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Auditor Report of NHPC Ltd.

Mar 31, 2023

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of NHPC Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and Notes to the Standalone Financial Statements, including a summary of significant accounting policies and Other Explanatory Notes for the year ended on that date (hereinafter referred to as "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 Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2023, and total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the "Auditors'' Responsibilities for the Audit of the Standalone Financial Statements" section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters

Key Audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the standalone fi nancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have considered the matters described below to be the Key Audit Matters for incorporation in our Report.

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Addressing the Key Audit Matters

Regulatory Deferral Account Debit Balances and accruals of revenue pending tariff Notifications.

The operating activities of the Company are subject to cost of service regulations whereby tariff charged for electricity generated is based on allowable capital and other cost and expenses and stipulated return there against. The Company invoices its customers on the basis of pre-approved/ provisional tariff which is subject to truing up.

The Company recognizes revenue as the amount invoiced to customers based on pre-approved/ provisional tariff rates agreed with the regulator. As the Company is entitled to a fixed return on equity, the difference between the revenue recognized and entitlement as per the regulations is recognized as regulatory assets / liabilities.

As at March 31,2023, the Company has recognized Regulatory Deferral Account Debit balances of '' 6420.12 Crores ('' 6948.11 Crores up to March 31, 2022) as given in Note 14.1 of the Standalone Financial Statements.

Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the carrying value of Regulatory Deferral Account Debit Balances include the following:

â¢ Understanding and testing the design and operating effectiveness of controls as established by the management for accrual of income and determination of the amounts recoverable there against.

â¢ Obtaining and understanding of the amount recoverable in terms of CERC Regulations and assessing, testing and evaluating the reasonableness thereof keeping in view the significant judgements applied by the management for such assessments.

â¢ The above includes the evaluation of the CERC guidelines and acceptance of the claim made by the Company in the past and the trend of disallowances on various count and adherences and compliances thereof by the management and rationale for assumptions taken under the given situation and business environment.

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Addressing the Key Audit Matters

This include accruals aggregating to '' 3470.59 Crores on account of interest cost and other attributable expenses pertaining to Subansiri Lower HE Project for the period from the date of interruption of work i.e. 16.12.2011 till 30.09.2019 as indicated in Note 34(22A) of Standalone Financial Statements.

Regulatory Deferral Accounts Debit Balances are determined based on tariff regulations and past tariff orders and are subject to verifi cation and approval by the regulators. The Regulatory Deferral Accounts Debit Balances are recognized on undiscounted basis based on the estimates and assumptions with respect to the probability that future economic beneft will flow to the entity as a result of actual or expected action of regulator under applicable regulatory framework and therefore recoverability thereof is dependent upon Tariff Regulations and related approvals and notifcations.

The accruals made as above are vital and proprietary to the business in which the Company is operating. In absence of specif c notif cation and rate f xation, these are based on the management''s assumptions and estimates which are subject to f nalization of tariff by CERC and commencement of operations of the Projects.

â¢ Evaluating the various assumptions considered by the management for arriving at the value of Cash Generating Unit, Note 34(18) of Standalone Financial Statements in case of Subansiri Lower HE Project and adequacy thereof with respect to the carrying value of the Project in Progress and balances pertaining to the said project under Regulatory Deferral Accounts.

â¢ Assessing the application of provisions of Ind AS 114, Guidance Note on Accounting of Rate Regulated Activities issued by ICAI for recognition of regulatory deferral balances.

â¢ Reviewing the adequacy and reasonableness of amounts recognised and measurement policies followed by the Company and adequacy of the disclosure made with respect to the same in the Standalone Financial Statements of the Company.

Impairment Assessment of carrying amount of: A. Property, Plant and Equipment (PPE) and Capital Work in Progress (CWIP)

Each of the Power Station/ Project has been considered as Cash Generating Units (CGU) of the Company and impairment indicators and requirements thereof have been assessed with respect to the Property, Plant and Equipment (PPE) and Capital Work in Progress (CWIP) as given in Note 34(18) of the Standalone Financial Statements. This has been assessed that no signif cant change with an adverse effect on the Company has taken place during the year or is expected to take place in the near future, in the technological, economic or legal environment in which the Company operates. Based on the assessment, the Company has concluded that there exists no signifcant impairment indicator or any impairment in respect of the CGUs of the Company tested for impairment during the year 2022-23. Based on the above assessment, no provision for impairment against PPE or CWIP has been considered necessary by the Company.

Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the impairment assessment of carrying amount of PPE, CWIP & Investments in/ Loans to Subsidiaries/ Joint Ventures include the following:

â¢ Critical evaluation of internal and external factors impacting the entity and indicators of impairment (or reversal thereof) in line with Ind AS 36.

â¢ Review of impairment valuation models used in relation to CGU to determine the recoverable amount by analysing the key assumptions used by management in this respect including:

- Consistency with respect to forecast for arriving at the valuation and assessing the potential impact of any variances;

- Price assumptions used in the models;

- Factoring of risk inherent to the CGUs in the Cash Flow projections or the discount rate.

- The assumption/estimation for the weighted average cost of capital and rate of discount for arriving at the value in use.

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Impairment exercise undertaken which justifies the carrying amount of certain assets as above include the regulatory deferral account balances pertaining to Subansiri Lower HE Project as dealt with under para 1 above, is significant and vital to the Company''s operations.

Evaluation of the impairment involves assessment of value in use of the Cash Generating Units (CGUs) and requires signifi cant judgements and assumptions about the future cash flow forecasts, forecast production, forecast volumes, prices and discount rate.

B. Company''s investments in and loans to Subsidiaries and Joint Ventures

The Company has investments in a subsidiary (Loktak Downstream Hydroelectric Corporation Limited) and a joint venture (National High Power Test Laboratory Private Limited) with a carrying value of '' 135.96 Crores. Further, the Company has also provided loan to the joint venture amounting to '' 18.40 Crore.

The Company accounts for its investments in subsidiaries and joint ventures at cost (subject to impairment assessment). Management regularly reviews whether there are any indicators of impairment of investments with reference to Ind AS 36 ''Impairment of Assets''. If such indicators exist, impairment loss is determined and recognised in accordance with the accounting Policy of the Company.

In case of the subsidiary, due to the delay in investment sanction (PIB & CCEA) and high projected tariffs, the Company has recognised impairment allowance of '' 105.56 Crores during the year ended March 31, 2023, in respect of the investment made in the subsidiary.

The joint venture, on the other hand, has been incurring continuous losses, and accordingly, during the year ended March 31, 2023, the Company has recognised impairment allowance of '' 16.33 Crores, in respect of the investment made in the joint venture and '' 18.40 Crores in respect of loan provided to the joint venture. Refer Note 34(18) of Standalone Financial Statements.

â¢ Reviewed the Government Policy and approval for setting up the Projects, decision of the Board of Directors and the efforts and steps being undertaken in this respect.

â¢ Reliance has been placed on management projections for completion timeline, volume of generation and resultant revenue based on expected tariff there against.

â¢ Obtained and read the fi nancial statements of the Subsidiaries and joint ventures to identify any disclosure for impairment of assets in their standalone financial statements.

â¢ Evaluation of adequacy and appropriateness of disclosures made in the Standalone Financial Statements.

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	Further, the Company has not recognised interest income of '' 2.10 Crores during the current fi nancial year ('' 1.67 Crores during the year ended March 31, 2022) from its joint venture due to signifcant uncertainty in realization.
3.	Contingent Liabilities - against claim from Contractors (Note 34(1)(a)(i) of Standalone Financial Statements) Various claims lodged by the Contractors against Capital Works amount to '' 9971.13 Crores of which '' 1116.93 Crores have been provided for, '' 8556.95 Crores have been disclosed under Contingent Liabilities and in respect of the rest of the claims, possibility of any outflow in settlement is considered as remote. This includes matters under arbitration and/ or before the Court which have been decided against the Company. Further, amounts have been paid/deposited pursuant to the NITI Aayog directions or Court order in some cases as referred in Note 34 (1) (e) (i) & (ii) of the Standalone Financial Statements. Claims made against the Company are signifcant. These are pending for decision before arbitration or other judicial forums and consequential and possible impact thereof. Provisions/disclosure required have been based on the management''s assessment of the probability of the occurrence of the liability.	Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the Contingent Liabilities include the following: â¢ Obtained the status of the cases from the legal department and their view on the matter; â¢ Evaluated the contractual terms and conditions and management''s rationale for the adequacy of the provision so far made and the amount remaining unprovided against the demands made against the Company; â¢ Discussion with management and perusing/ reviewing the correspondences, Memos and Notes on related matters. â¢ Reliance has been placed on the legal views and decisions on similar matters and probability of the liability arising therefrom and provision made by the Management pending f nal judgement/ decisions; â¢ Reviewed the appropriateness and adequacy of the disclosure and provision by the management as required in terms of the requirement of Ind AS 37 "Provisions, Contingent Liabilities and Contingent Assets".
4.	Expenditure incurred on Survey and Investigation Projects and those under preconstruction stage upto 31.03.2023 Expenditure of '' 1293.90 Crores as given in Note 2.2.3 of the Standalone Financial Statements has been incurred for conducting survey and investigation on projects. This includes Interest, administrative and other costs attributable to these projects. Out of this '' 964.21 Crores (including '' 2.19 Crores during the year) have been provided for, keeping in view uncertainty with respect to clearances, approvals for implementing the Projects, leaving '' 329.69 Crores which has been carried forward as Capital Work in Progress. Further, Capital Work in Progress also includes Projects where active construction activities are yet to be undertaken. Interest, Administrative and other Costs are capitalized till the projects are abandoned, however, provisions are made as given herein above in cases where in view of the management there are uncertainties in implementing the projects undertaken.	Our audit procedures based on which we arrived at the conclusion regarding the carrying amount of expenditure incurred on survey and Investigation Projects include the following: â¢ Obtained the status of the Projects under Survey and Investigation stage as provided by the management and the reason thereof of keeping them in abeyance. â¢ Understanding and testing the design and operating effectiveness of controls as established by the management for accounting the expenses incurred (a) for survey and investigation projects and the Policy followed for making provisions/ write off for such expenses given the nature of business of the Company, (b) for project under pre-construction stage and allocation of Borrowing and other cost incurred and allocated there against. â¢ Evaluating the management''s rationale with respect to continuing such projects under Capital Work in Progress in spite of there being uncertainties and delay in implementing the same and expected economic use of the same in future.

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Key Audit Matters

Addressing the Key Audit Matters

In the event of related Projects not being undertaken, amounts spent on survey and investigation and those incurred/ allocated prior to construction thereof will no longer be eligible to be carried forward as Capital Work in Progress.

â¢ Evaluating the tenure of pre and under construction stage of project and management contention of normal period required for the same given the location, size and nature in each case of the respective project.

â¢ The matter being technical and proprietary to the nature of business in which the Company is operating, reliance has been placed on the management''s contention and representation on the matter.

Recognition of MAT Credit and Regulatory Deferral (Credit) balances

During the current Financial Year, the Company has assessed the recoverability of unrecognised MAT Credit of '' 945.96 Crores available to it. Based on such assessment, the Company has recognized deferred tax asset relating to MAT credit entitlement of '' 417.31 Crores ('' 1478.62 Crores upto March 31,2022) as the amount of MAT Credit which shall be available for utilization by the Company in future years by way of lower outflow of Income Tax in future years. Out of the MAT Credit recognised, '' 328.94 Crores has been utilized during the current Financial Year.

Correspondingly, in respect of ibid deferred tax asset relating to MAT credit entitlement, Regulatory Deferral (Credit) Balance of '' 923.20 Crores ('' 1313.27 Crores upto March 31, 2022) has been recognized, being the amount, which shall be passed on to the beneficiaries in future as per CERC Tariff Regulations.

The recoverability of this deferred tax asset relating to MAT credit entitlement is dependent upon the generation of sufficient future taxable profits to utilize such entitlement within the stipulated period prescribed under the Income Tax Act, 1961.

The recognition of MAT Credit and Regulatory Deferral (Credit) balance there against is important to the intended users of the Standalone Financial Statements in view of its materiality and requirement of judgement in forecasting future taxable profits for recognition of MAT credit entitlement considering the recoverability of such tax credits within allowed time frame as per the provisions of the Income Tax Act, 1961.

Relevant disclosures in this regard have been provided at Notes 14.2, 18, 30.1, 31,34(22)(E) read with Signifi cant Accounting Policy No. 20.0(b) of the Standalone Financial Statements.

Our audit procedures based on which we arrived at the conclusion regarding appropriateness of MAT Credit recognized and Regulatory Deferral (Credit) balances created there against include the following:

â¢ Understanding and testing the operating effectiveness of the Company''s control relating to taxation and assessment of carrying amount of deferred tax assets/ liabilities.

â¢ Review of the Company''s accounting Policy in respect of deferred tax assets on unutilized MAT credit and current year developments, if any, requiring change in such Policy and management contention on the same.

â¢ Evaluation of tax credit entitlement as legally available to the Company based on internal forecasts prepared by the Company and probability of future taxable income.

â¢ Review of underlying assumptions for consistency and uncertainty involved and principle of prudence for arriving at a reasonable degree of probability of utilisation of MAT Credit recognized.

â¢ Review of implication pertaining to regulatory regime under which the Company operates and estimations prepared by the Company regarding MAT Credit arising out of generation activity to be passed on to beneficiaries and impact thereof on the Standalone Financial Statements under the given current Regulatory provisions and period of applicability thereof.

â¢ Evaluation of adequacy and appropriateness of disclosures made in the Standalone Financial Statements.

Information other than the Financial Statements and Auditors'' Report thereon

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the Standalone Financial Statements and our auditors'' report thereon. The other information as stated above is expected to be made available to us after the date of this auditors'' report.

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available, and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

When we read the other information as stated above and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and describe necessary actions required as per applicable laws and regulations.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the state of affairs (financial position), Profit or Loss (financial performance including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditors'' Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standard on Auditing (SAs) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

â¢ Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system with reference to Standalone Financial Statements in place and the operating effectiveness of such controls;

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

â¢ Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern; and

â¢ Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Standalone Financial Statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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

Report on Other Legal and Regulatory Requirements

i. As required by the Companies (Auditor''s Report) Order, 2020 ("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 A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

ii. Based on the verification of books of account of the Company and according to information and explanations given to us, we give below a report on the Directions issued by the Comptroller and Auditor General of India in terms of Section 143 (5) of the Act:

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Directions

Whether the Company has system in place to process all the accounting transactions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.

According to the information and explanations given to us and based on our audit, all accounting transactions are routed through ERP system implemented by the Company. Period end Standalone Financial Statements are compiled offline based on balances and transactions generated from ERP system.

We have neither been informed nor have we come across during the course of our audit any accounting transactions having impact on the integrity of the accounts along with the financial implications which have been processed outside the IT system.

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2	Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/ interest etc. made by a lender to the Company due to the Company''s inability to repay the loan? If yes, the financial impact may be stated. Whether such cases are properly accounted for? (In case, lender is a government company, then this direction is also applicable for statutory auditor of lender company)	According to information and explanations given to us and based on our audit, there is no case of restructuring of an existing loan or cases of waiver/write off of debts / loans / interest etc. made by lender to the Company. Further, in respect of loan given by the Company to National High Power Test Laboratory Private Limited (Joint Venture) where interest was receivable in half yearly instalments starting from 30.04.2021 and principal was repayable in 20 equal half yearly instalments starting from 31.10.2022, interest accrued for the FY 2021-22 amounting to '' 1.67 Crore and for the FY 2022-23 amounting to '' 2.10 Crores respectively have not been accounted for in view of signifi cant uncertainty of realization due to cash losses incurred by the Joint Venture.
3	Whether funds (grants/ subsidy etc.) received/ receivable for specific schemes from Central/ State Government or its agencies were properly accounted for/utilized as per its terms and conditions? List the cases of deviation.	According to information and explanations given to us and based on our audit, the Company has accounted for and utilized the funds received for specific schemes from Central/State agencies as per the terms and conditions of the schemes.

iii. Further to our comments in the annexure referred to in the paragraph above, as required by Section 143(3) of the Act, we report that:

a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) the Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.

d) in our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act.

e) in terms of Notification no. G.S.R. 463 (E) dated 05^th June 2015 issued by the Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualifications of the Directors, are not applicable as it is a Government Company.

f) With respect to the adequacy of the internal fi nancial controls with reference to Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal control; and

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 and Companies (Audit and Auditors) Amendment Rules, 2021 in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer Note 34(1) to the Standalone Financial Statements.

ii. The Company did not have any material foreseeable losses against long-term contracts including derivative contracts and thereby requirement for making provision in this respect is not applicable to the Company.

iii. There has been no delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. As per notification number G.S.R. 463 (E) dated 5^th June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act as regards the managerial remuneration is not applicable to the Company, since it is a Government Company.

v. a. The management has represented that, to the best of its knowledge and belief, no funds have

been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:

â¢ whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or

â¢ provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

b. The management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall:

â¢ whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or

â¢ provide any guarantee, security or the like from or on behalf of the Ultimate Beneficiaries; and

c. Based on such audit procedures as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub clause (v) (a) and (v) (b) contain any material mis-statement.

vi. The dividend declared or paid during the year by the Company is in compliance with Section 123 of the Act.

vii. The Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1,2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31,2023.

