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Auditor Report of Neyveli Lignite Corporation Ltd. Company
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Auditor Report of Neyveli Lignite Corporation Ltd.

Mar 31, 2016

We have audited the accompanying standalone financial statements of M/s. NEYVELI LIGNITE CORPORATION LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the 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 of these financial statements that give a true and fair view of the 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.

Auditor''s Responsibility

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 thereunder.

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. 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.

Opinion

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, 2016, and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

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

a) Note No: 24(A)(1)(i) to the financial statements regarding adoption of normal corporate tax rate instead of Minimum Alternate Tax rate for calculation of Return on Equity in tariff fixation under Central Electricity Regulatory Commission (CERC) regulation.

b) Note No: 24(A)(1)(ii) to the financial statements regarding the review order of Central Electricity Regulatory Commission (CERC) dated 21.01.2016 for refund of additional profit earned by sale of lignite to outside agencies over and above 85% capacity utilisation factor of Mine II Expansion and refund of incentive for the excess generation of power over and above the contemplated PLF in TPS II due to inclusion of pooled price of Mine II Expansion.

c) Note No: 24(A)(1)(iii) to the financial statements regarding the order of the Central Electricity Regulatory Commission (CERC) dated 14.03.2016 regarding disallowance of interest during construction period of Barsingsar Thermal Power Station.

d) Note No: 26(d) to the financial statements regarding Power tariff that final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order, which is not ascertainable at this stage.

Our opinion is not modified in respect of these matters.

Other Matter

We did not audit the financial statements of ONE (1) branch included in the standalone financial statements of the company whose financial statement reflects a total assets of Rs.1821.20 crore as at 31st March 2016 and total revenue of Rs.435.98 crore for the year ended on that date, as considered in the standalone financial statements. The financial statements of this branch has been audited by the branch auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor. Our opinion is not modified in respect of this matter.

Report on other Legal and Regulatory Requirements

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

2. 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 report on accounts of the branch office of the company audited U/s.143(8) of the Act by the branch auditor has been sent to us and has been properly dealt with by us in preparing this report.

d) 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.

e) 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.

f) As per the Notification No. G.S.R. 829(E) dated 21.10.2003, issued U/s. 620(1) of the Companies Act, 1956 and read with Section 465(2) of Companies Act,2013, Sub-section (2) of Section 164 of the Companies Act, 2013 is not applicable to Government Companies.

g) With respect to the adequacy of internal financial control systems and the operating effectiveness of such controls, we give our Report in Annexure-II .

h) 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 24(A) to the financial statements;

ii. 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.

3. As required by section 143(5) of the Companies Act, 2013, our comments in regard to the directions and sub-directions issued by the Comptroller and Auditor General of India is given in Annexure-III.

Statement of matters specified in Para 3 & 4 of the order referred to in sub-section (11) of section 143

1) Fixed Assets

a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The Company has a policy of verifying all the fixed assets once in five years. For the cycle 2006-07 to 2010-11, physical verification of all the fixed assets has been carried out during the financial year 2010-11. Pending reconciliation of discrepancies observed on physical verification conducted during the financial year 2010-11 a sum of Rs.0.41 crore has been provided for. For the cycle 2011-12 to 2015-16, the physical verification of fixed assets is in progress. Material discrepancies, if any, will be adjusted as and when determined.

c) According to the information and explanations given to us, the Company is in possession of title deeds/assignment deeds/GO''s in respect of immovable properties, except as detailed below. However, due to the enormous volume of the documents held by the Company for acquisition of land, all the title deeds could not be fully verified.

(Rs.in crore)

Gross Block Net Block

Nature of Immovable Total No. Remarks, as on as on Property of cases if any 31.03.2016 31.03.2016

Building - Leasehold 1 2.08 1.35 Registration of Lease Deed pending

Building - Freehold 1 26.25 25.94 Execution of Sale Deed is pending

2) Inventory

The inventory has been physically verified during the year by the management. No material discrepancies were noticed.

