company as at 31st March 2017, and its profit/loss (financial performance including other comprehensive income), its cash flows and changes in equity for the year ended on that date.

Audit Qualifications/Observatins:

i) The Management has not provided justification of Payment of Hydro allowance to Patel Gammon Joint Venture (PGJV) amounting to Rs. 928437602. As per Govt order hydro allowance was to be paid @ 25% minimum wages as additional wages. Actual records of minimum wages paid by the contractors were available with SJVN which are required to be submitted by the contractor along with each running account bill and also the same could have been verified with PF amount deducted and deposited by the contractor which is required ot be submitted by the contractor. As per our assessment based on the actual wages paid by the contractor an amount of Rs. 57883509 was payable as Hydro Allowance to M/s PGJV. However, the management had released payment of Hydro allowance based on an notional formula for the same and paid Rs. 928437602, afterwards recovery of Rs. 14,78,03,826/- at the advice of Vigilance Department/CVC was made. However, the actual recovery on the basis of wages paid to the labourer comes out to be Rs. 720420580 which is yet to be recovered. To that extent the Capital Cost of Hydraulic Works is overstated and payable to contractors is overstated/recoverable from contractors is understated. Also the depreciation provided from the date of capitalization is also overstated to that extent.

Emphasis of Matter

We draw attention to Note No. 2.29 to the financial statements in respect of accounting of sales on provisionally approved tariff approved & applicable as on 31.03.2014 as provided in Tariff Regulations, 2014.

Our opinion is not modified in respect of this matter.

Audit Comparative Information for adjustments to transition to Ind AS:

The Comparative financial information of the Company for the year ended 31st March 2016 and the transition date opening balance sheet as at 1st April 2015 included in these standalone Ind AS financial statements prepared in accordance with the Companies (Accounting Standard) Rules, 2006 by us & reports of which dated 27th May 2016 AND 27th May 2015 respectively express an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2015 ("the Order") issued by the Government of India in terms of subsection (11) of section 143 of the Act, we give in the Annexure-1, 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-2 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 purpose of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books [and proper returns adequate for the purpose of our audit have been received from the branches not visited by us.]

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement and statement of changes in equity dealt with by this report are in agreement with the books of account [and with the returns received from the branches not visited by us.];

d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act except the observations given above.

e) On the basis of written representation received from the directors as at 31st March, 2017 taken on record by the Board

of Directors, none of the directors is disqualified from being appointed as a director in terms of Section 164(2) of the Act as on 31st March 2017. Moreover, this Para is not applicable to Govt. Companies.

f) With respect to adequacy of Internal Financial Controls over financial reporting of the Company and operating effectiveness of such controls, refer to our separate Report in "Annexure B".

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 Companys management does not expect the claims/obligations (including litigation), when ultimately concluded and determined, will have a material and adverse effect on the companys results of operations or financial conditions as disclosed in Note no. 2-37.

ii The company had made provision, as require under the applicable law or accounting standard, for material foreseeable losses, if any, on long-term contracts including derivative contracts; [or The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses].

iii There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company [or, following are the instances of delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company or there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company].

For Soni Gulati & Co.

Chartered Accountants

Firm Regn. No. 008770N

(Suresh Chand Soni)

Partner

M. No. 083106

Place : New Delhi

Date : 29.05.2017

Annexure —

ANNEXURE 1 TO THE AUDITORS REPORT

Annexure referred to in our report of even date to the members of SJVN LIMITED on the accounts for the year ended 31st March 2017.

(i) (a) The company has generally maintained proper records showing full particulars, including quantitative details and situation of its fixed assets but records need be improved as far as identification ,location is concerned.

(b) As explained to us all the assets were got physically verified by the management from outside agency during the year, but the procedure adopted for such verification was not informed to us nor any report (except one unit) was made available to us. We were informed that no material discrepancies were noticed on such verification.

(c) Even upon our repeated request Title deed of immovable properties were not shown to us except those which were acquired through acquision order of Govt. At RHEP neither any conveyance deed nor any lease deed has been executed for forest land. At NJHPS some Land was decapitalised 2 years back being disputed, but no conveyance deeds were available.

(ii) The inventory of the company consisting of stores and spare parts. We were informed that these have been physically verified by the management through outside agency during the year but no report was made available to us except one Unit . In our opinion the verification process need be improved. Procedure for such verification was not informed to us by the unit even upon our repeated requests.