For K G Somani & Co LLP For Chaturvedi & Co. For P C Bindal and Co.

Chartered Accountants Chartered Accountants Chartered Accountants

FRN:006591N/N500377 FRN:302137E FRN: 003824N

(Bhuvnesh Maheshwari) (S C Chaturvedi ) (Manushree Bindal)

Partner Partner Partner

M. No.088155 M. No. 012705 M. No. 517316

UDIN: 23088155BGYWED5558 UDIN: 23012705BGWLYC7299 UDIN: 23517316BGYPFX8650

Place: New Delhi Date: May 29, 2023

Mar 31, 2022

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of NHPC Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2022, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and Notes to the Standalone Financial Statements, including a summary of Significant Accounting Policies and Other Explanatory Notes for the year ended on that date (hereinafter referred to as "Financial Statements").

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors'' Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have considered the matters described below to be the Key Audit Matters for incorporation in our Report.

Key audit Matters

Addressing the Key Audit Matters

Regulatory Deferral Account Debit Balances and accruals of revenue pending tariff Notifications.

The operating activities of the Company are subject to cost of service regulations whereby tariff charged for electricity generated is based on allowable capital and other cost and expenses and stipulated return there against. The Company invoices its customers on the basis of preapproved/ provisional tariff which is subject to truing up.

The Company recognizes revenue as the amount invoiced to customers based on pre-approved/

Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the carrying the value of Regulatory Deferral Account Debit Balances include the following:

â¢ Understanding and testing the design and operating effectiveness of controls as established by the management for accrual of income and determination of the amounts recoverable there against.

â¢ Obtaining and understanding of the amount recoverable in terms of CERC Regulations and assessing, testing and evaluating the reasonableness thereof keeping in view the

Key audit Matters

Addressing the Key Audit Matters

provisional tariff rates agreed with the regulator. As the Company is entitled to a fixed return on equity, the difference between the revenue recognized and entitlement as per the regulations is recognized as regulatory assets / liabilities.

As at March 31, 2022, the Company has recognized Regulatory Deferral Account Debit balances of Rs. 6948.11 Crores (Rs. 6902.93 Crores up to 31st March 2021) as given in Note 14 of the Standalone Financial Statements. This include accruals aggregating to Rs. 3470.59 Crores on account of interest cost and other attributable expenses pertaining to Subansiri Lower Project for the period from the date of interruption of work i.e. 16.12.2011 till 30.09.2019 as indicated in Note 34(22A).

Regulatory Deferral Accounts Debit Balances are determined based on tariff regulations and past tariff orders and are subject to verification and approval by the regulators. The Regulatory Deferral Accounts Debit Balances are recognized on undiscounted basis based on the estimates and assumptions with respect to the probability that future economic benefit will flow to the entity as a result of actual or expected action of regulator under applicable regulatory framework and therefore recoverability thereof is dependent upon Tariff Regulations and related approvals and notifications.

The accruals made as above are vital and proprietary to the business in which the Company is operating. In absence of specific notification and rate fixation, these are based on the management''s assumptions and estimates which are subject to finalization of tariff by CERC and commencement of operations of the Projects.

significant judgements applied by the management for such assessments.

â¢ Evaluating the various assumptions considered by the management for arriving at the value of Cash generating Unit, Note 34(18) of Standalone Financial Statements in case of Subansiri Lower HE Project and adequacy thereof with respect to the carrying value of the Project in Progress and balances pertaining to the said project under Regulatory deferral Accounts.

â¢ Assessing the application of provisions of Ind AS 114, Guidance Note on Accounting of Rate Regulated Activities issued by ICAI for recognition of regulatory deferral balances.

Impairment Assessment of carrying amount of Property, Plant and Equipment (PPE) and Capital Work in Progress (CWIP)

Each of the Hydro electricity generating plant has been considered as Cash Generating Units (CGUs) of the company and impairment indicators and requirements thereof have been assessed with respect to the Property, Plant and Equipment (PPE) and Capital Work in Progress (CWIP) as given in Note 34(18) of the Standalone Financial Statements. This has been assessed that no significant change with an adverse effect on the

Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the non-provisioning of any CGU based on impairment testing include the following:

â¢ Critical evaluation of internal and external factors impacting the entity and indicators of impairment (or reversal thereof) in line with Ind AS 36;

â¢ Review of impairment valuation models used in relation to CGU to determine the recoverable amount by analysing the key assumptions used by management in this respect including:

Key audit Matters

Addressing the Key Audit Matters

company has taken place during the year or is expected to take place in the near future, in the technological, economic or legal environment in which the company operates. Based on the assessment, the company has concluded that there exists no significant impairment indicator or any impairment in respect of the CGUs of the company tested for impairment during the year 2021-22. Based on the above assessment, no provision for impairment against PPE or CWIP has been considered necessary by the Company.

Impairment exercise undertaken which justifies the carrying amount of certain assets as above include the regulatory deferral account balances pertaining to Subansiri Lower Project as dealt with under Para 1(a) above, is significant and vital to the Company''s operations.

Evaluation of the impairment involves assessment of value in use of the Cash Generating Units (CGUs) and requires significant judgements and assumptions about the future cash flow forecasts, forecast production, forecast volumes, prices and discount rate.

- Consistency with respect to forecast for arriving at the valuation and assessing the potential impact of any variances;

- Price assumptions used in the models;

- Factoring of risk inherent to the CGUs in the Cash Flow projections or the discount rate.

- The assumption/estimation for the weighted average cost of capital and rate of discount for arriving at the value in use.

â¢ Reviewed the Government policy and approval for setting up the Projects, decision of the Board and the efforts and steps being undertaken in this respect.

â¢ Reliance has been placed on management projections for completion timeline, volume of generation and resultant revenue based on expected tariff there against.

Contingent Liabilities - against claim from Contractors (Note 34.1(a)(1) of Standalone Financial Statements)

Various claims lodged by the Contractors against Capital Works amount to Rs. 10240.95 Crore of which Rs. 418.63 Crore have been provided for, Rs. 9546.17 Crore have been disclosed under Contingent Liability and in respect of the rest of the claims, possibility of any outflow in settlement is considered as remote. This includes matters under arbitration and/ or before the Court which have been decided against the Company. Further, amounts have been paid/deposited pursuant to the NITI Aayog directions or Court order in some cases as referred in Note 34 (1) (e) (i) & (ii) of the Standalone Financial Statements.

Claims made against the Company are significant. These are pending for decision before arbitration or other judicial forums and consequential and possible impact thereof. Provisions/disclosure required have been based on the management''s assessment of the probability of the occurrence of the liability.

Our audit procedures based on which we arrived

at the conclusion regarding reasonableness of the

Contingent Liabilities include the following:

â¢ Obtained the status of the cases from the Legal department and their view on the matter;

â¢ Evaluated the contractual terms and conditions and management''s rationale for the adequacy of the provision so far made and the amount remaining unprovided against the demands made against the Company;

â¢ Discussion with management and perusing/ reviewing the correspondences Memos and Notes on related matters.

â¢ Reliance has been placed on the legal views and decisions on similar matters and probability of the liability arising therefrom and provision made by the Management pending final judgement/ decisions;

â¢ Reviewed the appropriateness and adequacy of the disclosure and provision by the management as required in terms of the requirement of IND AS 37 "Provisions, Contingent Liabilities and Contingent Assets".

Key audit Matters

Addressing the Key Audit Matters

Expenditure incurred on Survey and Investigation Projects and those under preconstruction stage upto 31.03.2022

Expenditure of Rs. 1234.97 Crores as given in Note 2.2.3 of the Standalone Financial Statements has been incurred for conducting survey and investigation on projects. This includes Interest, administrative and other costs attributable to these projects. Out of this Rs. 962.00 (including Rs. 7.42 Crores during the year) Crores have been provided for keeping in view uncertainty with respect to clearances, approvals for implementing the Projects, leaving Rs. 272.97 Crores which has been carried forward as Capital Work in Progress.

Further, Capital Work in Progress also includes Projects where active construction activities are yet to be undertaken.

Interest, Administrative and other Costs are capitalized till the projects are abandoned, however, provisions are made as given herein above in cases where in view of the management there are uncertainties in implementing the projects undertaken.

In the event of related Projects not being undertaken, amounts spent on survey and investigations and those incurred/ allocated prior to construction thereof will no longer be eligible to be carried forward as Capital Work in Progress.

Our audit procedures based on which we arrived at the conclusion regarding carrying the amount of expenditure incurred on survey and Investigation Projects incurred include the following:

â¢ Obtained the status of the Projects under Survey and Investigation stage as provided by the management and the reason thereof of keeping them in abeyance.

â¢ Understanding and testing the design and operating effectiveness of controls as established by the management for accounting the expenses incurred (a) for survey and investigation projects and the policy followed for making provisions/ write off for such expenses given the nature of business of the Company, (b) for project under preconstruction stage and allocation of Borrowing and other cost incurred and allocated there against.

â¢ Evaluating the management''s rationale with respect to continuing such projects under Capital Work in Progress in spite of there being uncertainties and delay in implementing the same and expected economic use of the same in future.

â¢ The matter being technical and proprietary to the nature of business in which the company is operating, reliance has been placed on the management''s contention and representation on the matter.

Recognition of MAT Credit

During the current Financial Year, the Company has assessed the recoverability of MAT Credit of Rs 2424.58 crore available to it. Based on such assessment, the Company has recognized deferred tax asset relating to MAT credit entitlement of Rs 1478.62 crore as the amount of MAT Credit which shall be utilized by the Company in future years by way of lower outflow of Income Tax in future years. Consequently, the Company has also recognized Regulatory Deferral (Credit) balance of Rs 1313.27 crore in respect of ibid MAT Credit recognized, being the amount, which shall be passed on to the beneficiaries in future as per CERC Tariff Regulations. The recoverability of this

Our audit procedures based on which we arrived at the conclusion regarding appropriateness of MAT Credit recognized and Regulatory Deferral (Credit) balances created thereagainst:

â¢ Understanding and testing the operating effectiveness of the company''s control relating to taxation and assessment of carrying amount of deferred tax assets/ liabilities.

â¢ Review of the Company''s accounting policy in respect of deferred tax assets on unutilized MAT credit and current year developments, if any, requiring change in such policy and management contention on the same.

â¢ Evaluation of tax credit entitlement as legally available to the company based on internal

Key audit Matters

Addressing the Key Audit Matters

deferredtaxassetrelatingto MATcredit entitlement is dependent upon the generation of sufficient future taxable profits to utilize such entitlement within the stipulated period prescribed under the Income Tax Act,1961.

The recognition of MAT Credit and Regulatory Deferral (Credit) balance thereagainst is important to the intended users of the Standalone Financial Statements in view of its materiality and requirement of judgement in forecasting future taxable profits for recognition of MAT credit entitlement considering the recoverability of such tax credits within allowed time frame as per the provisions of the Income Tax Act,1961.

Relevant disclosures in this regard have been provided at Note Nos. 14.2, 18, 30.1, 31, 34(22) (E) read with Significant Accounting Policy No. 20.0(b) of the Standalone Financial Statements.

forecasts prepared by the company and probability of future taxable income.

â¢ Review of underlying assumptions for consistency and uncertainty involved and principle of prudence for arriving at a reasonable degree of probability of utilisation of MAT Credit recognized.

â¢ Review of implication pertaining to regulatory regime under which the company operates and estimations prepared by the Company regarding MAT Credit arising out of Generation activity to be passed on to beneficiaries and impact thereof on the Standalone Financial Statements under the given current Regulatory provisions and period of applicability thereof.

â¢ Evaluation of adequacy and appropriateness of disclosures made in the Standalone Financial Statements.

Information other than the Financial Statements and Auditors'' Report thereon

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the state of affairs (financial position), Profit or Loss (financial performance including other comprehensive income), Changes in Equity and Cash Flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under section 133 of the Act.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process. Auditors'' Responsibility for the Audit of the Standalone Financial Statements

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

Other Matters

The Standalone Financial Statements for the year ended 31st March 2021 have been audited by then Joint Statutory Auditors of the Company. Two of them were predecessor audit firms and had expressed an unmodified opinion vide their report dated June 10, 2021. Reliance has been placed on the figures and other information incorporated for the purpose of these Standalone Financial Statements.

Our opinion is not modified in respect of above matter.

Report on Other Legal and Regulatory Requirements

Sl.

No.

Directions

We have neither been informed nor we have come across during the course of our audit any accounting transactions having impact on the integrity of the accounts along with the financial implications which have been processed outside the IT system.

Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc. made by a lender to the Company due to the Company''s inability to repay the loan? If yes, the financial impact may be stated. Whether such cases are properly accounted for? (In case, lender is a government company, then this direction is also applicable for statutory auditor of lender company)

According to information and explanations given to us and based on our audit, there is no case of restructuring of an existing loan or cases of waiver/ write off of debts / loans / interest etc. made by lender to the Company. Further in respect of loan given by the company to National High Power Test Laboratory Private limited (Joint Venture) where interest is receivable in half yearly instalments starting from 30.04.2021, Interest accrued for the FY 2021-22 amounting to Rs. 1.67 Crore has not been accounted for in the books of accounts in view of significant uncertainty of realization due to cash losses incurred by the joint ventures. The same has been disclosed in the Note no.34 (18) of the Standalone Financial Statements.

3	Whether funds (grants/ subsidy etc.)	According to information and explanations given
	received/receivable for specific schemes from	to us and based on our audit, the Company has
	Central/State Government or its agencies	accounted for and utilized the funds received for
	were properly accounted for/utilized as per	specific schemes from Central/State agencies as per
	its terms and conditions? List the cases of deviation.	the terms and conditions of the schemes.

iii. Further to our comments in the annexure referred to in the paragraph above, 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;

d) in our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act

e) in terms of Notification no. G.S.R. 463 (E) dated 05th June 2015 issued by the Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualifications of the Directors, are not applicable as it is a Government Company;

f) With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal control; and

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer Note no. 34 Para 1 to the Standalone Financial Statements;

iii. There has been no delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;

iv. As per notification number G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act as regards the managerial remuneration is not applicable to the Company, since it is a Government Company;

v. a. The management has represented that, to the best of its knowledge and belief, no funds

have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:

â¢ directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Company or

â¢ provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

â¢ directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Funding Party or

â¢ provide any guarantee, security or the like from or on behalf of the Ultimate Beneficiaries; and

'' c. Based on such audit procedures as considered reasonable and appropriate in the

circumstances, nothing has come to our notice that has caused us to believe that the representations under sub clause (v)(a) and (v)(b) contain any material mis-statement.

vi. The dividend declared or paid during the year by the Company is in compliance with Section 123 of the Act.

For K G Somani & Co LLP For Chaturvedi & Co. For P C Bindal and Co.

Chartered Accountants Chartered Accountants Chartered Accountants

FRN : 006591N/N500377 FRN: 302137E FRN : 003824N

Bhuvnesh Maheshwari R. K. Nanda Manushree Bindal

Partner Partner Partner

M. No.088155 M. No. 510574 M. No. 517316

UDIN: 22088155AJOVOC1369 UDIN:22510574AJORWD4417 UDIN:22517316AJOVNS7051

Place: Faridabad Place: Faridabad Place: Faridabad

Date: May 25, 2022 Date: May 25, 2022 Date: May 25, 2022

Mar 31, 2019

Annexure- XI

INDEPENDENT AUDITOR''S REPORT

To the Members of NHPC Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of NHPC Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2019, and the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and Notes to the Standalone Financial Statements, including a summary of significant accounting policies and Other Explanatory Notes for the year ended on that date (hereinafter referred to as "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 Companies Act 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 201 5, as amended, ("Ind AS") and the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, and profit, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors'' Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have considered the matters described below to be the Key Audit Matters for incorporation in our Report.

