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INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF POWER FINANCE CORPORATION LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Power Finance Corporation Limited ('the Company'), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's 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 and presentation of these standalone financial statements that give a true and fair view ofthe financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these standalone 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 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 financial statements are free from material misstatement .An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
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, of the state of affairs of the Company as at 31st March, 2015 and its profit and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the notes the financial statements:
Note No. 18 of Part–C of other notes to accounts, regarding application of prudential norms stipulated by Reserve Bank of India in respect of Restructuring / Reschedulement/ Renegotiation (R/R/R) for the financial year 2014–15 for reasons indicated therein.
Our opinion is not modified in respect of above matters.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(5) of the Act, we have considered the directions issued by the Comptroller and Auditor General of India, the action taken thereon and its impact to the financial statements of the company give in the Annexure A.
2. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub–section (11) of section 143 of the Act, we give in the Annexure B a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.
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 and the cash flow statement 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 Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
(e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act; and
(f) With respect to the other matters to be included in the Auditor's 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 financial statements – Refer Note No. 2(A),(iii), 2B of Part–C of other notes to accounts to the 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 – Refer Note No. A–5 of Note to the financial statements; and
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
Directions indicating the areas to be examined by the Statutory Auditors during the course of audit of annual accounts of Power Finance Corporation Limited (Standalone) for the year 2014–15 issued by the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013
We have generated this report, as per the information and explanation provided to us by the management during the course of audit. Sl. No. Questionnaire Replies
1. If the company has been selected for disinvestment, a complete status report in terms of valuation of Assets (including intangible assets and land) and Liabilities (including Committed & General Reserves) may be examined including the mode and present stage of disinvestment process. During the FY 2014–15, DoD, GoI, appointed merchant bankers to sell upto 5% equity shares of the company through offer for sale route, however, the sale of equity shares by GoI is yet to take place. No valuation of Assets and Liabilities has been done.
2. Please report whether there are any cases of waiver / write off of debts / loans / interest etc., if yes, the reasons there for and the amount involved. During FY 2014–15: i) Penal interest aggregating to Rs. 9,77,939/– in respect of 2 borrowers was waived off as per the request of the borrower and extant delegation of powers. ii) Interest on interest amounting to Rs. 61,10,181/– in respect of 2 borrower was waived off as per the request of the borrower and extant delegation of powers. iii) Commitment charges aggregating to Rs. 78,901/– in respect of 1 borrower was waived off as per the request of the borrower and extant delegation of powers. iv) Additional Interest aggregating to Rs. 4,14,13,495/– in respect of 1 borrower was waived off as per the request of the borrower and extant delegation of powers.
3. Whether proper records are maintained for inventories lying with third parties & assets received as gift from Govt. or other authorities Rs. NA
4. A report on age–wise analysis of pending legal / arbitration cases including the reasons of pendency and existence / effectiveness of a monitoring mechanism for expenditure on all legal cases (foreign and local) may be given. Details of age wise analysis of pending along with new legal / arbitration cases and income tax cases as on 31.03.2015 are given in Annexure – I. There were no large legal expenses (foreign and local) in FY 2014–15. However, normal legal expenses were incurred as per Delegation of Power approved by the Board.
For N. K. Bhargava & Co.
Firm's Regn. No. : 000429N
Sd/–N. K. Bhargava
Membership No.: 080624
For K. B. Chandna & Co.
Firm's Regn. No. : 000862N
Membership No. : 016521
Place: New Delhi