3) Transactions with parties covered by register referred to in section 189

The Company has granted unsecured loan to a subsidiary Company and to a Director of the Company covered by the register maintained under section 189 of the Companies Act, 2013.

a) In our opinion, the terms and conditions of grant of the loans are not prejudicial to the interest of the Company.

b) According to the information and explanations given to us, the schedule of repayment of principal and payment of interest has been stipulated while granting such loans and the repayment/receipts are regular.

c) No amounts are overdue for more than 90 days.

4) Compliance with section 185 & 186 in respect of Loans and Investments

The Company has not advanced loans, given guarantees or security or made any investment in contravention of section 185 and/or section 186 of the Companies Act, 2013.

5) Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules made there under are not applicable to the Company.

6) Maintenance of Cost Records

The Central Government has prescribed the maintenance of cost records U/s. 148(1) of the Companies Act, 2013 in respect of Electricity Industry and Lignite. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148 of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

7) Statutory Dues

a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on the information and explanations given to us the Company has laid down system and procedures regarding deposit of PF and ESI dues relating to contractors'' workers. The company has generally been regular in depositing Income-tax, Sales Tax, Service Tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities.

Based on information and explanation given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues were outstanding as at 31st March 2016 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty, Value Added Tax and Cess which have not been deposited on account of any dispute except as reported below:

Amount Period to Forum Name Demand Nature of Deposited which where of the Amount the dues under protest the amount dispute is Statute (Rs.in lakh) (Rs.in lakh) relates pending

57.53 28.76 2008-09

Rajasthan 173.73 63.28 2009-10 Tax Board,

Finance Act, Land tax 173.73 86.86 2010-11 Ajmer 2006

192.92 99.96 2011-12

192.92 99.96 2012-13

Customs Act Customs Duty 3237.21 733.98 - CESTAT

89.56 6.72 April 2009 CESTAT to June 2012 10.18 - CEC(A)

Finance Act,

Service Tax July 2012 1994 51.34 3.85 to March 2014 CEC(A)

April 2012 1.11 0.08 CEC(A) to June 2012

The Central Nov 2011 Excise Act, Excise Duty 29.03 2.18 CEC(A) to Sep 2012 1944

8) Repayment of Loans

The Company has not defaulted in repayment of loans or borrowing to a financial institution, bank, government or dues to debenture holders during the relevant financial year.

9) Raising of monies through Public Offer and/or Term Loans

According to the information and explanations given to us, the monies raised by ways of issue of debt instruments and term loans were applied for the purposes for which those were raised.

10) Frauds

According to the information and explanations given to us no fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year.

11) Managerial Remuneration

According to the information and explanations provided to us, the total Managerial remuneration paid/provided by the Company is within the overall maximum limit as specified section 197 read with Schedule V to the Companies Act, 2013 and accordingly requirements as to obtaining requisite approval this section does not arise.

12) Compliance with Net Owned Funds Ratio & unencumbered term deposits

The Company is not a Nidhi Company and hence the provisions para 3(xii) of the order referred to in Companies (Auditor''s Report) Order, 2016 issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act does not apply to the Company.

13) Transaction with Related Parties

In our opinion all transactions with the related parties are in compliance with the provision of section 177 and 188 of Companies Act, 2013 wherever applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

14) Preferential Allotment or Private Placement

The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

15) Non-cash transactions

The Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.

16) Registration with Reserve Bank of India

The Company is not carrying any activities which require registration under section 45-IA of the Reserve Bank of India Act, 1934.

Annexure-III to Independent Auditors'' Report

Comments in regard to the directions and sub-directions issued by the Comptroller and Auditor General of India

1. The company has been acquiring land through Government of Tamil Nadu. As per the legal opinion obtained by the company as regards the clear title the position is as under :-

Period during which land Statute under which the Mode of Nature of was acquired land was acquired acquisition ownership

From incorporation to 1977 The Land Acquisition Assignment Conditional Act, 1894 Deeds Ownership

1978 to 1996 The Land Acquisition Government Absolute owner Act, 1894 Notifications of the land

1997 to 2001 The Tamil Nadu Acquisition Government Conditional of Land for Industrial Notifications Ownership Purposes Act, 1997

2001 to 31.03.2016 The Tamil Nadu Acquisition Government Absolute owner of Land for Industrial Notifications of the land Purposes Act, 1997

2. During the year under audit, there were no cases of waiver/write off of debts/loans/interest etc.

3. There are no cases of inventories lying with third parties or assets received as gifts/grants from the Government or other authorities.