Key audit Matters	Addressing the Key Audit Matters
1. Regulatory Deferral Account Balances and accruals of revenue pending tariff Notifications.	Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the carrying the value of Regulatory Deferral Account Debit Balances include the following:
(a) Regulatory Deferral Account balances include accruals on account of interest cost and other attributable expenses pertaining to Subansiri Lower Project for the period from the date of interruption of work i.e. 16.12.2011 due to the matter pending before the National Green Tribunal as indicated in Note 34(22A). These expenses have been considered and carried forward as recoverable in terms of Central Electricity Regulatory Commission (CERC) Regulations. The amount involved in the project including the deferral account balances is material. Risk and uncertainties due to the matter being sub judice and pending for decision for a considerable period of time, might affect the recovery thereof having significant impact on the affairs of the company.	â¢ Understanding and testing the design and operating effectiveness of controls as established by the management for accrual of income and determination of the amounts recoverable there against. â¢ Obtaining and understanding of the amount recoverable in terms of CERC Regulations and assessing, testing and evaluating the reasonableness thereof keeping in view the significant judgements applied by the management for such assessments. â¢ The above includes the evaluation of the CERC guidelines and acceptance of the claim made by the Company in the past and the trend of disallowances on various count and adherences and compliances thereof by the management and rationale for assumptions taken under the given situation and business environment.
(b) Further as given in Note 34(22B) to 34(22E), Regulatory deferral account balances have been recognised in respect of certain other expenses aggregating to Rs 3225.27 crores on account of Wage Revision, foreign exchange fluctuations, depreciation on moderation of tariff, deferred taxation, etc.	â¢ Evaluating the various assumptions considered by the management for arriving at the value of Cash generating Unit specially in case of Subansiri Project and coverage thereof and adequacy thereof with respect to the carrying value of the Project in Progress and balances of Regulatory deferral Accounts.
(c) Rs 515.05 Crores has been considered recoverable pending approval of tariff by the CERC and/ or approval of revised cost estimate in certain power stations and petitions filed with the CERC towards Energy Shortfall and reimbursement of additional impact of Goods and Service Tax (GST) due to change in law and included under Financial Assets Current- Other (Current) {Note 34 (20)} as on 31st March 2019. The operating activities of the Company are subject to cost of service regulations whereby tariff charged for electricity generated is based on allowable capital and other cost and expenses and stipulated return there against. Regulatory Deferral Accounts are based on the estimates with respect to recoverability thereof as per the current CERC Tariff Regulations on final approval and notifications. Further, in cases where Tariff rates are yet to be approved, revenue is recognised considering current prevailing CERC Regulations. The accruals made above in (a) to (c) above are vital to the business in which the Company is operating. In absence of specific notification and rate fixation, these are based on the management''s assumptions and estimates which are subject to finalisation of tariff by CERC.
2. Impairment Assessment of carrying amount of Property, Plant and Equipment (PPE) and Capital Work in Progress (CWIP)	Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the non-provisioning of any CGU based on impairment testing include the following:
Certain Cash Generating Units (CGUs) of the company and subsidiaries were assessed for impairment as on 31st March 2019. This covers Property, Plant and Equipments and Capital Work in Progress in respect of Subansiri Lower Project currently under interruption ( Note 2.2.7) and other projects as given in Note 34(18). This has been assessed that no significant change with an adverse effect on the company has taken place during the year, or is expected to take place in the near future, in the technological, economic or legal environment in which the company and its subsidiaries and joint ventures operate. Based on the assessment, the company has concluded that there exists no significant impairment indicator or any impairment in respect of the CGUs of the company and its subsidiary tested for impairment during FY 2018-19. Based on the above assessment, no provision for impairment has been considered necessary by the Company. Impairment exercise undertaken which justifies the carrying amount of certain assets including the regulatory deferral account balances pertaining to Subansiri Lower Project as dealt with under para 1(a) above, is significant and vital to the Company''s operations.	â¢ Critical evaluation of internal and external factors impacting the entity and indicators of impairment (or reversal thereof) in line with Ind AS 38; â¢ Review of impairment valuation models used in relation to CGU to determine the recoverable amount by analysing the key assumptions used by management in this respect including: Consistency with respect to forecast for arriving at the valuation and assessing the potential impact of any variances; Price assumptions used in the models; Factoring of risk inherent to the CGUs in the Cash Flow projections or the discount rate. The assumption/estimation for the weighted average cost of capital and rate of discount for arriving at the value in use. â¢ Reviewed the Government policy and approval for setting up the Projects, decision of the Board and the efforts and steps being undertaken in this respect.
Evaluation of the impairment involves assessment of value in use of the Cash Generating Units (CGUs) and requires significant judgements and assumptions about the future cash flow forecasts, forecast production, forecast volumes, prices and discount rate.
3. Contingent Liabilities - against claim from Contractors (Note 34.1 (a)(i))	Our audit procedures based on which we arrived at the conclusion regarding reasonableness of the Contingent Liabilities include the following:
Various claims lodged by the Contractors against Capital Works have been disclosed under Contingent Liability. This includes matters under arbitration and/ or before the Court which have been decided against the Company, out of which certain amounts have been paid/deposited pursuant to the NITI Aayog directions. Claims made against the Company are significant. These are pending for decision before arbitration or other judicial forums and consequential and possible impact thereof and provisions/disclosure required have been based on the management''s assessment of the probability of the occurrence of the liability.	â¢ Obtained the status of the case from the legal department and their view on the matter; â¢ Evaluated the contractual terms and conditions and management''s rationale for the adequacy of the provision so far made and the amount remaining unprovided against the demands made against the Company; â¢ Meeting with management and reading/ reviewing the correspondences Memos and Notes on related matters. â¢ Reliance has been placed on the legal views and decisions on similar matters and probability of the liability arising therefrom pending final judgement/ decisions; â¢ Reviewed the appropriateness and adequacy of the disclosure by the management as required in terms of the requirement of IND AS 37 "Provisions, Contingent Liabilities and Contingent Assets".
4. Expenditure incurred on Survey and Investigation Projects upto 31.03.2019	Our audit procedures based on which we arrived at the conclusion regarding carrying the amount of expenditure incurred on survey and Investigation Projects incurred include the following:
Expenditure of Rs 1419.98 Crores as given in Note 2.2.2 (including Rs 132.06 Crores for the year) has been incurred for conducting survey and investigation on projects. Out of this Rs 666.05 Crores (including Rs 60.52 Crores during the year) have been provided for on account of uncertainty with respect to clearances, approval for implementing the Projects, leaving Rs 753.93 Crores which has been carried forward as Capital Work in Progress. In the event of related Projects not being undertaken, amounts spent on survey and investigations which are material will no longer be eligible to be carried forward as Capital Work in Progress.	â¢ Obtained the status of the Projects under Survey and Investigation stage as provided by the management and the reason thereof of keeping them in abeyance including the cases where there are order of appropriate authority or Court to the effect. â¢ Understanding and testing the design and operating effectiveness of controls as established by the management for accounting the expenses incurred for survey and investigation projects and the policy followed for making provisions/ write off for such expenses given the nature of business of the Company. â¢ Evaluating the management''s rationale with respect to possible abandonment of such projects in future and/ or expected economic use of the same.

Information other than the Financial Statements and Auditors'' Report thereon

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Board''s Report including Annexures to Directors'' Report, Management Discussion and Analysis Report, Business Responsibility Report and Report on Corporate Governance, but does not include the standalone financial statements and our auditors'' report thereon. The other information as stated above is expected to be made available to us after the date of this auditors'' report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available, and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone financial statements that give a true and fair view of the state of affairs (financial position), Profit or Loss (financial performance including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian accounting Standards specified under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process. Auditors'' Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standard on Auditing (SAs) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

â¢ Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system with reference to financial statements in place and the operating effectiveness of such controls;

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

â¢ Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern; and

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

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

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

Other Matter

The standalone financial statements of the Company for the year ended March 31, 2018 were audited by the then joint auditors of the Company, two of whom were predecessor audit firms and they had expressed an unmodified audit Report vide their report dated May 28, 2018 on such standalone financial Statements.

Our opinion is not modified in respect of these matters. Report on Other Legal and Regulatory Requirements

i. As required by the Companies (Auditor''s Report) Order, 201 6 ("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 A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

SI. No.	Directions	Reply
1	Whether the Company has system in place to process all the accounting transactions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.	According to the information and explanations given to us and based on our audit, all accounting transactions are routed through ERP system implemented by the Company. Period end Financial Statements are compiled offline based on balances and transactions generated from ERP system. We have neither been informed nor we have come across during the course of our audit any accounting transactions having impact on the integrity of the accounts along with the financial implications which have been processed outside the IT system.
2	Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/ interest etc. made by a lender to the Company due to the Company''s inability to repay the loan? If yes, the financial impact may be stated.	According to information and explanations given to us and based on our audit, there is no case of restructuring of an existing loan or cases of waiver/write off of debts / loans / interest etc. made by lender to the Company.
3	Whether funds received/receivable for specific schemes from Central/State agencies were properly accounted for/utilized as per its terms and conditions? List the cases of deviation.	According to information and explanations given to us and based on our audit, the Company has accounted for and utilized the funds received for specific schemes from Central/ State agencies as per the terms and conditions of the schemes.

iii. Further to our comments in the annexure referred to in the paragraph above, as required by Section 143(3) of the Act, we report that:

a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) the Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income),the Statement of Changes in Equity 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 Indian Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 201 5, as amended;

e) in terms of Notification no. G.S.R. 463 (E) dated 05th June 201 5 issued by the Ministry of Corporate Affairs, provisions of Section 1 64(2) of the Act regarding disqualifications of the Directors, are not applicable as it is a government Company;

f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal control; and

g) With respect to the other matters to be included in the Auditors'' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements- Refer Note no. 34 para 1 to the standalone financial statements;

ii. The Company has made provision, as required under the applicable law or Indian Accounting Standards, for material foreseeable losses, if any, on long-term contracts. The Company did not have any derivative contracts; and

iii. There has been no delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

The financial statements for the year ended March 31, 2019 (the financial statements) have been approved by the Board of Directors of the Company on May 27, 2019 and our report of even date (earlier report) on the same was issued.

This Independent Auditors'' Report (the report) has been issued in supersession of our earlier report pursuant to the provisional comments made by Comptroller and Auditor General of India (C&AG) on the Financial Statements after revising the amount of disputed dues of cess reported under Para (vii)c of the Annexure A'' [a statement on the matters specified in paragraph 3 and 4 of the Companies (Auditors'' Report) Order 201 6] forming part of Other Legal and Regulatory requirements section of earlier report. The revision relates to the disclosure of the figures in the Annexure A'' to the report and thereby our opinion on the financial statements as given in the earlier report remain unaltered and our audit procedure on subsequent event remain restricted to date of our earlier report.

For Arora Vohra & Co.	For DSP & Associates	For Lodha & Co.
Chartered Accountants	Chartered Accountants	Chartered Accountants
Firm''s ICAI Registration No.: 009487N	Firm''s ICAI Registration No.:006791N	Firm''s ICAI Registration No.:301051E
PREM C. BANSAL	SAN JAY JAIN	RP SINGH
Partner	Partner	Partner
M. No. 083597	M. No. 084906	M. No. 052438
Place : Ludhiana	Place : New Delhi	Place : Kolkata
Date : 23rd July, 2019	Date: 22nd July, 2019	Date: 23rd July, 2019
UDIN: 19083597AAAAAL8589	UDIN: 1 9084906AAAAFE9695	UDIN: 19052438AAAAAR3351

ANNEXURE "A" TO THE AUDITORS'' REPORT OF EVEN DATE:

a. The Company has maintained proper records showing full particulars, including quantitative details and situations of Fixed Assets.

b. As per the information and explanations given to us and on the basis of our examination of the records of the Company, the Tangible Fixed Assets except Land in certain Units, have been physically verified by the management/outside agencies, in a phased manner, which in our opinion is reasonable, having regard to the size of Company and nature of its business. The reconciliation of physically verified assets with the book records in certain cases is in progress. Discrepancies noticed on the physical verification and consequential adjustments are carried out on completion of reconciliation. According to information and explanations given by the management and in our opinion, the same are not material.

c. According to the information and explanations given to us, the records examined by us and based on the Title/ Lease deeds provided to us, we report that, the title/ Lease deeds, comprising all the freehold/ leasehold immovable properties of land and building, are held in the name of the Company as on the balance sheet date except for the following where the title/lease deeds are not available with the Company:

Nature	Area in Hectares	Gross block (at actual cost) as at 31.03.2019 (Rs In Crore)	Net block as at 31.03.2019 (Rs In Crore)
Freehold land	109.85	6.73	6.73
Leasehold Land	519.68	251.28	236.84
Building under Lease		17.01	16.64

ii) As informed, the inventories of the Company except for inventories in transit, have been physically verified by the management/ outside agencies, during the year. In our opinion and according to the information and explanations given to us, the frequency of such verification is reasonable. The discrepancies noticed on physical verification of inventories as compared to book records were not material and the same have been properly dealt with in the books of account.

iii) According to the information and explanations given to us by the Management, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act, except unsecured loan granted during the previous year to a Company.

i. In our opinion the terms and conditions of grant of such loans are not, prima facie, prejudicial to the interest of the Company.

ii. In respect of Loan so granted by the Company, the schedule of repayment of principal and Interest has been stipulated. Unsecured loan of Rs 6 Crores which though due for repayment during the year, was not repaid by the borrower. The borrower has requested for extension of the repayment schedule, the approval of which is under process by the Company. However, repayment of the interest is regular.

iii. in respect of such loan, there is an overdue amount of Rs 6 Crore for more than ninety days. As informed to us and based on the explanations given, the Company has taken reasonable steps for recovery of the principal.

iv) In our opinion and according to information and explanations given to us the Company has, in respect of loans, investments, guarantees, and security, complied with the provisions of section 185 and 186 of the Act.

v) The Company has not accepted any deposits within the meaning of sections 73 to 76 or any other relevant provisions of the Act. In respect of overdue earnest money deposits and security deposits, Management is of the view that overdue earnest money deposits and security deposits of suppliers/contractors appearing in the books are in the nature of retention money for performance of contracts for supply of goods and services and accordingly, not to be treated as deemed deposits by virtue of amendment in rule 2, sub rule (1), clause (c) of the Companies (Acceptance of Deposits) Amendment Rules 201 6.

vi) 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 (1) of the Act in respect of the Company''s products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been maintained. We have however not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

vii) a. According to the information and explanations given to us, during the year, the Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education Protection fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Goods and Service Tax, Service tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues as applicable to it.

b. There were no undisputed amounts payable in respect of Provident Fund, Investor Education Protection fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrear as at March 31, 2019 for a period of more than six months from the date they become payable.

c. According to the information and explanations given to us, the details of disputed dues of sales tax, income tax, customs duty, wealth tax, excise duty, service tax, and Cess, if any, as at March 31, 2019, are as follows:

Name of Statute	Nature of Duties	Amount (Rs in Crores)	Financial Year to which it pertains	Deposit under Protest (Rs in Crores)	Forum at which case is pending
Sales Tax Acts/VAT Acts	Sales Tax/VAT	288.13	1994-95	0.19	J & K Sales Tax Appellate Tribunal
		1.6	2008-09, 2009-1 0& 2010-11 to 2014-15	1.42	Assistant Excise & Taxation Commissioner, Kullu
		19.58	2004-05 to 2012-13	15.29	West Bengal Taxation Tribunal, Kolkata
		15.08	201 2-1 3 to 2013-14	0	CTO, Baramulla
		25.71	2005-06 to 2007-08	25.71	Deputy Commissioner of Commercial Taxes, Sikkim.
Finance Act, 1996	Service Tax	22.07	2008-09 to 2011-12& 201 2-1 3 to 2014-15	22.07	CESTAT, Kolkata
		101	2013-14to 2016-17	0	Additional Director General (Adjudication), Director General of GST Intelligence, New Delhi
		16.13	2004-05 to 2008-09	1.7	Assistant Commissioner of GST, Faridabad
		0.03	2005-06	0	Service Tax Department, Patna
West Bengal Tax on Entry of Goods into Local Areas Act, 2012	Entry Tax	1.14	201 2-1 3 to 2017-18	0	Kolkata High Court
Jammu and Kashmir Entry Tax on Goods Act 2000	Entry Tax	0.25	2013-14	0.25	Dy. Commissioner, Commercial Taxes, Appeal, Jammu
The Jammu & Kashmir Urban Immovable Property Tax Act, 1962	Property Tax	0.21	1991-92 to 1 996-97 & 1997-98 to 2001-02.	0.014	State Sales Tax Appellate Tribunal, Jammu
Uttarakhand Water Tax on Electricity Generation Act, 2012	Water Cess	107.89	201 5-1 6 to 2018-19		High Court of Uttarakhand, Nainital
Uttarakhand Green Energy Cess Act, 2014	Green Energy Cess	45.93	201 5-1 6 to 2018-19		High Court of Uttarakhand, Nainital
Building and Other Construction Workers Welfare Cess Act, 1996	BOCW Cess	9.24	2010-11	9.24	Labour Officer cum cess assessing officer, Chamba, Himachal Pradesh

viii) In our opinion and on the basis of information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks, Governments or debenture holders.