(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.

In view of above, the clauses 3(iii)(a) and 3(iii)(b) of the Order are not applicable.

(iv) In respect of loans, investments, guarantees and security, the company has complied with provisions of section 185 and 186 of the Companies Act, 2013.

(v) The company has not accepted any deposits from the public in terms of section 73 to 76 or any provisions of the Companies Act, 2013 and rules there under.

(vi) We have broadly reviewed the accounts and cost records maintained by the company under Section 148(1) of the Companies Act, 2013 and we are of the opinion that prima facie the prescribed accounts and records have been maintained. We have not, however, made detailed examination of the records with a view to determine whether they are accurate and complete.

(vii) (a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, value added tax, cess and other statutory dues applicable to it, and as informed to us there are no undisputed dues outstanding as on 31st March 2017 for a period of more than six months from the date they became payable. 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, dues of income tax, sales tax, 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
The Central Excise Act, 1944 Excise Duty Penalty 1.00 CESTAT
Finance Act, 1994 Service Tax 1236.00 Commissioner, Excise & Service Tax, Chandigarh

(viii) The Company has not defaulted any repayment of loans or borrowing to any financial institution or bank or Government or dues to debenture holders.

(ix) No money was raised by way of initial public offer or further public offer during the year.

(x) As per information provided to us no fraud by the company or any fraud by officers and employees of the company has been noticed/ reported during the year. However, the company is required to recover/adjust principal (Rs 7204 lakhs + interest on account of excess payment made to contractor on account of hydro allowance.

(xi) The managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provision of section 197 read with Schedule V to the Companies act. However, the valuation of perks is not proper.

(xii) Company is not a Nidhi Company.

(xiii) As per information available to us we are of opinion that all transactions with the related parties disclosed as per requirement of section 177 and 188 of Companies act 2013.

(xiv) As informed to us, the company has not made any preferential allotment to private placement of shares or fully convertible debentures during the year under review.

(xv) As informed to us the company has not entered in to any noncash transaction with directors.

(xvi) Section 45-IA of the Reserve Bank of India Act,1934 is not applicable to the company.

For Soni Gulati & Co.

Chartered Accountants

Firm Regn. No. 008770N

(Suresh Chand Soni)

Partner

M.No. 083106

Place : New Delhi

Date : 29.05.2017

COMPLIANCE CERTIFICATE

We have conducted the audit of accounts of "SJVN LIMITED" for the year ended 31st March, 2017 in accordance with the directors/sub- directors 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.

For Soni Gulati & Co.

Chartered Accountants

Firm Regn. No. 008770N

(Suresh Chand Soni)

Partner

M.No. 083106

ANNEXURE - 2 TO THE AUDITORS REPORT

Annexure referred to in our report of even date to the members of SJVN LIMITED on the accounts for the year ended 31" March 2017

Directors Action Taken Impact on financial statement
Whether the company has clear title / lease deeds for freehold and leasehold respectively? If not please state the area of freehold and leasehold land for which title/lease deed are not available. No lease deed for diverted land to RHEP has been entered, however, lease rent notice was received & paid during September 2014. Later during audit this amount was shown as Advance. The area of the same not provided by the management. Similarly, at NJHPS land diverted by HP Govt. has been disputed and case is in Court. Details not made available to us. NIL
Whether there are any cases of waiver off of debts/loan/interest etc.if yes, the reason there for and the amount involved. No such case found during the audit NIL
Whether proper records are maintained for inventories laying with third parties & assets received as gift from Government or other authorities. Yes NIL

ANNEXURE-3 TO THE AUDITORS REPORT

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of SJVN Limited ("the Company") as of 31 March 2017 in conjunction with our audit of the standalone 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 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 the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards 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 an 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 judgment, including the assessment of the risks of material misstatement of the financial statements, 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 those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised 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 limitations 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.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, 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 deficiencies in Internal Financial Controls were observed during audit :

i) Transactions ultra-virus: The Company paid Rs 1144 lakhs to DC Kullu as lease rent for the tunnel & allied land used without any lease deed during September 2014. However as per directions from Centre, no payment could be made without prior approval of Central Govt. Expenses booked during 2014 were reversed & shown as recoverable from Govt. but no action has been taken to recover the amount wrongly paid.