For M/s. P.B. VIJAYARAGHAVAN & CO., For M/s. CHANDRAN & RAMAN

Chartered Accountants Chartered Accountants

Firm Regn. No. 004721S Firm Regn No. 000571S



P.B. Srinivasan S. Pattabiraman

Partner Partner

M.No.: 203774 M.No.: 014309

Place : Chennai

Date : 26.05.2016


Mar 31, 2015

We have audited the accompanying standalone financial statements of M/s. NEYVELI LIGNITE CORPORATION LIMITED("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information, in which are incorporated the Returns for the year ended on that date audited by the branch auditor of the Company''s branch at Barsingsar.

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 of these standalone financial statements that give a true and fair view of the 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.

Auditor''s Responsibility

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 control system over financial reporting and 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.

Opinion

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 to the financial statements:

a) Note No: 11(c) to the financial statements regarding Capitalisation of Interest and Overheads for the delay in commissioning of Thermal Power Station-II Expansion project.

b) Note No: 23(b)(v)(b) to the financial statements regarding contingent liability of Rs. 147.56 crore under the scheme of Perform, Achieve and Trade (PAT) mechanism of the Energy Conservation Act, 2001 in respect of Thermal Power Station-I for exceeding the notified energy efficiency targets.

c) Note No: 25(e) to the financial statements regarding disputed liability based on the order of Central Electricity Regulatory Commission (CERC) dated 7-5-2015 for refund of incentive earned for the excess generation of power over and above the contemplated PLF in TPS-II and passing of the revenue earned on lignite sales from Mine-II to beneficiaries.

d) Note No: 23(a)(ii) to the financial statements regarding adoption of normal corporate tax rate instead of Minimum Alternate Tax rate for calculation of Return on Equity in tariff fixation under Central Electricity Regulatory Commission (CERC) regulation.

e) Note No: 25(d) to the financial statements regarding Power tariff that final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order, which is not ascertainable at this stage.

f) Note No: 37 to the financial statements regarding accounting of Foreign Exchange Rate Variation (FERV) recoverable from /payable to beneficiaries which is as per opinion of Expert Advisory Committee (EAC) of Institute of Chartered Accountants of India (ICAI)

g) As per the requirements of section 135(1) of Companies Act, 2013, at least one director shall be an independent director on Corporate Social Responsibility Committee. In the absence of Independent Directors, this has not been complied with from 24th September 2014.

h) As per Companies (Appointment and Qualification of Directors) Rules, 2014, the Company is supposed to have appointed at least one woman director. However this has not been complied with.

Our opinion is not modified in respect of these matters.

Other Matters

We did not audit the financial statements of ONE(1) branch included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs. 1907.91 crore as at 31st March, 2015 and total revenues of Rs. 453.59 crore for the year ended on that date, as considered in the standalone financial statements. The financial statements of this branch has been audited by the branch auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor. Our opinion is not modified in respect of this matter.

Report on other Legal and Regulatory Requirements

1. 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 Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

2. 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 and proper returns adequate for the purposes of our audit have been received from the branch not visited by us.

(c) The report on the accounts of the branch office of the Company audited under Section 143 (8) of the Act by branch auditor has been sent to us and has been properly dealt with by us in preparing this report.

(d) 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 and with the returns received from the branch not visited by us.

(e) 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.

(f) As per the Notification No. G.S.R. 829(E) dated 21.10.2003, issued u/s. 620(1) of the Companies Act, 1956, Sub-section (2) of Section 164 of the Companies Act 2013 is not applicable to Government Companies.

(g) 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 23 to the financial statements;

ii. 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.

Annexure to Auditors'' Report

I. Fixed Assets

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the fixed assets once in five years. As explained to us, physical verification was carried out during the year 2010-11. Pending reconciliation of discrepancies observed on the physical verification, a sum of Rs. 0.41 crore has been retained as Provision for possible loss of asset.