ix) In our opinion and according to the information and explanations given to us, the Company has not raised any money by way of initial public offer or further public offer during the year. The Company has raised money by issue of debt instruments during the year. This includes the amount raised through 8.12 % Semi annual 10 year unsecured non-cumulative redeemable non-convertible taxable "Government of India fully serviced Bonds- Series -I" to meet the funding requirement of Government of India for the scheme of Power System Development Fund during the year. On the basis of our examination and according to the information and explanations given to us, money raised by way of term loans have been applied for the purpose for which the loans were obtained.

x) Based on our audit procedures and as per the information and explanations given to us by the management, no fraud by the Company or any fraud on the Company, by any person including its officers/ employees, has been noticed or reported during the year.

xi) As per notification number G.S.R. 463 (E) dated 5th June, 201 5 issued by Ministry of Corporate Affairs, section 197 of the Act as regards the managerial remuneration is not applicable to the Company, since it is a Government Company.

xii) The Company is not a Nidhi Company and hence reporting under paragraph 3(xii) of the Order is not applicable to the Company.

xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Section 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the Standalone Financial Statements as required by the applicable accounting standards.

xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, clause 3 (xiv) of the Order is not applicable to the Company.

xv) According to the information and explanations given to us and as represented to us by the management and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For Arora Vohra & Co.	For DSP & Associates	For Lodha & Co.
Chartered Accountants	Chartered Accountants	Chartered Accountants
Firm''s ICAI Registration No.: 009487N	Firm''s ICAI Registration No.:006791N	Firm''s ICAI Registration No.:301051E
PREM C. BANSAL	SAN JAY JAIN	RP SINGH
Partner	Partner	Partner
M. No. 083597	M. No. 084906	M. No. 052438
Place : Ludhiana	Place : New Delhi	Place : Kolkata
Date : 23rd July, 2019	Date: 22nd July, 2019	Date: 23rd July, 2019
UDIN: 19083597AAAAAL8589	UDIN: 1 9084906AAAAFE9695	UDIN: 19052438AAAAAR3351

ANNEXURE "B" TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph (f) under ''Report on Other Legal and Regulatory Requirements'' of our report of even date)

Report on the Internal Financial Controls with reference to financial statements under Clause (i) of Sub-section 3 of Section 143 of the Act

We have audited the internal financial controls with reference to financial statements of NHPC Limited ("the Company") as at March 31, 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control with reference to financial statements 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. 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 Company''s 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 Act.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls with reference to financial statements 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") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. 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 control with reference to financial statements 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 with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors'' judgement, including the assessment of the risks of material misstatement of the standalone 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 Company''s internal financial controls with reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A Company''s internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A Company''s internal financial control with reference to financial statements 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 standalone 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 Company''s assets that could have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls with reference to financial statements

Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements 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, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2019, based on the internal control with reference to financial statements 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.

For Arora Vohra & Co.	For DSP & Associates	For Lodha & Co.
Chartered Accountants	Chartered Accountants	Chartered Accountants
Firm''s ICAI Registration No.: 009487N	Firm''s ICAI Registration No.:006791N	Firm''s ICAI Registration No.:301051E
PREM C. BANSAL	SAN JAY JAIN	R P SINGH
Partner	Partner	Partner
M. No. 083597	M. No. 084906	M. No. 052438
Place : Ludhiana	Place : New Delhi	Place : Kolkata
Date : 23rd July, 2019	Date: 22nd July, 2019	Date: 23rd July, 2019
UDIN: 19083597AAAAAL8589	UDIN: 1 9084906AAAAFE9695	UDIN: 19052438AAAAAR3351

Mar 31, 2018

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of NHPC LIMITED (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information.

Managementâs Responsibility for the Standalone Ind AS Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit (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 read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditorâs 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 thereunder.

We conducted our audit of the standalone Ind AS financial statements 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 the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditorâs 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 Companyâs preparation of the standalone Ind AS 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 accounting policies used and the reasonableness of the accounting estimates made by Companyâs 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 Ind AS financial statements.

Opinion

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, 2018, its profit (financial performance including other comprehensive income), its cash flows and changes in equity for the year ended on that date.

Emphasis of Matter

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

i) Note no. 2.2 para 2 to the standalone Ind AS financial statements regarding expenditure incurred for conducting survey and investigation on projects either provided for on account of uncertainty about the outcome or being carried forward pending clearance with various authorities.

ii) Note No. 34 para 1 to the standalone Ind AS financial statements, regarding the uncertainty related to the outcome of the claims/ arbitration proceedings and lawsuits filed by/ against the Company on/ by contractors and others. In some of the cases the arbitration award has been decided against the Company/ lost in lower courts and the Company is pursuing the matter in higher courts.

iii) Note No. 34 para 22A to the standalone Ind AS financial statements, regarding Subansiri Lower Project where the construction activities at site have been interrupted w.e.f. 16.12.2011 due to protest by anti-dam activists and the case is pending before the National Green Tribunal. Certain risks and uncertainties might affect the future recovery of Regulatory Deferral Account Balances being created in respect of additional expenditure on this project.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government in terms of subsection (11) of Section 143 of the Act, we give in the âAnnexure Aâ, a statement on the matters specified in the paragraphs 3 and 4 of the Order.

2. The Comptroller and Auditor General of India has issued directions indicating the areas to be examined in terms of subsection (5) of Section 143 of the Act, the compliance of which is set out in âAnnexure Bâ.

3. As required by Section 143 (3) of the Act, we report that:

a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) the Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rules issued thereunder;

e) being a Government Company, pursuant to the Notification No. GSR 463(E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of Section 164 of the Act, are not applicable to the Company;

f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Câ; and

g) with respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 34 Para 1 to the standalone Ind AS financial statements;

ii. the Company has made provision, as required under the applicable law or Indian Accounting Standards, for material foreseeable losses, if any, on long-term contracts. The Company did not have any derivative contracts;

iii. there has been no delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure A referred to in paragraph 1 under the heading âReport on Other Legal and Regulatory Requirementsâ of our report of even date:-

i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Property, Plant and Equipment.

(b) The Property, Plant and Equipment, except in case of land in certain units, have been physically verified by the management /outside agencies. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and nature of its assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of Property, Plant and Equipment physically verified during the year.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for the following.

Total no. of cases	Type of asset	Gross block as at 31.03.2018	Net block as at 31.03.2018	Remarks
6	Freehold land (129.79 Hectare)	Rs.0.53 Crore	Rs.0.53 Crore	The Company is taking appropriate steps for execution of title/lease deed.
8	Leasehold Land (870.87 Hectare)	Rs.306.08 Crore	Rs.245.01 Crore

ii. The inventories have been physically verified during the year by the management / outside agencies. In our opinion, the frequency of such verification is reasonable. The discrepancies noticed on physical verification of inventories as compared to book records were not material and the same have been properly dealt with in the books of account.

iii. According to the information and explanations given to us by the Management, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act, except unsecured loan granted during the year to one Company, in respect of which:

i. in our opinion the terms and conditions of grant of such loans are not, prima facie, prejudicial to the interest of the Company.

ii. the schedule of repayment of principal and payment of interest has been stipulated and the repayment of the principal amount and the interest are regular.

iii. there is no overdue amount in respect of such loan granted to the Company.

iv. In our opinion and according to information and explanations given to us the Company has, in respect of loans, investments, guarantees, and security, complied with the provisions of sections 185 and 186 of the Act.

v. The Company has not accepted any deposits within the meaning of sections 73 to 76 or any other relevant provisions of the Act other than overdue earnest money deposits and security deposits. However, Management is of the view that overdue earnest money deposits and security deposits of suppliers/contractors appearing in the books are in the nature of retention money for performance of contracts for supply of goods and services and accordingly, not to be treated as deemed deposits by virtue of amendment in rule 2, sub rule (1), clause (c) of the Companies (Acceptance of Deposits) Amendment Rules 2016. Accordingly, clarification/exemption has been sought by the Management vide its letter no. NH/CS/433 dated 25th January, 2018 from the Ministry of Corporate Affairs (MCA) regarding applicability of MCA notification no. G.S.R. 639(E) dated 29.06.2016 to such security deposits/ retention money.

vi. 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 sub-section (1) of Section 148 of the Act in respect of Companyâs products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

vii. a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, goods and service tax, cess and any other material statutory dues have generally been regularly deposited with the appropriate authorities. We are informed that the Employeesâ State Insurance Scheme is not applicable to the Company. According to the information and explanations given to us, no undisputed demand payable in respect of aforesaid statutory dues was in arrears, as at 31st March, 2018 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and as per the records of the Company, the following dues of income tax, sales tax/VAT, goods and service tax, duty of customs, service tax, property tax & consumption tax have not been deposited on account of dispute.

Name of Statute	Nature of Duties	Amount (Rs. in Crores)	Financial Year to which it pertains	Deposit under Protest (Rs. in Crores)	Forum at which case is pending
Income Tax Act, 1961	Income Tax	7.07	2012-13	1.41	CIT (A) Faridabad
Sales Tax Acts/VAT Acts	Sales Tax/VAT	277.57	1994-95	0.22	J & K Sales Tax Appellate Tribunal
		5.26	2005-06 to 2009-10		Assistant Excise & Taxation Commissioner, Kullu
		15.29	2004-05 to 2011-12	15.29	West Bengal Taxation Tribunal, Kolkata
		5.16	2013-14		Commercial Tax Department J&K
		1.4	2006-07 to 2009-10		Sr. Joint Commissioner Siliguri Circle
		2.74	2012-13		Joint Commissioner, Siliguri
Finance Act, 1996	Service Tax	26.07	2012-13		CESTAT, Kolkata
Finance Act, 1996	Service Tax	0.04	Jan, 2008		Service Tax Department, Patna
Custom Act, 1962	Duty of Custom	2.2	1986-87		Kolkata High Court
The Jammu & Kashmir Urban Immovable Property Tax Act, 1962	Property Tax	0.05	01.04.1991 to 31.03.1997		Tax Tribunal
The Jammu & Kashmir Urban Immovable Property Tax Act, 1962	Property Tax	0.15	01.04.1997 to 31.03.2002		Tax Tribunal
The Uttarakhand Water Tax on Electricity Generation Act, 2012	Water Cess	67.93	2015-16 to 2017-18		High Court of Uttarakhand, Nainital
Uttarakhand Green Energy Cess Act, 2014	Green Energy Cess	33.19	2015-16 to 2017-18		High Court of Uttarakhand, Nainital
WB State Tax on Consumption of Use of Goods Act, 2001	Consumption Tax	0.06	2003-04 to 2005-06		Kolkata High Court
BOCW Act, 1996	BOCW Cess	9.24	2010-11	9.24	Labour Officer cum cess assessment officer
West Bengal Tax on Entry of Goods into Local Areas Act, 2012	Entry Tax	0.87	2012-13 to 2017-18		Senior Joint Commissioner, Siliguri
West Bengal Tax on Entry of Goods into Local Areas Act, 2012	Entry Tax	0.17	2003-2006		Senior Joint Commissioner, Siliguri

viii. Based on our audit procedures and as per the information and explanations given to us by the management, the Company has not defaulted in repayment of loans or borrowings to any financial institution, bank, government and dues to debenture holders.

ix. In our opinion and as per the information and explanations given to us by the management, the Company has applied the money raised during the year by way of debt instruments and term loans for the purpose for which they were raised. The Company has not raised any money by way of initial public offer/ further public offer during the year.

x. Based on our audit procedures and as per the information and explanations given to us by the management, no fraud by the Company or any fraud on the Company, by any person including its officers/ employees, has been noticed or reported during the year.

xi. In view of exemption given in terms of Notification No. G.S.R. 463(E) dated 05th June 2015 issued by the Ministry of Corporate Affairs, Government of India, the provisions of Section 197 read with schedule V of the Act regarding managerial remuneration, are not applicable to the Company.

xii. According to the information and explanations given to us by the management, the Company is not a Nidhi Company. Therefore, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. According to the information and explanations given to us by the management and on the basis of our examination of the records of the Company, transactions with related parties are in compliance with the provisions of sections 177 and 188 of the Act, wherever applicable and the details of such transactions have been disclosed in the notes to the financial statements as required by the applicable accounting standards.

xiv. Based on our audit procedures and as per the information and explanations given to us by the management, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Therefore, the provisions of clause 3(xiv) of the Order are not applicable to the Company.

xv. In our opinion and as per the information and explanations given to us by the management, the Company has not entered into any non-cash transactions with directors or persons connected with them. Therefore, the provisions of clause 3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Therefore, the provisions of clause 3(xvi) of the Order are not applicable to the Company.

Managementâs reply on the âEmphasis of mattersâ reported by Joint Statutory Auditors (JSAs) to the members of NHPC Limited on the Standalone Financial Statements for F.Y 2017-18.

Sl. No.	Matter	Managementâs Reply
(a)	Note no. 2.2 para 2 to the standalone Ind AS financial statements regarding expenditure incurred for conducting survey and investigation on projects either provided for on account of uncertainty about the outcome or being carried forward pending clearance	(a)	In the opinion of the management, the projects on which survey & investigation expenditure is incurred are still active and accordingly, the expenditure incurred is being carried forward. However, provision wherever considered necessary has been made in the books.
	with various authorities.	(b)	This disclosure in Para 1 of Note No. 34 of Standalone
(b)	Note No. 34 para 1 to the standalone Ind AS financial		Financial Statements has been made in compliance of
(b)	statements, regarding the uncertainty related to the outcome of the claims/ arbitration proceedings		provisions of Ind-AS 37 (Provisions, Contingent Liabilities and Contingent Assets).
	and lawsuit filed by/ against the Company on/ by	(c)	(a) Creation of regulatory deferral account balances
	contractors and others. In some of the cases the		(assets) and recognition of corresponding regulatory income
	arbitration award has been decided against the		towards the expenses being incurred in the project is as per
	Company/ lost in lower courts and the company is		Ind AS 114 (Regulatory Deferral Accounts and Guidance
	pursuing the matter in higher courts.		Note issued by ICAI (Previous GAAP). Management has
(c)	pursuing the matter in higher courts.		assessed that the incremental additions to this asset meets
(c)	Note No. 34 para 22A to the standalone Ind AS financial statements, regarding Subansiri Lower project where the construction activities at site have been interrupted w.e.f. 16.12.2011 due to protest by anti-dam activists and the case is pending before the National Green Tribunal. Certain risks and uncertainties might affect the future recovery of Regulatory Deferral Account Balances being created in respect of additional expenditure on this project.		the level of certainty and prudence required for such recognition as per applicable accounting standard. Further, as per management assessment, there is no impairment in the carrying amount of the assets of the Project including regulatory deferral account balances recognised therein.

For S N Dhawan & Co. LLP For Ray & Ray For Arora Vohra & Co.

Chartered Accountants Chartered Accountants Chartered Accountants

FRN 000050N/N500045 FRN 301072E FRN 09487N

(SURESH SETH) (ASISH KUMAR MUKHOPADHYAY) (RAJAT MENGI)

Partner Partner Partner

M. No.010577 M. No.056359 M. No.089871

Place : New Delhi

Date : 28th May, 2018

Mar 31, 2017

TO THE MEMBERS OF NHPC LIMITED

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of NHPC LIMITED ("the Companyâ), which comprise the Balance Sheet as at 31st March, 2017, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash flows and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "Standalone Ind AS financial statements).

Management''s Responsibility for the Standalone Ind AS Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit (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 read with relevant rules issued thereunder.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''s 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 Company''s preparation of the standalone Ind AS 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 accounting policies used and the reasonableness of the accounting estimates made by Company''s 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 Ind AS financial statements.

Opinion

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, its profit (financial performance including other comprehensive income),its cash flows and changes in equity for the year ended on that date.