ii) Circular no 507/2016 issued to favour the members of top management is in violation of DPE guidelines and is without approval from DPE, even the management did not consider it necessary to take approval from a disinterested Board and decision was taken for favouring certain group of top management.

iv). Favour to contractors: Favour is being done to contractors & we noticed the same in many cases like Rays Power Experts (P) Ltd., Patel gammon JV etc in releasing EMD and waiving off the LD. In other (Gamesha) case we noticed service tax payment for purchase of Land on which stamp duty had been paid Although payment of ST was stopped yet the case has been preferred for arbitration . In case of Zamil Construction works order was issued for supply, construction of prefabricated store costing Rs 420 lakhs and was to be completed by January 2016. However, we came to know that the Works order and special conditions attached do have contradictory conditions, work order says, including Gantry girders for 10 ton EOT (2 nos.) while special condition says "EOT crane shall be supplied by SJVN. Crane not in the scope of this contract & gantry girder will be supplied by the EOT Crane manufacturer.

v) Head Office building at Shanan, Interest free advance Rs 10 crore was paid to NBCC who in turn paid the same to subcontractor and charging interest on the same. The management of SJVN neither checked the drawings nor the cost which resulted in defective and very high cost of construction. Cost of Non-scheduled items purchased are exorbitantly high, Items mentioned in MOU like window pane solar cells has not been put. Construction which was to be naturally lighted and heated is lacking in natural lights in most of the portion. It is also noted that the company after spending Rs 130 crores on office building is paying Rs 1.50 lakhs per month as rent on storing of old furniture in other building, such payment is infructuous.

vi) Purchase of software from M/s IFS purchased is a sheer wastage of money, as the package is very old and will become useless after implementation of ERP. It is neither user friendly nor technically advanced & gives odd results company needs to further strengthen the control system for tendering ,issuing works orders & payment to contractors .

For Soni Gulati & Co.

Chartered Accountants

Firm Regn. No. 008770N

(Suresh Chand Soni)
Place : New Delhi Partner
Date : 29.05.2017 M.No. 083106

CORRIGENDUM TO INDEPENDENT AUDITORS REPORT

To

The members of SJVN Limited

Report on the standalone Financial Statements

Auditors Report on the stand Alone Financial Statements page 2 Audit Qualification/ Observations Line no 9, I nstead of Rs 57883509/- Rs 58772867 may be read. At line no 14 instead of Rs 720420580, Rs 721864506 may be read.

Annexure 1 to Auditors Report at Para (x) instead of Rs 7204 Lakhs, Rs 7219 lakhs may be read.

For Soni Gulati & Co.