II. Inventories

(a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

III. Transactions with persons covered by register maintained u/s 189 of the Companies Act, 2013

During the year the Company has not granted any loan to Companies, firms and other parties to be listed in the register maintained under Section 189 of the Companies Act, 2013. However in respect of loans granted in the earlier year repayment of principal and interest are regular as per the terms and conditions of the loan.

IV. Internal Control

In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls in other areas.

V. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of sections 73 to 76 or any other provisions of the Companies Act 2013 and the rules made there under are not applicable to the Company.

VI. Cost Accounting Records

The Central Government has prescribed the maintenance of records under Section 148(1) of the Companies Act, in respect of Thermal Power Station Units and Mining Units. We are of the opinion that prima facie, the records prescribed under the Cost Accounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company for Thermal Power Station Units and the proforma specified therein for the year are under preparation. In the case of Mining Units, the records have been maintained to meet the requirements of the Companies (Cost Accounting Records) Rules, 2011. We have however not carried out a detailed verification of such records.

VII. Statutory Dues

(a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF and ESI dues relating to contractors'' workers.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues were outstanding as at 31st March 2015 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty, Value Added Tax and Cess which have not been deposited on account of any dispute except as reported below:

Amount Name Nature of Demand Deposited of the the dues Amount under protest Statute (Rs. in lakh) (Rs. in lakh)

57.53 28.76

Rajasthan 173.73 6328 Finance Act 2006 Land tax 173.73 86.86

192.92 99.96

192.92 99.96

Customs Act Customs Duty 3237.21 733.98

4147.97 200.00

16158.18 4800.00

Income Tax Income Tax 26539.89 - Act,1961 31586.31 22959.43

79.75 79.75

100.02 100.02

15.61 15.61

TNGST Sales Tax 2.02 2.02

Name Period to Forum of the which where Statute the amount dispute is relates pending

2008-09 Rajasthan Finance Act 2009-10 Tax Board, 2006 Ajmer 2010-11

2011-12

2012-13

Customs Act - CESTAT

AY 2010-11 CIT(A)

AY 2012-13 CIT(A) Income Tax Act,1961 AY 2009-10 CIT(A)

AY 2011-12 CIT(A)

AY 2001-02 ITAT

AY 2010-11 ITAT

2002-03 Tribunal TNGST

2003-04 Tribunal

(d) The Company has generally been regular in transfer of amounts required to be transferred to Investor Education and Protection Fund in accordance with relevant provisions of Companies Act, 2013.

VIII. Accumulated Losses

The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

IX. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or Debenture Holders.

X. The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

XI. In our opinion, the term loans have been applied for the purpose for which they were obtained.

XII. Frauds

According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For M/s. SREEDHAR, SURESH & For M/s. P.B. VIJAYARAGHAVAN & CO., RAJAGOPALAN, Chartered Accountants Chartered Accountants Firm Regn. No. 003957S Firm Regn. No. 004721S

K. Sreedhar P.B. Srinivasan Partner Partner M.No.: 024314 M.No.: 203774

Place : Chennai Date : 29.05.2015


Mar 31, 2014

We have audited the accompanying financial statements of Neyveli Lignite Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. 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 mis-statement.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) in the case of statement of Profit and Loss, of the profit for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

Attention is invited to:

a) Note No:11(c) to the Financial statements regarding Capitalisation of Interest and Overheads for the delayed project of Thermal Power Station II Expansion.

b) Note No:23(a) to the Financial statements regarding adoption of normal corporate tax rate instead of Minimum Alternative Tax rate for calculation of Return on Equity as per Central Electricity Regulatory Commission (CERC) Regulation.

c) Note No:25(d) & (e) to the Financial statements regarding Power tariff final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order, which is not ascertainable at this stage.

d) Note No: 37 to the Financial statements regarding accounting of Foreign Exchange Rate Variation (FERV) recoverable/payable from beneficiaries which is as per opinion of Expert Advisory Committee (EAC) of Institute of Chartered Accountants of India (ICAI).

Our opinion is not qualified in respect of these matters mentioned above.