Emphasis of Matters

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

Sl. No.	Matter	Management''s Reply
(a)	Note no. 2.2 para 2 to the standalone Ind AS financial statements regarding expenditure incurred for conducting survey and investigation on projects either provided for on account of uncertainty about the outcome or being carried forward pending clearance with various authorities.	(a) In the opinion of the management, the projects on which survey & investigation expenditure is incurred are still active and accordingly, the expenditure incurred is being carried forward. However, provision wherever considered necessary has been made in the books.
(b)	Note No. 22 para 1 to the standalone Ind AS financial statements regarding the stay from Hon''ble High Court of Delhi against the implementation of stoppage of Personal Pay Adjustment (fitment benefits) recovery from below Board level executives	(b) NHPC Officers Association has got stay from Hon''ble High Court of Delhi against the implementation of stoppage of Personal Pay Adjustment recovery. In view of the directions of the Hon''ble High Court, Personal Pay Adjustment is being paid along with the salary.
(c)	Note No. 34 para 1 to the standalone Ind AS financial statements, regarding the uncertainty related to the outcome of the claims/ arbitration proceedings and lawsuit filed by/ against the Company on/ by contractors and others. In some of the cases the arbitration award has been decided against the Company/ lost in lower courts and the company is pursuing the matter in higher courts. Management does not envisage any possible outflow in respect of decisions against the company other than those already provided for in the books of account.	(c) This disclosure in the ibid para has been made in compliance of provisions of Ind-AS 37 (Provisions, Contingent Liabilities and Contingent Assets).
(d)	Note No. 34 para 13 to the standalone Ind AS financial statements regarding the various balances which are subject to reconciliation/ confirmation and respective consequential adjustments.	(d) Disclosure through note is a statement of fact.
(e)	Note No. 34 para 28 to the standalone Ind AS financial statements regarding Kotlibhel-IA project, the fate of which depends upon suit pending adjudication before the Hon''ble Supreme Court of India.	(e) Disclosure through note is a statement of fact.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Orderâ) issued by the Central Government in terms of subsection (11) of Section 143 of the Act, we give in the "Annexure Aâ, a statement on the matters specified in the paragraphs

3 and 4 of the Order.

3. As required by Section 143 (3) of the Act, we report that:

(a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) the Balance Sheet, the Statement of Profit and Loss, the Statement of Cash Flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rules issued thereunder.

(e) in terms of Notification No. G.S.R. 463(E) dated 05th June 2015 issued by the Ministry of Corporate Affairs, the provisions of Section 164 (2) of the Act regarding disqualification of directors, are not applicable to the Company;

(f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure Câ; and

(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 read with Companies (Audit & Auditors) Amendment Rules 2017, in our opinion and to the best of our information and according to the explanations given to us:

(i) the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 34 Para 1 to the standalone Ind AS 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 which were required to be transferred to the Investor Education and Protection Fund by the Company.

Iv) the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 in Note 34 para 17 to the standalone Ind AS financial statements. Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with books of account maintained by the Company.

i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Property, Plant and Equipment.

Sl.

No.

Matter

Management''s Reply

i (b)

The Property, Plant and Equipment, except in case of land in certain units, have been physically verified by the management /outside agencies. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and nature of its assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of Property, Plant and Equipment physically verified during the year.

Physical verification of Land wherever pending shall be got conducted during F.Y 2017-18.

i(c)

According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for the following.

Title deeds pending execution in favour of the company are being pursued with concerned authorities.

Total no of cases	Type of asset	Gross block as at 31.03.2017	Net block as at 31.03.2017	Remarks
10	Freehold land	'' 9.96 Crore	'' 9.96 Crore	158.31 Hectares of land
10	Leasehold Land	'' 310.04 Crore	'' 270.83 Crore	627.25 Hectares of land

iii. The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Therefore, the provisions of clause 3(iii) (a), (b) and

iv. In our opinion and according to information and explanations given to us, the Company has, in respect of loans, investments, guarantees, and security, complied with the provisions of section 185 and 186 of the Act.

v. The Company has not accepted any deposits within the meaning of sections 73 to 76 or any other relevant provisions of the Act. However, pursuant to meeting of ACB held on 27th May 2017, the Management vide its letter no. NH/CS/433 dated 29th May 2017 has represented to Ministry of Corporate Affairs seeking clarification/exemption on applicability of the Ministry of Corporate Affairs (MCA) notification no. G.S.R. 639(E) dated 29.06.2016. It has contended that its security deposits are in the form of retention money for the performance of the contract for supply of goods and provision of services and accordingly, not to be treated as deemed deposits by virtue of amendment in rule 2, in sub rule (1), in clause (c) by Companies (Acceptance of Deposits) Amendment Rules 2016. The management has stated that for any contrary decision then exemption be granted for Financial Year 2016-17 with assurance to comply with directions of Ministry of Corporate Affairs henceforth.

vi. The Company has made and maintained cost accounts and records specified by the Central Government under section 148

(1) of the Act. However, we have not made a detailed examination of these accounts and records with a view to determine whether they are accurate or complete.

vii. a) According to the information and explanations given to us and on the basis of our examination of the records of the

Company, amounts deducted/accrued in the books of accounts in respect of undisputed statutory dues including provident fund, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other material statutory dues have generally been regularly deposited with the appropriate authorities. We are informed that the Employees'' State Insurance Scheme is not applicable to the Company. According to the information and explanations given to us, no undisputed demand payable in respect of aforesaid statutory dues was in arrears, as at 31st March, 2017 for a period of more than six months from the date they became payable except the following:

Name of the Statute	Amount ('' In Crore)	Due date of Remittance	Remarks
Service Tax	0.40 (including interest)	12.09.2014	NIL
Entry Tax	0.14	Instant	Provision made in view of Supreme Court Judgement.

b) According to the information and explanations given to us and as per the records of the Company, the following dues of income tax, sales tax/VAT, duty of customs, service tax, property tax & consumption tax have not been deposited on account of dispute.

Name of the Statute	Nature of Duties	Amount ('' In Crores)	Year to which it pertains	Forum at which case is pending
Income Tax Act,1961	Income Tax	1.27	2010-11	CIT (A), Faridabad
		0.92	2011-12	CIT (A), Faridabad
		7.15	2014-15	CIT (A), Faridabad
Sales Tax Acts/VAT Act	Sales Tax/ VAT	266.77	1994-95	J&K Sales Tax Appellate Tribunal
		5.26	2005-06 to 2009-10	Assistant Excise & taxation Commissioner, Kullu
		19.42	2004-05 to 2012-13	ACST West Bengal Sales Tax Department
Finance Act,1996	Service Tax	14.12	2010-11	CBEC
Finance Act,1996		25.16	2012-13	CESTAT, Kolkata
Custom Act,1963	Duty of Custom	0.26	1986-87	Calcutta High Court
The Jammu & Kashmir Urban Immovable Property Tax Act, 1962	Property Tax	0.19	1991-97, 1997-2002, 1989-2004, 19952004	Sales tax Tribunal, Jammu
Uttarakhand State Govt.	Water Cess	34.73	2015-16	Nainital High Court
Uttarakhand State Govt.	Green Energy Cess	20.17	2015-16	Nainital High Court
WB State Tax on Consumption of Use of Goods Act, 2001	Consumption Tax	0.06	2003-04, 2004-05, 2005-06	Calcutta High Court

xi. In view of exemption given vide in terms of Notification No. G.S.R. 463(E) dated 05th June 2015 issued by the Ministry of Corporate Affairs, the provisions of Section 197read with schedule V of the Act regarding managerial remuneration, are not applicable to the Company.

xiii. According to the information and explanations given to us by the management and on the basis of our examination of the records of the Company transactions with related parties are in compliance with the provisions of section 177 and 188 of the Act, where applicable and the details of such transactions have been disclosed in the notes to the financial statements as required by the applicable accounting standards.

xv. In our opinion and as per the information and explanations given to us by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him. Therefore, the provisions of clause 3(xv) of the Order are not applicable to the Company.

Sr. No.	Directions	Reply
1	Whether the company has clear title/lease deeds for freehold and leasehold land respectively? If not please state the area of freehold and leasehold land for which title/lease deeds are not available.	All freehold and leasehold lands have clear titles/lease deeds except for 158.31 and 627.25 hectares respectively.
2	Whether there are any cases of waiver/ write off of debts/ loans/interest etc., if yes, the reasons there for and the amount involved.	There is one case where claims amounting to '' 34,650/being recoverable, has been written off.
3	Whether proper records are maintained for inventories lying with third parties & assets received as giftygrant(s) from Government or other authorities.	In our opinion, the company is maintaining proper records for inventories lying with third parties. As informed, the company has not received any assets as gift/grant(s) from Government or other authorities.

Annexure C referred to in paragraph 3(f) under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date:-Report on the Internal Financial Controls under Clause

(i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of NHPC LIMITED ("the Companyâ) as of 31st March, 2017 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s 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 ("ICAIâ). 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 company''s 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 Act.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Company''s 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 Noteâ) 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 ICAI. 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 auditor''s judgement, 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 Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles including the Indian Accounting Standards (Ind AS). A company''s 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 the 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 company''s 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 31stMarch, 2017, 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 ICAI.

For S N Dhawan & Co. LLP For Gupta Gupta & Associates For Ray & Ray

(Chartered Accountants) (Chartered Accountants) (Chartered Accountants)

FR No. 000050N/N500045 FR No. 001728N FR No. 301072E

(S.K. KHATTAR) (VASU GUPTA) (BARUN KUMAR GHOSH)

Partner Partner Partner

M. No. 084993 M. No. 537545 M. No. 051028

Place : New Delhi

Date : 30th May, 2017

Mar 31, 2016

We have audited the accompanying standalone financial statements of NHPC 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 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 standalone 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 accounting policies used and the reasonableness of the accounting estimates made by Company''s Directors, as well as evaluating the overall presentation of the standalone 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) Para to Note No. 7 to the financial statements which describes about the stay from Hon''ble High Court of Delhi against the implementation of stoppage of Personal Pay Adjustment (fitment benefits) recovery from below Board level executives.

b) Note no. 11.1 para 2 to the financial statements which describes about the expenditure incurred for conducting survey and investigation on projects either provided for on account of uncertainty about the outcome or being carried forward pending clearance with various authorities.

c) Note No. 29 para 1 to the financial statements, which describes the uncertainty related to the outcome of the claims/ arbitration proceedings and lawsuit filed by/ against the Company on/ by contractors and others. In some of the cases the arbitration award has been decided against the Company/ lost in lower courts and the company is pursuing the matter in higher courts. Management does not envisage any possible outflow in respect of decisions against the company other than those already provided for in the books of account.

d) Note No. 29 para 21 (a) to the financial statements about the various balances which are subject to reconciliation / confirmation and respective consequential adjustments.

e) Note No. 29 para 28 to the financial statements about the Kotlibhel-IA project, the fate of which is pending adjudication before the Hon''ble Supreme Court of India.

f) Accounting Policy no. 2.3.4 on Capital work in progress read with Note No. 29 para 15 to the financial statements about the capital expenditure incurred for creation of facilities over which the Company does not have control but the creation of which is essential principally for construction of the project is charged to "Expenditure Attributable to Construction (EAC)" as the same is in line with Revised AS-10 notified on 30.03.2016 as Para 88 of this Revised Accounting Standard which states about transitional provision that shall result into the same treatment.

ManagementÂs Reply

(a) NHPC Officers Association has got stay from HonÂble High Court of Delhi against the implementation of stoppage of Personal Pay Adjustment (PA). In view of the directions of the HonÂble High Court, PA to the employees is continued to be paid along with salary.

(b) In the opinion of the management, the projects on which survey & investigation expenditure is incurred are still active and accordingly, the expenditure incurred is being carried forward. However, provision wherever considered necessary, has been made in the books.

(c) This disclosure in the ibid para has been made in compliance of provisions of Accounting Standard-29 (Provisions, Contingent Liabilities and Contingent Assets).

(d) Disclosure through note is a statement of fact

(e) Disclosure through note is a statement of fact

(f) Disclosure through note is a statement of fact

Our opinion is not modified in respect of these matters.

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 the "Annexure A" , a statement on the matters specified in the paragraphs 3 and 4 of the Order, to the extent applicable.

2. The Comptroller and Auditor General of India has issued directions indicating the areas to be examined in terms of sub-section (5) of Section 143 of the Act, the compliance of which is set out in "Annexure B".

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) In terms of Notification No. G.S.R. 463(E) dated 05th June 2015 issued by the Ministry of Corporate Affairs, the provisions of Section 164 (2) of the Act regarding disqualification of directors, are not applicable to the Company;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure C"; and

(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 Â Refer Note 29 Para 1 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

Annexure A referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" 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 fixed assets, except in case of land in certain units, have been physically verified by the management /outside agencies. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and nature of its assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fixed assets physically verified during the year.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for the following.

Total no Type of asset Gross block as at Net block as at Remarks of cases 31.03.2016 31.03.2016

11 Freehold land Rs. 13.37 crores Rs. 13.37 crores 155.69 Hectares of land

9 Leasehold Land Rs. 297.34 crores Rs. 253.91 crores 766.20 Hectares of land

ii. The inventories have been physically verified during the year by the management / outside agencies. In our opinion, the frequency of such verification is reasonable. The discrepancies noticed on physical verification of inventories as compared to book records were not material and the same have been properly dealt with in the books of account.

iii. The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Therefore, the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company.

iv. In our opinion and according to information and explanations given to us, the Company has, in respect of loans, investments, guarantees, and security, complied with the provisions of section 185 and 186 of the Act.

v. The Company has not accepted any deposits from the public within the meaning of sections 73 to 76 or any other relevant provisions of the Act, and the Rules framed there under.

vi. The Company has made and maintained cost accounts and records specified by the Central Government under section 148 (1) of the Act. However, we have not made a detailed examination of these accounts and records with a view to determine whether they are accurate or complete.

vii. a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of accounts in respect of undisputed statutory dues including provident fund, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other material statutory dues have generally been regularly deposited with the appropriate authorities. We are informed that the Employees'' State Insurance Scheme is not applicable to the Company. According to the information and explanations given to us, no undisputed demand payable in respect of aforesaid statutory dues was in arrears, 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 and as per the records of the Company, the following dues of income tax, sales tax/VAT, duty of customs, service tax, property tax & consumption tax have not been deposited on account of dispute.

Name of the Statute Nature of Amount Year to which dues (Rs. In Crores) it pertains

Income Tax Act,1961 Income Tax 0.46 2007-08

256.19 1994-95

5.78 2005-06 to 2009-10

Sales Tax Acts/VAT Act Sales Tax/ VAT 0.14 2006-07

0.76 2007-08

0.43 2008-09

0.07 2009-10

Sales Tax Acts/VAT Act Sales Tax/ VAT 0.22 2010-11

2.74 2012-13

Finance Act,1996 Service Tax 13.51 2010-11

39.70 2012-13

Custom Act,1963 Duty of 2.01 2004 Custom

The Jammu & Kashmir Property Tax 0.19 1991-2002 Urban Immovable Property Tax Act, 1962

WB State Tax on Consumption 0.06 2003-04, Consumption of Use of Tax 2004-05 & Goods Act, 2001 2005-06

Name of the Statute Forum at which case is pending

Income Tax Act, 1961 Income Tax Department

Sales Ta x Appellate Tribunal, Srinagar

Chairman, HP VAT Tribunal, Shimla

Sales Tax Acts/VAT Act Sr. Joint Commissioner, Siliguri Circle

Sr. Joint Commissioner, Siliguri Circle

Sr. Joint Commissioner, Siliguri Circle

Sales Tax Acts/VAT Act Sr. Joint Commissioner, Siliguri Circle

CTO, Baramulla

Jt. Commissioner, Siliguri Charge

Finance Act, 1996 CBEC

Commissioner, CE & ST, Patna

Custom Act, 1963 Kolkata High Court

The Jammu & Kashmir Urban Immovable Property Tax Act, 1962 DC, Commercial Taxes

WB State Tax on Consumption of use of Goods Act, 2001 Kolkata High Court

viii. Based on our audit procedures and as per the information and explanations given to us by the management, the Company has not defaulted in repayment of loans or borrowings to any financial institution, bank, government and dues to debenture holders.

ix. In our opinion and as per the information and explanations given to us by the management, the Company has applied the money raised during the year by way of debt instruments and term loans for the purpose for which they were raised.

x. Based on our audit procedures and as per the information and explanations given to us by the management, no fraud by the Company or any fraud on the Company, by any person including its officers/ employees, has been noticed or reported during the year.

xi. In view of exemption given vide in terms of Notification No. G.S.R. 463(E) dated 05th June 2015 issued by the Ministry of Corporate Affairs, the provisions of Section 197 read with schedule V of the Act regarding managerial remuneration, are not applicable to the Company.

xii. According to the information and explanations given to us by the management, the Company is not a Nidhi Company. Therefore, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. According to the information and explanations given to us by the management and on the basis of our examination of the records of the Company, transactions with related parties are in compliance with the provisions of section 177 and 188 of the Act, where applicable and the details of such transactions have been disclosed in the notes to the financial statements as required by the applicable accounting standards.

xiv. Based on our audit procedures and as per the information and explanations given to us by the management, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Therefore, the provisions of clause 3(xiv) of the Order are not applicable to the Company.

xv. In our opinion and as per the information and explanations given to us by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him. Therefore, the provisions of clause 3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Therefore, the provisions of clause 3(xvi) of the Order are not applicable to the Company.