Suresh Chand Soni
Date: 21.07.2017 (Partner)
Place: Shimla

MANAGEMENTS REPLY ON STATUTORY AUDITORS QUALIFICATION/OBSERVATIONS/COMMENTS

Independent Auditors Report

Audit cSfans/Obietf/dtians Managements Reply
The Management has not provided justification of Payment of Hydro allowance to Patel Gammon Joint Venture (PGJV) amounting to Rs 928437602. As per Govt order hydro allowance was to be paid @ 25% minimum wages as additional wages. Actual records of minimum wages paid by the contractors were available with SJVN which are required to be submitted by the contractor along with each running account bill and also the same could have been verified with PF amount deducted and deposited bythecontractorwhich is required to be submitted by the contractor. As per our assessment based on the actual wages paid by The justification facts and associated background is as under: The Civil and Hydro Mechanical works of Rampur Hydroelectric Project RHEP were awarded under Package 1 and Package 2 to M/s Patel Gammon Joint Venture (PGJV). The contract was an item rate contract which include cost of material, machinery and labour etc. As per provisions of the contracts, contract price shall be adjusted taking into account any increase or decrease in cost resulting due to changes in legislation. The labour component in the price adjustment clause in respect of Package 1 & Package 2 was 35% and 25% respectively. Subsequently, the Government of Himachal Pradesh vide its notification (28.05.2008) inter-alia revised minimum wages of workers w.e.f. 01.01.2008. The said notification also provided for the first time an additional 25 per cent increase on the minimum wages as hydro allowance for labours working in Under Construction Hydro-Electric Power Projects located in Non-Tribal Area. SJVN constituted an in-house committee to furnish the recommendations regarding methodology and paymentof hydro allowance.
the contractor an amount of Rs 57883509 was payable as Hydro Allowance to M/s PGJV. However, the management had released payment of Hydro allowance based on a notional formula for the same and paid Rs 928437602, afterwards recovery of Rs. 14,78,03,826/- at the advice of Vigilance Department/CVC was made. However, the actual recovery on the basis of wages paid to the labourer comes out to beRs 720420580 which is yet to be recovered. To that extent the Capital The committee in its Report recommended for payment of 25% Hydro Allowance on minimum wages w.e.f. Jan, 2008 on a formula derived by the committee taking into account the labour component of 35% for Package-1 and 25% for Package-2 (as provided in the contract agreement) as the payment against Package-1 & 2 to the contractors was as per BOQ (item rate) in which labour payment was not to be made separately. Further, the main contractor of package 1 & 2 had engaged a number of subcontractors for execution of works, the workers/labours engaged by sub-contractors were also eligible for increased 25% as hydro allowance on minimum wages. Since, a number of sub-contractors were also engaged for execution of work, it was recommended by the Committee that it is more prudent to pay the hydro allowance on labour component provided in the respective contract.
Cost of Hydraulic Works is overstated and payable to contractors is overstated/ recoverable from contractors is understated. Also the depreciation provided from the date of capitalization is also overstated to that extent. SJVN sought the legal opinion of the then Solicitor General of India (SGI) who opined that the Hydro Allowance of 25 per cent was payable by SJVN to contractors. The learned SGI also opined that hydro allowance may be paid based on the formula. Thus, the payment has been made as approved bythe management taking into account the provisions of the Contract and opinion of the Solicitor General of India.

Annexure 1 to the Auditors Report

Auditors Comment Managements Reply
(x) As per information provided to us no fraud by the company or any fraud by officers and employees of the company has been noticed/ reported during the year. However, the company is required to recover/adjust principal (Rs 7204 lakhs + interest on account of excess payment made to contractor on account of hydro allowance. The payment has been made as approved bythe management taking into account the provisions of the Contract and opinion of the Solicitor General of India.