Report on other Legal and Regulatory Requirements

As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

As required by section 227(3) of the Act, we report that:

a) We have 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 appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from Rajasthan branch not visited by us. The Branch Auditor''s Report has been forwarded to us and has been appropriately dealt with.

c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the audited returns received from Rajasthan branch not visited by us.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) As per the Notification No: G.S.R. 829(E) dated 21.10.2003, issued under Section 620(1) of the Companies Act, 1956, clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 is not applicable to Government Companies.

f) As the Central Government is yet to notify Cess payable under section 441A, the reporting requirement under Section 227(3) (g) of the Companies Act, 1956, does not arise.

Annexure to Auditors'' Report

I. Fixed Assets

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the fixed assets once in five years. As explained to us, physical verification was carried out during the year 2010-11. Pending reconciliation of discrepancies observed on the physical verification, a sum of Rs.0.41 crore has been retained as Provision for possible loss of asset.

(c) During the year the Company had not disposed off substantial part of fixed assets.

II. Inventories

(a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

III. Transactions with persons covered by register maintained u/s 301 of the Companies Act, 1956

(a) The Company has not granted / taken any loan to / from Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) There were no transactions of purchase of goods and materials and sale of goods, materials and services in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year Rs.5,00,000 or more.

(c) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Act.

IV. Internal Control

In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

V. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of section 58A, 58AA or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable to the Company.

VI. Internal Audit System

In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

VII. Cost Accounting Records

The Central Government has prescribed the maintenance of records under Section 209(1) (d) of the Companies Act, 1956 in respect of Thermal Power Station Units and Mining Units. We are of the opinion that prima facie, the books of accounts prescribed under the Cost Accounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company for Thermal Power Station Units and the proforma specified therein for the year are under preparation. In the case of Mining Units, the books of accounts have been maintained to meet the requirements of the Companies (Cost Accounting Records) Rules, 2011. We have however not carried out a detailed verification of such records.

VIII. Statutory Dues

(a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF and ESI dues relating to contractors'' workers.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except as reported below:

Amount Name Demand Nature of Deposited of the Amount the dues under protest Statute (Rs. in lakh) (Rs. in lakh)

57.53 28.76 Rajasthan Land tax 173.73 63.28 Finance Act, 173.73 86.86 2006

192.92 99.96

192.92 99.96

733.98

Customs Customs 3137.21 300.00 Act, 1962 duty (by way of bank guarantee)

Name of the Statue Period to Forum which where the amount dispute is relates pending

2008-09

Rajasthan Finance Act, 2006 2009-10 Tax Board, 2010-11 Ajmer 2011-12 2012-13

Customs Act, 1962 - CESTAT

IX. Accumulated Losses

The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

X. Funds from Banks/Financial Institutions/Public

(a) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(b) The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

(c) In our opinion, the term loans have been applied for the purpose for which they were raised.

(d) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the no funds raised on short term basis have been used for long term investment.

(e) According to the information and explanations given to us and the records examined by us, securities have been created in respect of bonds issued.

XI. Frauds

According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

XII. Other Matters

The nature of the Company''s business/activities during the year was such that paragraphs 4 (xii), (xiii), (xiv), (xx) of Companies (Auditor''s Report) Order, 2003 are not applicable.

For M/s. SREEDHAR, SURESH & RAJAGOPALAN, For M/s. P.B. VIJAYARAGHAVAN & CO.,

Chartered Accountants Chartered Accountants

Firm Regn. No. 003957S Firm Regn. No. 004721S

S. SUBRAMANIAM P.B. SRINIVASAN

Partner Partner

M.No.: 025433 M.No.: 203774

Place : Chennai Date : 23.05.2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Neyveli Lignite Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material mis-statement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. 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 mis-statement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material mis-statement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

Attention is invited to:

a) Note No:25(d) & (e) to the Financial statements. Final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order on power tariff, which is not ascertainable at this stage.

b) Note No:25(f) to the Financial statements. Pending receipt of CERC order regarding reduction in power sales of Rs.17.78 crore on account of deemed export benefit granted by Government of India has not been given effect.

Our opinion is not qualified in respect of these matters mentioned above.