For S. N. Dhawan & Co. For Gupta Gupta & Associates For Ray & Ray

Chartered Accountants Chartered Accountants Chartered Accountants

(FR No: 000050N) (FR No: 001728N) (FR No:301072E)

(Suresh Seth) (R. K. Gupta) (Asish Kumar Mukhopadhyay)

Partner Partner Partner

M. No. 010577 M. No. 085074 M. No. 056359

Place: New Delhi

Date: May 28, 2016

Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying Standalone Financial Statements of NHPC LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Proft and Loss, the Cash Flow Statement for the year then ended, and a summary of the signifcant 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 Standalone Financial Statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specifed 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 fnancial 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 specifed 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 fnancial 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 fnancial controls system over fnancial 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 suffcient and appropriate to provide a basis for our audit opinion on the standalone Financial Statements.

Auditors'' Comment

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 proft and its cash fows 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) Para to Note No. 7 to Financial Statements, which describes about the stay from Hon''ble High Court of Delhi against the implementation of stoppage of Personal Pay Adjustment (ftment benefts) recovery from below Board Level Executives and also about the confrmation of directions of Competent Authority effecting such recoveries w.e.f. 01.02.2014 which is still pending with the Ministry of Power (MoP).

b) Note No. 11 para 2 to Financial Statements read with Note No. 29 para 9, which describes uncertainty about the outcome of the projects under survey and investigation stage. Expenditure incurred for conducting Survey & Investigation on such projects are being carried forward as these projects are under investigation/ pending clearance/or fnancial assistance with various authorities.

c) Note No. 29 para 1 to the Financial Statements, which describes the uncertainty related to the outcome of the claims/ arbitration proceedings and lawsuit fled by/ against the Company on/ by contractors and others. In some of the cases the arbitration award has been decided against the company/ lost in lower courts and the company is pursuing the matter in higher courts. Management does not envisage any possible outfow in respect of decisions against the company other than those already provided for in the books of account.

d) Note No. 29 para 4(a) to the Financial Statements about the various balances which are subject to reconciliation / confrmation and respective consequential adjustments.

e) Note No. 29 para 8 to the Financial Statements about the Kotlibhel-1A project, the fate of which is pending adjudication before the Hon''ble Supreme Court of India.

f) Note No. 29 para 23 read with signifcant accounting policy no. 4 to the Financial Statements regarding earlier adoption (duly permitted) of Guidance Note on Accounting for Rate Regulated Activities issued by The Institute of Chartered Accountants of India.

Our opinion is not modifed in respect of these matters.

Management''s Reply

The confrmation of action of having implemented the directions of Competent Authority effecting recoveries w.e.f. 01.02.2014 has been sought from Ministry of power (MoP), Govt. of India and issue is being pursued from time to time. In the meanwhile, NHPC Offcers Association has got stay from Hon''ble High Court of Delhi against the implementation of stoppage of Personal Pay Adjustment (PA) recovery. In view of the directions of the Hon''ble High Court, PA to the employees is continued to be paid along with the salary. In the opinion of the management, the projects on which survey & investigation expenditure is incurred are still active and accordingly, the expenditure incurred is being carried forward. However, provision wherever considered necessary, has been made in the books.

This disclosure in the ibid para has been made in compliance of provisions of Accounting Standard-29 (Provisions, Contingent Liabilities and Contingent Assets).

Disclosure through note is a statement of fact.

This is a statement of fact. This is a statement of fact.

Auditors'' Comment

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 the Annexure-I, a statement on the matters specifed in the paragraph 3 and 4 of the Order, to the extent applicable.

2. The Comptroller and Auditor-General of India has issued directions indicating the areas to be examined in terms of sub-section (5) of section 143 of the Companies Act, 2013, the compliance of which is set out in Annexure II.

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 Proft 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 specifed 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 disqualifed 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 fnancial position in its Financial Statements Â Refer Note 29 Para 1 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For S. N. Nanda & Co. For Gupta Gupta & Associates For S.N. Dhawan & Co. For Ray and Ray Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants

(FR No: 000685N) (FR No: 001728N) (FR No: 000050N) (FR No: 301072E)

(CA Gaurav Nanda) (CA R. K Gupta) (CA Suresh Seth) (CA Barun Kr. Ghosh)

Partner Partner Partner Partner

M. No. 500417 M. No. 085074 M. No. 010577 M. No. 051028

Place : New Delhi

Date: 29-May-2015

Auditors'' Comment

Annexure I referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date:-

1. In respect of fxed assets:

a) The company has maintained records showing full particulars including quantitative details and situation of fxed assets.

b) The fxed assets, except in case of land in certain units, have been verifed by the management /outside agencies. In our opinion, the frequency of such verifcation is reasonable having regard to the size of the company and nature of assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fxed assets physically verifed during the year.

2. In respect of its inventories:

a) The inventory has been physically verifed during the year by the management / outside agencies. In our opinion, the frequency of such verifcation is reasonable.

b) In our opinion and according to the information and explanation given to us, the procedures of physical verifcation followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

c) The company is maintaining proper records of inventories. The discrepancies noticed on physical verifcation, which were not material, have been properly dealt with in the books of account.

3. The company has not granted any loans, secured or unsecured to the companies, frms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. In view of this, sub-clauses (a) and (b) of clause (iii) of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fxed assets and for the sale of power and services. There is no continuing failure to correct major weaknesses in internal control system.

5. The company has not accepted any deposit from public within the meaning of sections 73 to 76 or any other provisions of the Companies Act, 2013 and rules framed there under.

6. The Company has made and maintained cost accounts and records specifed by the Central Government under 148(1) of the Companies Act, 2013. However, we have not made a detailed examination of these accounts and records with a view to determine whether they are accurate or complete.

7. In respect of statutory dues:

a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of accounts in respect of, undisputed statutory dues including provident fund, income tax, sales tax, wealth tax, service tax, duty of custom, duty of excise, value added tax, cess and any other material statutory dues have generally been regularly deposited with the appropriate authorities. We are informed that the Employees'' State Insurance Scheme is not applicable to the Company. According to the information and explanations given to us, no undisputed demand payable in respect of aforesaid statutory dues was in arrears, as at 31st March, 2015 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and as per the records of the company, the following dues of income tax, sales tax and duty of custom have not been deposited on account of dispute.

Auditors'' Comment

(Rs. in crore)

Name of the Nature of the Year to which it Forum where dispute

Amount Statute dues pertains is pending

0.07 2007-08 Income tax

Income tax 0.01 2008-09 ITO, Dehradoon Act,1961

0.02 2009-10

HP VAT Tribunal HP VAT Act Sales tax 5.78 2005-06 to 2009-10 Dharmshala Camp 2005

Shimla.

J & K General Sales Tax Appellate Sales Tax Act Sales tax 245.61 1994-95 Tribunal, Srinagar 1962

J & K General

Sales Tax Act Sales tax 0.2156 2010-11 CTO, Baramulla 1962

Customs HC, Kolkata (last heard on Custom Duty 2.01 2004-2005 Act,1962 28.02.2005)

0.14 2006-07

0.76 2007-08

WB VAT Act, 0.43 2008-09 Sr. Joint Commissioner, Sales Tax 2005: Sales tax, Siliguri

0.07 2009-10

0.15 2010-11

c) As per the records of the company and according to information and explanations given to us, no amount is required to be transferred to Investor Education and Protection Fund (IEPF) in accordance with the provision of section 205C of the Companies Act, 1956 read with the IEPF (Awareness and Protection of Investors) Rules, 2001.

8. The Company does not have any accumulated losses at the end of the fnancial year and has not incurred cash losses in the fnancial year covered by our audit and in the immediately preceding fnancial year.

9. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the company has not defaulted in repayment of dues to fnancial institutions, banks or debenture holders.

10. In our opinion and according to the information and the explanations given to us, the Company has not given any guarantee for loans taken by others from banks or fnancial institutions

11. In our opinion and according to the information and the explanations given to us, and on overall examination of the Balance Sheet of the Company, we report that term loans have been applied for the purpose for which they were obtained.

12. In course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India we have not come across any instance of fraud on or by the Company, and according to the information and explanations given to us, no fraud was noticed or reported during the year by the management.

For S. N. Nanda & Co. For Gupta Gupta & Associates For S.N. Dhawan & Co. For Ray and Ray Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants

(FR No: 000685N) (FR No: 001728N) (FR No: 000050N) (FR No: 301072E)

(CA Gaurav Nanda) (CA R. K Gupta) (CA Suresh Seth ) (CA Barun Kr. Ghosh)

Partner Partner Partner Partner

M. No. 500417 M. No. 085074 M. No. 010577 M. No. 051028

Place : New Delhi

Date: 29-May-2015

Mar 31, 2014

We issued our audit report dated 30th May 2014 on the Financial Statements of NHPC LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, 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. These financial statements were revised by the Board of Directors on 7th July 2014 before circulation to members. We draw attention to note no. 29 para 28 to the financial statements which results in amendment of financial statements due to declaration of proposed dividend amounting to Rs. 332.12 crore and dividend distribution tax thereon amounting to Rs. 56.44 crore. Our audit procedure on subsequent events are restricted solely to the amendment of the financial statements as referred in note no. 29 para 28 to the financial statements. We report on revised Financial Statement of Accounts as under:

We have audited the accompanying financial statements of NHPC LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, 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") read with General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that 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 misstatement.

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 Company''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 aforesaid 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 the Statement of profit & Loss, of the profit of the Company for the year ended on that date; and

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

Emphasis of Matter

We draw attention to:

a) Note No. 7 para 1 to financial statements, which describes about the reversal of excess pay drawn from the month of February and March 2014 to be recovered from below Board level Executives giving effect to the approval of Competent Authority that the pay scales shall be fi tted w.e.f. 01.01.2007 after correcting the aberrations in pay scales fixed w.e.f. 01.01.1997. The confirmation of action of having implemented the directions of Competent Authority effecting recoveries w.e.f. 01.02.2014 is pending with the Ministry of Power (MoP).

b) Note No. 11 para 2 to financial statements read with Note No. 29 paras 9 and 14, which describes uncertainty about the outcome of the projects under survey and investigation stage. Expenditure incurred for conducting Survey & Investigation on such projects are being carried forward as these projects are under investigation/ pending clearance/ financial assistance with various authorities.

c) Note No. 29 para 1 to the financial statements, which describes the uncertainty related to the outcome of the claims/ arbitration proceedings and lawsuit fi led by/ against the Company on/ by contractors and others. In some of the cases the arbitration award has been decided against the company/ lost in lower courts and the company is pursuing the matter in higher courts. Management does not envisage any possible outflow in respect of decisions against the company other than those already provided for in the books of account.

Our opinion is not qualifi ed in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004 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 specifi ed in paragraphs 4 and 5 of the Order.

2. As required under provisions of section 227(3) of the Companies Act, 1956, 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;

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;

d. In our opinion the Balance Sheet, the Statement of profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 read with General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

e. The Department of Company Affairs, Ministry of Finance vides Notifi cation No. F.No.8/5/2001-CL.V dated 21st October, 2003 has notified that the provisions of clause (g) of sub-section (1) of section 274 of Companies Act, 1956, shall not apply to a Government Company.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

The confirmation of action of having implemented the directions of Competent Authority effecting recoveries w.e.f. 01.02.2014 has been sought from Ministry of Power (MoP), Govt. of India. In the meanwhile, NHPC officers Association has got a stay from Hon''ble High Court of Delhi against the implementation of stoppage of Personal Pay Adjustment (PA) recovery. In view of the directions of the Hon,ble High Court, PA to the employees is continued to be paid to the employees along with the Salary.

In the opinion of the management, the projects on which survey & investigation expenditure is incurred are still active and accordingly, the expenditure incurred is being carried forward. However, provision wherever considered necessary has been made in the books.

Company is required to disclose the uncertainty relating to any outfl ow in respect of Contingent Liability in terms of Para 68 of the Accounting Standard 29, as such the same has been disclosed.

Annexure referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date

1. In respect of its fixed assets:

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

b) All the fixed assets have been physically verifi ed by the management/outside agencies during the year. In our opinion, the frequency of verifi cation is reasonable having regard to the size of the company and nature of the assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fixed assets physically verifi ed during the year.

c) The Company has not disposed off substantial part of fixed assets during the year.

2. In respect of its inventories:

a) The inventory has been physically verifi ed during the year by the management/outside agencies. In our opinion, the frequency of verifi cation is reasonable.

b) In our opinion and according to the information and explanation given to us, the procedure of verifi cation of stocks 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 inventories. The discrepancies noticed on physical verifi cation of inventories have been properly dealt with in the books of account.

3. In respect of loans granted/taken to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The company has not granted any loans, secured or unsecured, to/from companies, firms or other parties during the year covered in the register maintained under section 301 of the Companies Act, 1956. In view of this, sub clauses (b), (c) and (d) of clause (iii) are not applicable.

b) As per explanations & information, the Company has not taken any loans from the parties covered under the register maintained u/s 301 of the Companies Act, 1956. In view of this sub clause (e), (f) & (g) of clause (iii) are not applicable.

4. In our opinion, the internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of the inventory, fixed assets and sale of power & services. System audit has suggested improvements to further strengthen the system.

5. In respect of transactions with companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) According to the information and explanations given to us, during the year under audit there have been no contracts & arrangements entered by the company which needs to be entered in the register maintained under section 301 of the Companies Act.

b) In view of sub clause (a) above, the sub-clause (4) (iii) (b) is not applicable.

6. The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Companies Act 1956 and the rules framed there under.

7. Company is having internal audit department/Outside agencies responsible for carrying out the Internal Audit of various sections at head office and at project offices at periodical intervals as per the approved audit plan. The internal audit system adopted by the internal audit department and the outside agency commensurate with the size and nature of the business of the company but frequency of internal audit needs to be improved.

8. The Company has maintained proper books of account relating to material, labour and items of cost incurred by it pursuant to the rule made by the Central Government for maintenance of cost records under section 209(1) (d) of the Companies Act, 1956. However, we have not made a detailed examination of these accounts with a view to determine whether they are accurate or complete.

9. In respect of statutory dues:

(a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess & other material statutory dues, have generally been regularly deposited with the appropriate authorities. We are informed that the Employee''s State Insurance Scheme is not applicable to the Company. According to the information and explanations given to us, no undisputed demand payable in respect of the aforesaid statutory dues were in arrears, as at 31st March 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the records of the company, the dues of Sales Tax, Income Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess which have not been deposited on account of disputes:- (Rs. in Crores)

Name of the Statute Nature of the Amount Year to which it Dues pertains

Income Tax Act, 1961 Income tax 0.07 A.Y 2011-12

Income tax 0.10 AY 2008-09 & 2009-10

Total 0.17

Sales Tax Act of various states Sales Tax 235.02 1994-95

Sales Tax 48.76 1995-96

Sales Tax 2.99 1996-97

Sales tax 0.54 2008-09

0.29 2009-10

Entry tax 0.91 2013-14

Immovable 0.19 1991-92 to 2000-01 Property tax

VAT 0.14 2006-07

0.76 2007-08

0.43 2008-09

0.07 2009-10

0.15 2010-11

Total 290.25

Customs Act, 1962 Custom Duty 0.06 1999-00

Finance Act, 1994 Service tax 13.97 2010-11

Service tax 0.04 2005-06 to 2008-09

Grand Total 304.49

Name of the Statue Forum

Income Tax Act, 1961 ITO(TDS), Srinagar

Kotli Bhel 1-A

Sales Tax Act of various states Sales Tax Appellate Tribunal, Srinagar

Sales Tax Appellate Tribunal, Srinagar

Sales Tax Appellate Tribunal, Srinagar AETC Kullu

Assessing Officer, Lakhanpur

Dy. Commissioner, Commercial Taxes (Appeal)

Sr. Joint Commissioner, Sales Tax, Siliguri

Customs Act,1962 Custom Department, Mumbai

Finance Act,1994 Commercial Taxes Officer, Faridabad Kolkata

10. The company has no accumulated losses as at the end of the fi nancial year. The company has not incurred cash losses during the fi nancial year covered by our audit or in the immediately preceding fi nancial year.