Annexure 3 to the Auditors Report

Auditors Comment Managements Reply
The following deficiencies in Internal Financial Controls were observed during audit:
i) Transactions ultra- virus : The Company paid Rs 1144 lakhs to DC Kullu as lease rent for the tunnel & allied land used without any lease deed during September 2014. However as per directions from Centre, no payment could be made without prior approval of Central Govt. Expenses booked during 2014 were reversed & shown as recoverable from Govt. but no action has been taken to recover the amount wrongly paid. i) The order to deposit lease amount was issued by DC, Kullu for land diverted for underground tunnel (which is termed as Notional Land) of Rampur Hydro Electric Project and Company is bound to comply with the orders issued by a Government Authority. Accordingly, amount was deposited on account of persistent demand raised by DC, Kullu. Government land is diverted on the basis of an order/ notification by the concerned Government. No lease deed is being signed for diverted Govt. land. Matter has already been taken up with concerned State Government Authorities.
ii) Circular no 507/2016 issued to favour the members of top management is in violation of DPE guidelines and is without approval from DPE, even the management did not consider it necessary to take approval from a disinterested Board and decision was taken for favouring certain group of top management. ii) Circular No. 507/2016 regarding revision in life span and rate of depreciation on amenities provided to senior executives was issued with the approval of CMD as the same has not been excluded from the powers of CMD. Further, Board has also approved in its 200th Meeting held on 8th January 2011, which was also attended by five independent (disinterested) directors that in future SJVN should adhere a benchmark of NHPC for amenities provided to its executives. The revised circular was issued in line with the changes made by the NHPC.
iv) Favour to contractors: Favour is being done to contractors & we noticed the same in many cases like Rays Power Experts (P) Ltd., Patel gammon JV etc in releasing EMD and waiving off the LD. In other (Gamesha) case we noticed service tax payment for purchase of Land on which stamp duty had been paid Although payment of ST was stopped yet the case has been preferred for arbitration. In case of Zamil Construction works order was issued for supply, construction of prefabricated store costing Rs 420 lakhs and was to be completed by January 2016. However, we came to know that the Works order and special conditions attached do have contradictory conditions, work order says, including Gantry girders for 10 ton EOT (2 nos.) while special condition says "EOT crane shall be supplied by SJVN. Crane not in the scope of this contract & gantry girder will be supplied by the EOT Crane manufacturer. iv) The Bidders i.e. Ray power Experts (P) Ltd., Patel Gammon JV etc. had submitted EMD at the time of submission of bids. As per the standard terms of bid documents, on Award of Work, EMD is either refunded or adjusted against the Security Deposit receivable from the respective Contractors. Accordingly, EMD of the respective contractors was converted to Security Deposit as per the Bid documents. M/s Rays Power experts Pvt. Ltd. were awarded 5 MW Solar Power Project for Rs. 2775.05 lakh. Due to financial crunch of M/s Rays Power Experts Pvt. Ltd., decision was taken to purchase Solar Panels directly by SJVN from the sub-vendor of M/s Rays Power Experts Pvt. Ltd. and provided to M/s Rays Power Projects which resulted in net saving of Rs. 120.75 lakh after adjusting the amount equivalent to Liquidated Damages (LD) from M/s Rays Power Experts Pvt. Ltd. The project got commissioned on 31st March, 2017. Thus LD has not been waived off. In case of contract with PGJV, the Board has approved the extension of time without levying of LD. Hence, LD is not leviable. Service tax has not been released to M/s Gamesa on the cost of the land. M/s Gamesa has approached for arbitration and the said amount has been shown as contingent liability.
There is precedence clause provided in the contract awarded to M/s Zamil Construction. As per precedence clause, contractors bid will prevail and according to which contractor is required to provide and erect the gantry girders and the same has been communicated to the contractor.
v) Head Office building at Shanan, Interest free advance Rs 10 crore was paid to NBCC who in turn paid the same to subcontractor and charging interest on the same. The management of SJVN neither checked the drawings nor the cost which resulted in defective and very high cost of construction. Cost of Non-scheduled items purchased are exorbitantly high, Items mentioned in MOU like window pane solar v) Advance was given to NBCC as per the provisions of MOU. NBCC is a Navratna Schedule A Central Public Sector Undertaking engaged in construction of buildings on behalf of various Government and Government organisations. The estimated cost of the construction of Head Office Building was approved by the Board amounting to Rs. 111.80 crore based on Floor Area Ratio excluding agency charges at April 2011 price level. The work of construction was awarded by NBCC through competitive bidding. The cost on completion will be approximately Rs. 133 crore (including escalation etc.) which is marginally higher than the estimated cost. SJVN office building has been provided completion certificate by Municipal Corporation, Shimla as well as other statutory authorities.
cells has not been put. Construction which was to be naturally lighted and heated is lacking in natural lights in most of the portion. It is also noted that the company after spending Rs 130 crores on office building is paying Rs 1.50 lakhs per month as rent on storing of old furniture in other building, such payment is infructuous. The space available in the present office building is inadequate to accommodate all the records and some other old furniture and as such space has been hired.
Vi) Purchase of software from M/s IFS purchased is a sheer wastage of money, as the package is very old and will become useless after implementation of ERP. It is neither user friendly nor technically advanced &givesodd results. vi) Old FA Software in SJVN was implemented in the year 2003-04. The implementation of new software and replacement of old software had become necessary. During 45th Audit Committee held on 30.07.2015, the Statutory Auditor during the course of interaction with committee, had pointed out that the accounting package adopted by SJVN was very old and needed immediate upgradation. Further, in order to take care of Ind AS, a fresh Accounting Package having capability of the same was required immediately. ERP implementation was to take longer time. Considering this being an immediate fresh requirement, contract of Accounting Package was awarded to IFS Solutions through competitive bidding. The accounting package provided by M/s IFS is working satisfactorily. Ind AS has been implemented in SJVN for the first time this year and the package being compliant to Ind AS is therefore based on latest application software and working smoothly.

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 2017

The preparation of financial statements of SJVN Limited for the year ended 31 March 2017 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 May 2017.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Section 143(6)(a) of the Act of the financial statements of SJVN Limited for the year ended 31 March 2017. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the accounting records. On the basis of my audit nothing significant has come to my knowledge which would give rise to any comment upon or supplement to statutory auditors report.

For and on behalf of the

Comptroller & Auditor General of India

(Ritika Bhatia)
Place : New Delhi Principal Director of Commercial Audit &
Dated : 26 July 2017 Ex-officio Member, Audit Board-III,
New Delhi