Report on other Legal and Regulatory Requirements

As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

As required by section 227(3) of the Act, we report that:

a) We have 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 appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from Rajasthan branch not visited by us. The Branch Auditor''s Report has been forwarded to us and has been appropriately dealt with.

c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the audited returns received from Rajasthan branch not visited by us.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e) As per the Notification No: G.S.R. 829(E) dated 21.10.2003, issued under Section 620(1) of the Companies Act, 1956, clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 is not applicable to Government Companies.

f) As the Central Government is yet to notify Cess payable under section 441A, the reporting requirement under section 227(3) (g) of the Companies Act, 1956, does not arise.

Annexure to Auditors'' Report

I. Fixed Assets

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the fixed assets once in five years. As explained to us, physical verification was carried out during the year 2010-11. Pending reconciliation of discrepancies observed on the physical verification done during the financial year 2012-2013, a sum of Rs.0.59 crore has been adjusted with the Provision amount of Rs.1.00 crore created in the previous year and the balance of Rs. 0.41 crore is available.

(c) During the year the Company had not disposed off substantial part of fixed assets.

II. Inventories

(a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

III. Transactions with persons covered by register maintained u/s 301 of the Companies Act, 1956

(a) The Company has not granted/taken any loan to/from Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) There were no transactions of purchase of goods and materials and sale of goods, materials and services in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year Rs.5,00,000 or more.

(c) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Act.

IV. Internal Control

In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

V. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of section 58A, 58AA or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable to the Company.

VI. Internal Audit System

In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

VII. Cost Accounting Records

The Central Government has prescribed the maintenance of records under Section 209(1) (d) of the Companies Act, 1956 in respect of Thermal Power Station Units and Mining Units. We are of the opinion that prima facie, the books of accounts prescribed under the Cost Accounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company for Thermal Power Station Units and the proforma specified therein for the year are under preparation. In the case of Mining Units, the books of accounts have been maintained to meet the requirements of the Companies (Cost Accounting Records) Rules, 2011. We have however not carried out a detailed verification of such records.

VIII. Statutory Dues

(a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF and ESI dues relating to contractors'' workers.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues were outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except as reported below:

Amount Name Nature of Demand Deposited of the the dues Amount under protest Statute (Rs. in lakh) (Rs. in lakh)

57.53 28.76

Rajasthan Land tax 173.73 63.28 Finance Act, 173.73 86.86 2006

192.92 99.96

192.92 99.96

Customs Customs 2932.74 3000 Act,1962 duty (by way of bank guarantee)

Name of the Statute Period to Forum which where the amount dispute is relates pending

Rajasthan Finance Act,2006 2008-09

2009-10 Tax Board,Ajmer

2010-11

2011-12

2012-13

Customs Act, 1962 - CESTAT

IX. Accumulated Losses

The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

X. Funds from Banks/Financial Institutions/Public

(a) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(b) The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

(c) In our opinion, the term loans have been applied for the purpose for which they were raised.

(d) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(e) According to the information and explanations given to us and the records examined by us, securities have been created in respect of bonds issued.

XI. Frauds

According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

XII. Other Matters

The nature of the Company''s business/activities during the year was such that paragraphs 4 (xii), (xiii), (xiv), (xx) of Companies (Auditor''s Report) Order, 2003 are not applicable.

For M/s. L.U.KRISHNAN & CO., For M/s. SREEDHAR, SURESH & RAJAGOPALAN,

Chartered Accountants Chartered Accountants

Firm Regn. No. 001527S Firm Regn. No. 003957S

S. Jothirajan K. Sreedhar

Partner Partner

M.No.: 211121 M.No.: 024314

Place : Chennai

Date : 28.05.2013


Mar 31, 2012

We have audited the attached Balance Sheet of NEYVELI LIGNITE CORPORATION LIMITED, as at 31st March 2012, the Statement of Profit and Loss and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.

As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to ourcomments in theAnnexure referred to above, we report that

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(ii) In our opinion, proper books of account as required by law have been kept by the Company in so far as it appears from examination of those books and proper returns adequate for the purposes of our audit have been received from Rajasthan branch not visited by us. The Branch Auditors' Report has been forwarded to us and has been appropriately dealt with.

(iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from Rajasthan branch.

(iv) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(v) As per the Notification No. G.S.R. 829(E) dated 21.10.2003, issued under section 620 (1) of the Companies Act 1956, clause (g) of sub-section (1) of section 274 of the Companies Act, 1956, is not applicable to Government Companies.

(vi) As the Central Government is yet to notify Cess payable under Section 441 A, the reporting requirement under Section 227(3)(g) of the Companies Act, 1956 does not arise.

(vii) Attention is invited to:

a. note no: 24(d) & (e) to the financial statements. Final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order on power tariff, which is not ascertainable at this stage.

b. note no: 24(f) to the financial statement regarding inclusion of Mine-ll Expansion expenditure in determining the energy charges in power sale on commissioning of Thermal Power Station-I I Expansion. Pending determination of revised energy charges, consequential adjustments may arise in future which is not ascertainable at this stage.

In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of Balance Sheet, of the State of Affairs of the Company as at 31 stMarch, 2012;

b) in the case of Statement of Profit and Loss, of the Profit for the year ended on that date; and

c) in the case of Cash Flow Statement, of the Cash Flows for the year ended on that date.

Annexure to Auditors' Report

I. Fixed Assets

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the fixed assets once in five years. As explained to us, physical verification was carried out during the year 2010-11. Pending reconciliation of discrepancies observed on the physical verification done during the financial year 2011 -2012, a sum of Rs. 1.00 crore has been created towards possible loss.

(c) During the year the Company had not disposed off substantial part of fixed assets.

II. Inventories

(a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

III. Transactions with persons covered by register maintained U/S 301 of the Companies Act, 1956

(a) The Company has not granted/taken any loan to/from Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) There were no transactions of purchase of goods and materials and sale of goods, materials and services in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the yearRs.5,00,000 or more.

(c) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Act.

IV. Internal Control

In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

V. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of section 58A, 58AA or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable to the Company.

VI. Internal Audit System

In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

VII. Cost Accounting Records

The Central Government has prescribed the maintenance of records under Section 209(1) (d) of the Companies Act, 1956 in respect of Thermal Power Station Units and Mining Units. We are of the opinion that prima facie, the books of accounts prescribed under the Cost Accounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company for Thermal Power Station Units and the proforma specified therein for the year are under preparation. In the case of Mining Units, the books of accounts prescribed under the Companies (Cost Accounting Records) Rules, 2011 are under preparation. We have, however, not carried out a detailed verification of such records.

VIII. Statutory Dues

(a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF dues relating to contractors' workers. The ESI Act does not apply to the Company.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues were outstanding as at 3151 March, 2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except as reported below:

Name Nature of Demand of the the dues Statute (Rs.in lakh)

57.53

Land tax 173.73

Rajasthan Finance Act, 173.73

2006 192.92

Customs Customs 2931.24 Act, 1962 duty

Name of the Amount Period to Forum Statute Deposited which where under protest the amount dispute is (Rs.in lakh) relates pending

Rajasthan 28.76 2008-09

Finance Act 63.28 2009-10 Tax Board,

2006 86.86 2010-11 Ajmer

99.96 2011-12

Customs 300 Act,1962 (by way of - CESTAT bank guarantee)

IX. Accumulated Losses

The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

X. Funds from Banks/Financial Institutions/Public

(a) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(b) The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

(c) In our opinion, the term loans have been applied forthe purpose for which they were raised.

(d) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the no funds raised on shortterm basis have been used for long term investment.

(e) According to the information and explanations given to us and the records examined by us, securities have been created in respect of bonds issued.

XI. Frauds

According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

XII. Other Matters

The nature of the Company's business/activities during the year was such that paragraphs 4 (xii), (xiii), (xiv), (xx) of Companies (Auditor's Report) Order, 2003 are not applicable.