11. Based on our audit procedures and according to the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

12. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the company based on the security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company.

14. 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 is not applicable to the company.

15. In our opinion and as per the information and explanation given to us, the company has not given guarantees for loans taken by the others from banks or financial institutions during the year.

16. As per information & explanations given to us by the management, the term loans have been applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

18. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

19. Proper security has been created in respect of tax free bonds issued by the company during the year.

20. During the year the company has issued tax free, secured, redeemable, non-convertible bonds in the nature of debenture and has disclosed the end use of the same in the financial statement and the same has been utilised for the purpose stated.

21. During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India we have not come across any instance of fraud on or by the company, and according to the information and explanations given to us, no fraud was noticed or reported during the year by the management.

For S. N. Nanda & Co. For Singhi & Co. For Gupta Gupta & Associates For Tiwari & Associates

Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants

(FR No. 000685N) (FR No. 302049E) (FR No. 001728N) (FR No. 002870N)

(CA Bhavna Nanda) (CA B. L. Choraria) (CA Ram Kumar Gupta) (CA Devender Magoo)

Partner Partner Partner Partner

M. No.095275 M. No. 0022973 M. No. 097382 M. No. 085739

Place :- New Delhi Date :- 7th day of July, 2014

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of NHPC 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 fair presentation of the financial statements that 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 andperformtheauditto 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 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. 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 ofthe financial statements.

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

Basis for Qualified Opinion

Capital Work in Progress carried in the Balance Sheet amounting to Rs. 19,709.04 crores. Management has included Borrowing Cost of Rs. 386.88 crores and Administrative & Other Cost of Rs. 139.69 crores incurred on Subansiri Lower H.E. Project, wherein active development of project is interrupted. Accounting Standards require these expenditure incurred during interruption period be charged to Statement of Profit & Loss. This constitutes departure from the Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956.

Accordingly, ''Finance Cost'' would have increased by Rs. 386.88 crores and ''Generation, Administration and Other Expenses'' would have increased by Rs. 139.69 crores and ''Net Profit before Tax'', ''Capital Work in Progress'' would have reduced by Rs. 526.57 crores and Shareholders'' Fund (Net of Taxes) would have reduced by Rs. 421.22 crores.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the basis for Qualified Opinion paragraph, 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 Statement of Profit & 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

We draw attention to:

(a) Note No. 12 para 3 to financial statement, which describes uncertainty about the outcome of the project under survey and investigation stage. Expenditure incurred for conducting Survey & Investigation on such projects are being carried forward as these projects are under investigation/ pending clearance with various authorities.

(b) Note No. 30 para 1 to the financial statement, which describes uncertainty related to the outcome ofthe claims/arbitration proceedings and lawsuit filed by/against the Company on/ by contractors and others.

(c) Note No. 30 para 6 in the financial statement, which describes treatment of expenditure incurred on creation of assets not within the control of the company (Enabling Assets) which has been referred to the Expert Advisory Committee (EAC) of Institute of Chartered Accountants of India (ICAI).

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. 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.

2. As required under provisions of section 227(3) ofthe Companies Act, 1956, 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;

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;

d. except for the matter described in the Basis for Qualified Opinion paragraph, 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 Act;

e. The Department of Company Affairs, Ministry of Finance vide Notification No. F.No.8/5/2001-CL.V dated 21st October, 2003 have notified that the provisions of clause (g) of sub-section (1) of section 274 of Companies Act, 1956, shall not apply to a Government Company.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

g. This report supersedes our report dated May 28, 2013 given by us on the financial statements of the company for the financial year ending on March 31, 2013.

Annexure referred to in paragraph 1 under the heading "Report on the other legal and regulatory requirements of our report of even date

1. In respect of its fixed assets:

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

b) All the fixed assets have been physically verified by the management/outside agencies during the year. In our opinion, the frequency of verification is reasonable having regard to the size of the company and nature of the assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fixed assets physically verified during the year.

c) The Company has not disposed off substantial part of fixed assets during the year.

2. In respect of its inventories:

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

b) In our opinion and according to the information and explanation given to us, the procedures of verification of stocks 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 inventories. The discrepancies noticed on physical verification of inventories have been properly dealt with in the books of account.

3. In respect of loans granted/taken to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The company has not granted any loans, secured or unsecured, to/from companies, firms or other parties during the year covered in the register maintained under section 301 of the Companies Act, 1956. In view of this, sub clauses (b), (c) and (d) of clause (iii) are not applicable.

b) As per explanations & information, the Company has not taken any loans from the parties covered under the register maintained u/s 301 of the Companies Act, 1956. In view of this sub clause (e), (f) & (g) of clause (iii) are not applicable.

4. 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 the purchase of the inventory, fixed assets and sale of power & services.

5. In respect of transactions with companies, firms or other parties covered in the register maintained under section 301 of the CompaniesAct, 1956:

a) According to the information and explanations given to us, during the year under audit there have been no contracts & arrangements entered by the company which needs to be entered in the register maintained under section 301 of the Companies Act.

b) In view of sub clause (a) above, the sub-clause (4) (iii) (b) is not applicable.

6. The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Companies Act 1956 and the rules framed there under.

7. Company is having internal audit department/Outside agencies responsible for carrying out the Internal Audit of various sections at head office and at project offices at periodical intervals as per the approved audit plan. The internal audit system adopted by the internal audit department and the outside agency commensurate with the size and nature of the business of the company.

8. The Company has maintained proper books of account relating to material, labour and items of cost incurred by it pursuant to the rule made by the Central Government for maintenance of cost records under section 209(1) (d) of the Companies Act, 1956. However, we have not made a detailed examination of these accounts with a view to determine whether they are accurate or complete.

9. In respect of statutory dues:

(a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess & other material statutory dues, have generally been regularly deposited with the appropriate authorities. We are informed that the Employee''s State Insurance Scheme is not applicable to the Company. According to the information and explanations given to us, no undisputed payable in respect of the aforesaid statutory dues were in arrears, as at 31st March 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the records of the company, the dues of Sales Tax, Income Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess which have not been deposited on account of any dispute.

(Rs. in Crores)

Name of the Statute Nature of the Amount Dues

Income Tax Act,1961 Income tax 24.08

0.24

0.03

0.06

Total 24.41

Sales Tax Act of various states Sales Tax 224.44

46.42

2.84

0.54

0.29

0.19

Total 274.72

Customs Act,1962 Custom Duty 0.06

Finance Act,1994 Service tax 29.22

Grand Total 328.41

Name of the Statute Year to which Forum it pertains

Income Tax Act 1961 A.Y 2010-11 ACIT,Faridabad

A.Y 2009-10 ITO(TDS), Srinagar

A.Y 2008-09

A.Y 2008-09 Income Tax Office, Guwahati

Sales Tax Act of various states 1994-95 Sales Tax Tribunal, Srinagar

1995-96 Sales Tax Tribunal, Srinagar

1996-97 Sales Tax Tribunal, Srinagar

2008-09 AETC, Kullu

2009-10 AETC, Kullu

2007-08 Commercial Tax Officer, Baramulla

Customs Act 1962 1999-00 Custom Department, Mumbai

Finance Act 1994 2010-11 Commercial Taxes Officer, Faridabad

10 The company has no accumulated losses as at the end of the financial year. The company has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

11 Based on our audit procedures and according to the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

12 In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the company based on the security by way of pledge of shares, debentures and other securities.

13 The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/societies are not applicable to the Company.

14 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 is not applicable to the company.

15 In our opinion and as per the information and explanation given to us, the company has not given guarantees for loans taken by the others from banks or financial institutions during the year.

16 As per information & explanations given to us by the management, the term loans have been applied for the purpose for which they were obtained.

17 According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

18 The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

19 The company has not issued any debentures during the year and there is no debenture outstanding at the year-end.

20 The Corporation has not raised any money by Public Issue during the year.

21 During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India we have not come across any instance of fraud on or by the company, and according to the information and explanations given to us, no fraud was noticed or reported during the year by the management.

For S. N. Nanda & Co. For Singhi & Co.

Chartered Accountants Chartered Accountants

(FRNo:000685N) (FRNo:302049E)

(CA S. N. Nanda) (CA P. K. Singhi)

Partner Partner

M. No. 005909 M.No.050773

For Baweja & Kaul For Tiwari & Associates

Chartered Accountants Chartered Accountants

(FRNo:005834N) (FRNo:002870N)

(CA Dalip K. Kaul) (CA Krishan Kumar)

Partner Partner

M.No.083066 M.No.085415

Mar 31, 2012

1. We have audited the attached Balance Sheet of M/s NHPC Limited as at March 31, 2012 and the Statement of Profit & Loss account and Cash Flow Statement of the Company 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from any 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of section 227(4A) of the Companies Act, 1956, and 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, we enclose in the Annexure a statement on the matters specified in paragraph 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Para 3 above, without qualifying our report, we draw attention to: (i) Note 14.1 Para 3 regarding Survey & Investigation projects being carried over as explained that the projects are still active.; and (ii) Note 35 Para 5 regarding issue of capitalisation of expenditure incurred for creation of assets (enabling assets) not within the control of the company, which has been referred to Expert Advisory Committee of the Institute of Chartered Accountants of India;

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 our audit;

(ii) 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 the books;

(iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(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;

(v) The Department of Companies Affairs, Ministry of Finance vide Notification No. F.No.8/5/2001-CL.V dated 21st October 2003 have notified that the provisions of clause (g) of sub-section (1) of section 274 of Companies Act, 1956, shall not apply to a Government Company.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the annexed accounts read together with other notes thereon in Note No. 35 and significant accounting policies in Note No. 1, thereon give the information required under the Companies Act, 1956 in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India:

1. In the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2012;

2. In the case of the Profit and Loss account, of the Profit for the year ended on that date;

3. In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditor's Report (Referred to in paragraph 3 of our report of even date)

1. In respect of its fixed assets:

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

b) All the fixed assets have been physically verified by the management/outside agencies during the year. In our opinion, the frequency of verification is reasonable having regard to the size of the company and nature of the assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fixed assets physically verified during the year.

c) The Company has not disposed off substantial part of fixed assets during the year.

2. In respect of its inventories:

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

b) In our opinion and according to the information and explanation given to us, the procedures of verification of stocks 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 inventories. The discrepancies noticed on physical verification of inventories have been properly dealt with in the books of account.

3. In respect of loans granted/taken to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The company has not granted any loans, secured or unsecured, to/from companies, firms or other parties during the year covered in the register maintained under section 301 of the Companies Act, 1956. In view of this, sub clauses (b), (c) and (d) of clause (iii) are not applicable.

b) As per explanations & information the Company has not taken any loans from the parties covered under the register maintained u/s 301 of the Companies Act, 1956. In view of this sub clause (e), (f) & (g) of clause (iii) are not applicable.

4. 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 the purchase of the inventory, fixed assets and sale of power & services.

5. In respect of transactions with companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) According to the information and explanations given to us, during the year under audit there have been no contracts & arrangements entered by the Company which needs to be entered in the register maintained under section 301 of the Companies Act.

b) In view of sub clause (a) above, the sub-clause (4) (iii)) (b) is not applicable.

6. The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Companies Act 1956 and the rules framed there under.

7. The company is having internal audit department/Outside agencies responsible for carrying out the Internal Audit of various sections at head office and at project offices at periodical intervals as per the approved audit plan. The internal audit system adopted by the internal audit department and the outside agency commensurate with the size and nature of the business of the company.

8. The Company has maintained proper books of account relating to material, labour and items of cost incurred by it pursuant to the rule made by the Central Government for maintenance of cost records under section 209(1)(d) of the Companies Act, 1956. However, we have not made a detailed examination of these accounts with a view to determine whether they are accurate or complete.

9. In respect of statutory dues:

(a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess & other material statutory dues, have generally been regularly deposited with the appropriate authorities. We are informed that the Employee's State Insurance Scheme is not applicable to the Company. According to the information and explanations given to us, no undisputed payable in respect of the aforesaid statutory dues were in arrears, as at 31.03.2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the records of the company, the dues of Sales Tax, Income Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess which have not been deposited on account of any dispute amounting to Rs.303.86 Cr.

(Rs. in crores)

Statute Nature Forum at which case is pending Amount

Income Tax Act,1961 Income tax ACIT(Range II), Faridabad 9.33

CIT(Appeal), Dehradun 0.33

ITO(TDS), Srinagar 0.40

ITO(TDS), Palampur 0.01

ACIT(TDS), Chandigarh 0.31

CIT, Tezpur 0.19

Total 10.57

Sales Tax Act of various states Sales Tax Sales Tax Appellate, J&K 260.62

Sales Tax Assessing Authority, Chamba 3.38

Dy. Commissioner (Appeal) Sales Tax, Srinagar (J&K) 0.01

Total 264.01

Custom Act, 1962 Custom Duty Dy. Commissioner of Customs, Contract Cell 0.06

Finance Act, 1994 Service tax Service tax Commissioner, Delhi 29.22

Grand Total 303.86

10 The company has no accumulated losses as at the end of the Financial year. The company has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

11 Based on our audit procedures and according to the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

12 In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the company on the basis of the security by way of pledge of shares, debentures and other securities.

13 The provisions of any special statute applicable to chit fund/ nidhi /mutual benefit fund/ societies are not applicable to the company.

14 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 is not applicable to the company.

15 In our opinion and as per the information and explanation given to us, the company has not given guarantees for loans taken by the others from banks or financial institutions during the year.

16 As per information & explanations given to us by the management, the term loans have been applied for the purpose for which they were obtained.

17 According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

18 The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

19 The company has not issued any debentures during the year and there is no debenture outstanding at the year end.

20 The Corporation has not raised money by Public Issue during the year.

21 During the course of our examination of the books and records of the company, carried out in accordance with generally accepted auditing practices in India we have not come across any instance of fraud on or by the company, and according to the information and explanations given to us, no fraud was noticed or reported during the year by the management.

For S.N. Nanda & Co. For Singhi & Co. For Baweja & Kaul For Tiwari & Associates

(Chartered Accountants) (Chartered Accountants) (Chartered Accountants) (Chartered Accountants)

FRN No. 000685N FRN No. 302049E FRN No. 005834N FRN No. 002870N

(CA Gaurav Nanda) (CA B. K. Sipani) (CA Sakshi Kaul Dhar) (CA Sandeep Sandill)

Partner Partner Partner Partner

M. No. 500417 M. No. 088926 M. No. 514325 M. No. 085747

Place: New Delhi

Dated: 25.05.2012

Mar 31, 2011

1. We have audited the attached REVISED Balance Sheet of M/s NHPC Limited as at March 31, 2011 and the REVISED Profit & Loss account, REVISED Statement of expenditure during construction and REVISED Cash Flow Statement of the Company 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.

2. Reference is invited to Auditors' Report dated 27.05.2011 given by us on the financial Statements of NHPC Limited for the financial year ended as at 31.03.2011.

3. The Company has amended its aforesaid financial statements covered by the above referred Auditor's Report so as to incorporate the provision for dividend and dividend distribution tax thereon in the books, which has been recommended by the Board of NHPC Limited. Accordingly, the Balance Sheet as at 31.03.2011 and Profit & Loss Account for the period ended on even date, audited by us (covered by our above referred Auditors Report) has been amended by the Company (refer Note No. 33 of Schedule 24).

4. We conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from any 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

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

6. Further to our comments in the Annexure referred to in Para 3 above, without qualifying our report, we draw attention to (a) Note No. 5 (Schedule 24 Ã Notes to Accounts) in respect of accounting of sales on provisional basis pending determination of tariff by the Central Electricity Regulatory Commission and Prior Period sales, (b) Note No. 7 (Schedule 24 Ã Notes to Accounts) regarding capitalisation of Corporate Office Expenses, Regional Office Expenses, Survey & Investigation and administration & other general overhead expenses of construction projects and (c) Note No. 12 (Schedule 24 Ã Notes to Accounts) regarding having referred the issue of capitalisation of expenditure incurred for creation of assets (enabling assets) not within the control of the company, to Expert Advisory Committee of the Institute of Chartered Accountants of India, 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 our audit;

(ii) The allocation of work amongst the auditors has been followed as per the direction contained in letter No.CA. V/COY/CENTRAL GOVERNMENT, NHPC(5)/70 dated 13.07.2010 addressed to NHPC by the Office of the Comptroller & Auditor General of India, New Delhi;

(iii) 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 the books;

(iv) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(v) 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;

(vi) The Department of Companies Affairs, Ministry of Finance vide Notification No. F.No.8/5/2001-CL.V dated 21st October 2003 have notified that the provisions of clause (g) of sub-section (1) of section 274 of Companies Act, 1956, shall not apply to a Government Company.

(vii) The Central Government has not prescribed the amount of Cess payable under section 441A on Companies Act,1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(viii) In our opinion and to the best of our information and according to the explanations given to us, the annexed accounts read together with other notes thereon in schedule 24 and significant accounting policies in schedule 23, thereon give the information required under the Companies Act, 1956 in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India:

1. In the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2011;

2. In the case of the Profit and Loss account, of the Profit for the year ended on that date;

3. In case of Statement of Expenditure During Construction, of the expenditure incurred up to the period ended on reporting date; and

4. In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT (Referred to in paragraph 3 of our report of even date)

1. In respect of its fixed assets:

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

b) All the fixed assets have been physically verified by the management/outside Chartered Accountants Firm during the year. In our opinion, the frequency of verification is reasonable having regard to the size of the company and nature of the assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fixed assets physically verified during the year.

c) The Company has not disposed off substantial part of fixed assets during the year.

2. In respect of its inventories:

a) The inventory has been physically verified during the year by the management/outside Chartered Accountants Firms. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanation given to us, the procedures of verification of stocks 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 inventories. The discrepancies noticed on physical verification of inventories have been properly dealt with in the books of account.

3. In respect of loans granted/taken to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The company has not taken or granted any loans, secured or unsecured, to/from companies, firms or other parties during the year covered in the register maintained under section 301 of the Companies Act, 1956. In view of this, sub clauses (b), (c) and (d) of clause (iii) are not applicable.

b) As per explanations & information the Company has not taken any loans from the parties covered under the register maintained u/s 301 of the Companies Act, 1956. In view of this sub clause (e), (f) & (g) of clause (iii) are not applicable.

4. 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 the purchase of the inventory, fixed assets and sale of power & services; however the same needs to be strengthened further.

5. In respect of transactions with companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) According to the information and explanations given to us, during the year under audit there have been no contracts & arrangements which need to be entered in the register maintained under section 301 of the Companies Act.

b) In view of sub clause (a) above, the sub-clause is not applicable.

6. The Company has broadly complied with provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. According to the information and explanation given to us, no order has been passed by the Company Law Board.

7. Corporation is having internal audit department/Outside Chartered Accountants Firm responsible for carrying out the Internal Audit of various sections at head office and at project offices at periodical intervals as per the approved audit plan.

8. The Company has maintained proper books of account relating to material, labour and items of cost incurred by the Company pursuant to the rule made by the Central Government for maintenance of cost records under section 209(1)(d) of the Companies Act, 1956. However, we have not made a detailed examination of these accounts with a view to determine whether they are accurate or complete.

9. In respect of statutory dues:

(a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess & other material statutory dues, have generally been regularly deposited with the appropriate authorities. We are informed that the Employee's State Insurance Scheme is not applicable to the Company. According to the information and explanations given to us, undisputed payable in respect of the aforesaid statutory dues were in arrears, as at 31/03/2011 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the records of the company, the dues of Sales Tax, Income Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess which have not been deposited on account of any dispute amounting to Rs. 2253.31 Cr.

Statute Nature Forum Amt (Rs. in crore)

Income Tax Act,1961 Income tax ACIT, Faridabad 8.65

CIT (Appeal), Dehradun 1.12

Total 9.77

Sales Tax Guhahati High Court 1934.07

Sales Tax Appellate, J&K 247.54 Sales Tax Act of various AC/JC, Trade Tax 0.05 states JCCT, Sale tax 20.87

High Court, Kolkatta 0.06

Total 2202.59

Assam VAT VAT DC, Sales tax 13.87

Custom Act,1962 Custom Duty Mumbai Custom 0.06

Finance Act,1994 Service tax Service tax Commissioner, Delhi 27.02

Grand Total 2253.31

10. The company has no accumulated losses as at the end of the financial year. The company has not incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

12. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the company on the basis of the security by way of pledge of shares, debentures and other securities.

13. In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of this clause are not applicable to the company.

14. 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 is not applicable to the company.

15. The company has not given guarantees for loans taken by the others from banks or financial institutions.

16. As per information & explanations given to us by the management, the term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

18 During the year, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. According to the information & explanations given to us, the company has created security in respect of Bonds issued by the company.

20. The Corporation has not raised money by Public Issue during the year.

21. Based on the audit procedures performed for the purpose of reporting the true & fair view of the financial statements and as per the information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S. B. G. & Company

Chartered Accountants

(CA. Suresh Kumar)

Partner

Place: New Delhi M. No. 072921

Dated: 30.06.2011 F.R.No.001818N

Mar 31, 2010

1. We have audited the attached Balance Sheet of NHPC Ltd. (formerly known as National Hydroelectric Corporation Limited) as at 31st March 2010 and also the Profit and Loss Account, Statement of Expenditure during construction and Cash Flow Statement of the Company for the year ended on that date anneRs.ed thereto, in which are incorporated the return of (i) one Regional Office, Corporate Office and 4 other offices audited by us, (ii) 8 Regional Offices audited by other auditors. These financial statements are the responsibility of the Companys management. Our responsibility is to eRs.press an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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 eRs.amining, 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 and read together with the Companies (Auditors Report) Amendment Order, 2004 (hereinafter referred to as the Order) 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 AnneRs.ure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments given in the AnneRs.ure referred to in paragraph 3 above, we report that:

(i) We have obtained all the information and eRs.planations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) The allocation of work amongst the auditors has been followed as per direction contained in letter No. CA. V/COY/NHPC (5)/51 dated 12.08.2009 addressed to NHPC by the Office of Comptroller & Auditor General of India, New Delhi;

(iii) 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. The Branch Auditors Report(s) have been forwarded to us and have been appropriately dealt with;

(iv) 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 the branches;

(v) 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;

(vi) The Department of Companies Affairs, Ministry of Finance vide their Notification No. F. No. 8/5/2001-CL.V dated 21st October, 2003 have notified that provision of Section 274 (1) (g) of the Companies Act, 1956, shall not apply to a Government Company.

(vii) The Central Government has not prescribed the amount of Cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(viii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Notes and the Significant Accounting Policies thereon 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 the Balance Sheet, of the state of affairs of the Company as at 31st March 2010,

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

c) In case of Statement of Expenditure During Construction, of the Expenditure incurred up to the period ended on reporting date, and

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

ANNERs.URE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date)

(i) (a) The company has generally maintained proper records showing full particulars including quantitative details and situation of fiRs.ed assets.

(b) We are informed that the fiRs.ed assets have been physically verified by the management /out side chartered accountants firm during the year. In our opinion, the frequency of verification is reasonable. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fiRs.ed assets physically verified during the year.

(c) There was no substantial disposal of fiRs.ed assets during the year.

(ii) (a) The inventories of stores, spare parts, steel and cement have been physically verified during the year by the management/outside chartered accountants firm. In our opinion, the frequency of physical verification is reasonable.

(b) In our opinion, 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) In our opinion, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories have been properly dealt with in the books of account.

(iii) (a) Based on the audit procedures applied by us and according to the information and eRs.planations given to us, the Company has not granted or taken any loans, secured or unsecured, to / from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. In view of this, sub clauses (b), (c) and (d) of clause (iii) are not applicable.

(b) As per information and eRs.planation the Company has not taken any loans from the parties covered under the register maintained u/s 301 of the Companies Act, 1956. In view of this sub clause (e), (f) & (g) of clause (iii) are not applicable.

(iv) In our opinion and according to the information and eRs.planations given to us, in general there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business for the purchase of inventories, fiRs.ed assets and for the sale of power and services.

(v) (a) According to the information and eRs.planations given to us, during the year under audit there have been no contracts or arrangements which need to be entered in the register maintained under section 301 of the Companies Act, 1956.

(b) In view of sub-clause (a) above, the sub clause is not applicable.

(vi) In our opinion and according to the information and eRs.planations given to us, the Company has not accepted any deposits from public within the meaning of section 58A and 58AA and any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

(vii) Corporation is having internal audit department responsible for carrying out the Internal Audit of various sections at head office and at project offices at periodical intervals as per the approved audit plan. Internal Audit has been conducted as per approved plan and there is considerable improvement as compared to earlier years, However it needs to be further strengthened in respect of reporting aspects and identification of critical areas for risk based audit.

(viii) 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 209 (1) (d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of these records with a view to determining whether they are accurate or complete.

(iRs.) (a) According to the records of the Company, undisputed statutory dues including provident fund, investor education and protection fund, income Tax, sales Tax, wealth Tax, service Tax, custom duty, eRs.cise duty, cess and other material statutory dues, have generally been regularly deposited with the appropriate authorities. We are informed that the Employees State Insurance Scheme is not applicable to the Company. According to the information and eRs.planations given to us, no undisputed amounts payable in respect of the aforesaid statutory dues were in arrears, as at 31st March, 2010, for a period of more than siRs. months from the date they became payable.

(b) According to the information and eRs.planations given to us and as per the records of the Company, the dues of sales Tax, income Tax, customs duty, wealth Tax, service Tax, eRs.cise duty and cess, which have not been deposited on account of any dispute amounting to Rs. 2099.36 crores.

Statute Nature of Dues Forum where the dispute is pending Rs. in Crores

Incomex Act, Income Tax ITO, TDS Faridabad 0.08 1961

Income Tax ITO, TDS Palampur 0.01

Sales Tax Act of Sales Tax Guwahati High Court 1934.07 Various State

Sales Tax Sales Tax Appellate Tribunal, Srinagar, J&K 117.35

Sales Tax Joint Commissioner Appeal 0.98

Sales Tax Assessing Authority, Chamba 3.39

Sales Tax ACCT WB Sales Tax 40.39

Assam Value VAT The Commissioner Taxes, Assam 3.03 added Tax of 2003

Custom Act 1962 Custom duty Mumbai Custom 0.06

Total 2099.36

(Rs.) The company does not have any accumulated losses at the end of the financial year. The Company has not incurred any cash loss during the year covered by our audit and in the immediately preceding financial year.

(Rs.i) Based on our audit procedures and as per the information and eRs.planations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. (Rs.ii) According to the information and eRs.planations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(Rs.iii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of this clause are not applicable to the Company.

(Rs.iv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments.

In view of provisions of this clause are not applicable.

(Rs.v) According to the information and eRs.planations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(Rs.vi) Based on information and eRs.planations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(Rs.vii) According to the information and eRs.planations 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.

(Rs.viii) The Company has not made any preferential allotment of shares during the period under audit to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(Rs.iRs.) According to the information and eRs.planations given to us, the Company has created security in respect of Bonds issued by the Company.

(Rs.Rs.) We have verified the end use of money raised by Public Issue as disclosed in the note no. 3(a) of schedule 24 of the financial statements.

(Rs.Rs.i) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and eRs.planations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For GSA & Associates

Chartered Accountants FRN 000257N

(SUNIL AGGARWAL)

PARTNER Membership No: 83899 PLACE : New Delhi DATE : 25th May 2010

Mar 31, 2009

1. We have audited the attached Balance Sheet of NHPC Ltd (formerly known as National Hydroelectric Power Corporation Limited) as at 31st March, 2009 and also the Profit and Loss Account, Statement of expenditure during construction and Cash Flow Statement of the Company for the year ended on that date annexed thereto, in which are incorporated the return of (i) one Regional Office, Corporate Office and 5 other offices audited by us, (ii) 6 Regional Offices and 5 other offices audited by other auditors. These financial statements are the responsibility of the CompanyÃs management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 and read together with the Companies (AuditorÃs Report) Amendment order, 2004 (hereinafter referred to as the order) 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.

4. Further to our comments in the Annexure referred to in paragraph 3 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 our audit;

(ii) The allocation of work amongst the auditors has been followed as per direction contained in letter No. CA. V/COY/Central Govt .NHPC (5)/48 dated 31.07.2008 addressed to NHPC by the Office of Comptroller & Auditor General of India, New Delhi.

(iii) 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. The Branch AuditorÃs Report(s) have been forwarded to us and have been appropriately dealt with;

(iv) 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 the branches;

(v) 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;

(vi) The Department of Companies Affairs, Ministry of Finance vide their Notification No. F. No. 8/5/ 2001-CL.V dated 21st October, 2003 have notified that provision of Section 274 (1) (g) of the Companies Act 1956, shall not apply to a Government Company.

(vii) The Central Government has not prescribed the amount of Cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(viii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Notes particularly note no. 11 regarding depreciation, and the Significant Accounting Policies thereon 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 the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009,

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

c) In case of Statement of Expenditure During Construction, of the expenditure incurred up to the period ended on reporting date, and

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

Annexure to the AuditorÃs Report (Referred to in paragraph 3 of our report of even date)

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

(b) We are informed that the fixed assets have been physically verified by the management /out side Chartered Accountants firm during the year. In our opinion, the frequency of verification is reasonable. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fixed assets physically verified during the year.

(c) During the year Siang Lower Project have been disposed of having assets value of Rs 40.73 Crore under government direction; however it has no impact on going concern.

(ii) (a) The inventories of stores, spare parts, steel and cement have been physically verified during the year by the management/outside Chartered Accountants firm. In our opinion, the frequency of physical verification is reasonable.

(b) In our opinion, 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) In our opinion, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories, wherever material, have been properly dealt with in the books of account.

(iii) (a) Based on the audit procedures applied by us and according to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to / from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. In view of this, sub clauses (b), (c) and (d) of clause (iii) are not applicable.

(b) As per information and explanation the Company has not taken any loans from the parties covered under the register maintained u/s 301 of the Companies Act, 1956. In view of this sub clause (e), (f) & (g) of clause (iii) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, in general there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business for the purchase of inventories, fixed assets and for the sale of power and services.

(v) (a) According to the information and explanations given to us, during the year under audit there have been no contracts or arrangements which need to be entered in the register maintained under section 301 of the Companies Act, 1956.

(b) In view of sub-clause (a) above, the sub clause is not applicable.

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

(vii) According to the information and explanations given to us and the records of the Company, the Company has an in-house Internal Audit system commensurate with its size and nature of its business. However it needs to be strengthened in respect of reporting aspects and follow up action.

(viii) 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 209 (1) (d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of these records with a view to determining whether they are accurate or complete.

(ix) (a) According to the records of the Company, undisputed statutory dues including provident fund, investor education and protection fund, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, have generally been regularly deposited with the appropriate authorities. We are informed that the EmployeeÃs State Insurance Scheme is not applicable to the Company. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid statutory dues were in arrears, as at 31st March, 2009, for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the records of the Company, the dues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess, which have not been deposited on account of any dispute amounting to Rs.2062.47 crores.

Statute Nature of Dues Forum where the dispute Rs in Crore is pending

Sales Tax act of Sales Tax Guwahati high Court 1934.07 Various State

Sales Tax Sales Tax Appellate Tribunal, 114.83 Srinagar, J&K

Sales Tax Joint Commissioner Appeal 1.04

Sales Tax Sales Tax Authority, Chamba 2.50

Sales Tax ACCT WB Sales Tax 1.67

Assam Value added VAT The Commissioner Taxes, Assam 8.30 tax of 2003

Custom Act 1962 Custom duty Mumbai Custom 0.06

Total 2062.47

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

(xi) On the basis of verification of records and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to Financial Institutions / Banks or Debenture holders.

(xii) Based on the audit procedures applied by us and information and explanation provided to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares and debentures and other securities.

(xiii) The company is not a chit fund or a nidhi or a mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (AuditorÃs 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. In view of provisions of this clause are not applicable.

(xv) The Company has not given any guarantee for loan taken by others from Banks/Financial Institutions.

(xvi) According to the information and explanations given to us, based on an overall examination of the Balance Sheet of the company, the term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us, based on an overall examination of the Balance Sheet of the company, related information made available to us and as represented to us by the Management, no funds have been raised on short term basis during the period under audit.

(xviii) The Company has not made any preferential allotment of shares during the period under audit to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the Company has created security in respect of Bonds issued by the Company.

(xx) The Company has not made any public issue of any securities during the period under audit.

(xxi) We are informed that no frauds by or on the Company have been noticed and reported during the period under audit.

For G S A & Associates

Chartered Accountants (Sunil Aggarwal)

Place : New Delhi

Partner Dated: 26th May, 2009 Membership No. 83899

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