For M/s. L.U.KRISHNAN & CO., For M/s. SREEDHAR, SURESH & RAJAGOPALAN,

Chartered Accountants Chartered Accountants

Firm Regn. No. 001527S Firm Regn. No. 003957S

R. Aghoramurthy V.Suresh

Partner Partner

M.No. 007595 M.No. 026525

Place : Chennai

Date : 28.05.2012


Mar 31, 2010

We have audited the attached Balance Sheet of NEYVELI LIGNITE CORPORATION LIMITED, as at 31st March 2010,the Profit and Loss Account and also the Cash Flow Statementfortheyearendedonthat date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basisforouropinion.

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Furtherto our comments in theAnnexure referred to above, we report that

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryforthe purposes of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the Company in so far as it appears from examination of those books and proper returns adequate for the purposes of our audit have been received from Rajasthan branch not visited by us. The Branch Auditors Report has been forwarded to us and has been appropriately dealt with.

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from Rajasthan branch.

(iv) In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub- section (3C) of Section 211 of the Companies Act, 1956, except:

Accounting Standard AS-6, regarding Depreciation Accounting in respect of unamortised depreciable amount not charged over the revised remaining useful life in respect of Specialised Mining Equipment (SME) existing on 31.08.2007 [the date of the order of the Ministry of Company Affairs reducing the rate of depreciation for SME from 11.31% to 6.33%]. Had this method of accounting been followed, the provision for depreciation for the period would have been lower by Rs.44.77crores. Accordingly profit for the year and fixed assets are understated to that extent.

(v) As per the Notification No.G.S.R. (E) dated 21.10.2003, issued under section 620 (1) of the Companies Act 1956, clause (g) of sub-section (1) of section 274 of the Companies Act, 1956, is not applicable to Government Companies.

(vi) As the Central Government is yet to notify Cess payable under Section 441 A, the reporting requirement under Section 227(3)(g) of the Companies Act, 1956 does not arise.

(vii) Attention is invited to Note No.18 of Schedule - 22, Notes on Accounts regarding accounting of sale of power by adopting provisional tariff. Pending final order on power tariff by Central Electricity Regulatory Commission (CERC), consequent adjustments, that may arise in future, are not ascertainable at this stage.

Subject to our comments in para (iv) and (vii) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) In the case of Balance Sheet, of the state of affairs of the company as at 31st March, 2010;

b)In the case of Profit and Loss Account, of the Profit for the year ended on that date;and

C)In the case of Cash Flow Statement,of the Cash Flows for the year ended on that date.

Annexure to the Auditors Report Referred to in paragraph 3 of our report of even date,

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the Fixed Assets once in five years, which is reasonable having regard to the size of the Company and nature of its assets. As explained to us, physical verification has not been carried out during the year. Pending reconciliation of discrepancies observed on the physical verification done during the year 2006, a sum of Rs. 0.86 crore has been retained as provision towards possible losses.

(c) During the year the Company had not disposed off substantial part of fixed assets.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, thefrequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

(iii) The Company has not granted/taken any loan to/from Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act,1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) There were no transactions of purchase of goods and materials and sale of goods, materials and services in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year Rs.5,00,000 or more.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public hence the provisions of section 58A, 58AA or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable to the Company.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has prescribed the maintenance of records under Section 209(1 )(d) of the Companies Act, 1956 in respect of Thermal Power Station Units and we are of the opinion that prima facie, the books of accounts prescribed underthe CostAccounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company and the proforma specified therein for the year are under preparation. We have however not carried out a detailed verification of such records.

(ix) (a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF dues relating to contractors workers. The ESI Act does not apply to the Company.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues were outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute.

(x) The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Hence the question of maintenance of documents and records does not arise.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

(xvi) In our opinion, the term loans have been applied forthe purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the no funds raised on short-term basis have been used for long-term investment.

(xviii) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained undersection 301 of the Act.

(xix) According to the information and explanations given to us and the records examined by us, securities have been created in respect of bonds issued.

(xx) The Company has not raised any money through public issue. Hence the provisions of clause 4(xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For GANESAN AND COMPANY, For L.U.KRISHNAN & CO.,

Chartered Accountants Chartered Accountants

Firm Regn. No. 000859S Firm Regn. No. 001527S

N.Venkatramani R. Aghoramurthy

Partner Partner

M.No.215145 M.No.007595

Place: Chennai Date: 27.05.2010



 
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