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India Power Corporation Ltd.

BSE: 532130 Sector: Infrastructure
NSE: DPSCLTD ISIN Code: INE360C01024
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India Power Corporation Ltd. (DPSCLTD) - Auditors Report

Company auditors report

INDEPENDENT AUDITORS' REPORT

To

The Members of

India Power Corporation Limited (Formerly DPSC Limited)

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of India PowerCorporation Limited (Formerly DPSC Limited) ("the Company") which comprise theBalance Sheet as at 31st March 2016 the Statement of Profit and Loss Cash FlowStatement for the year then ended and a summary of the significant accounting policiesand other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of Companies (Accounts) Rules2014. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on ouraudit. We have taken into account the provisions of the Act the Accounting and AuditingStandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder. We conducted our audit in accordancewith the Standards on Auditing as specified under Section 143(10) of the Act. ThoseStandards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstance. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide 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 explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2016 and its Profit and its Cash Flows for the year ended on that date.

Emphasis of Matter

Attention is invited to Note 16.1 of the financial statements regarding the beneficialinterest in Power Trust amounting to Rs 81886.01 lakhs comprising of Investments andLiabilities pertaining to Investment division of the amalgamating Company transferred tosaid trust (Note 2). Based on Independent valuation carried out as at the year end noadjustment in this respect has been considered necessary.

Our opinion is not modified in the above matters.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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 ofthe Act and according to the information and explanations given to us and also on thebasis of such checks as we considered appropriate we give in the 'Annexure A' astatement on the matters specified in paragraphs 3 and 4 of the Order.

As required by Section143 (3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany 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 Statementdealt with by this report are in agreement with the books of account;

d) In our opinion the Balance Sheet Statement of Profit and loss and Cash FlowStatement comply with the Accounting Standards specified under section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014;

e) On the basis of the written representations received from the Directors as on March31 2016 taken on

record by the Board of Directors none of the Directors is disqualified as on March 312016 from being appointed as a Director in terms of section 164 (2) of the Act;

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B";

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

i. As represented by the management pending litigations (other than those alreadyrecognised in the accounts) having material impact on the financial position of theCompany have been disclosed in the financial statement as required in terms of theAccounting Standards and provisions of the Act (refer Note No. 29.1 and 29.5 (b) of thefinancial statements);

ii. There are no long-term contracts for which there were any material foreseeablelosses. The Company has not entered into any derivative contract;

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

For Lodha & Co.
Chartered Accountants
Firm's ICAI Registration No.:301051E
H.K Verma
Place: Kolkata Partner
Date:14th May 2016 Membership No: 055104

INDIA POWER CORPORATION LIMITED (FORMERLY DPSC LIMITED) 'ANNEXURE A' REFERRED TO IN OURREPORT OF EVEN DATE

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the management according to a phasedprogramme designed to cover all the items over a period of

three years which in our opinion is reasonable having regard to the size of theCompany and nature of its assets. In accordance with this programme fixed assets werephysically verified by the management during the reporting period and no materialdiscrepancies were noticed on such verification.

(c) According to the information explanations and representations provided to us andbased on documents produced to us for our verification in our opinion except in thefollowing cases title deeds of immovable properties are held in the name of the Company.Deed/relevant document of leasehold/freehold land have been taken as the basis forverification in respect of such land as well as self-constructed building thereupon.

Land

Total Number of cases Whether Lease Hold/Free Hold Gross Block as at 31.03.2016 (Rs. in Lakhs) Net Block as at 31.03.2016 (Rs. in Lakhs)
5 (Five) Cases Freehold 4.09 4.09

 

Building
Total Number of locations Gross Block as at 31.03.2016 (Rs. in Lakhs)* Net Block as at 31.03.2016 (Rs. in Lakhs)* Remarks
14 (Fourteen) Cases (excluding cases subject to arbitration) 331.79 263.26 These buildings have been constructed on land owned by others (Refer Note 13.2 of the financial statements)

* Gross block and Net block Includes Rs. 111.00 lacs and Rs. 83.34 lacs respectivelyrelating to leased premises matters whereof are subject to arbitration proceedings (ReferNote 29.5 of the financial statements).

ii. As explained to us the Inventories have been physically verified by the managementat reasonable intervals during the year. In our opinion the frequency of suchverification is reasonable. No material discrepancies were noticed on physicalverification of inventories as compared to the book records.

iii. The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Act. Accordingly paragraph 3(iii) (a) to (c) of the Order is notapplicable to the Company.

iv. According to the information and explanations given to us the Company has compliedwith provisions of Section 185 of the Act in respect of loan made and guarantee given bythe Company. As explained to us since the Company is engaged in the business of providinginfrastructural facilities provisions of Section 186 of the Act so far as these relate toloan made guarantee given or security provided by the Company are not applicable to it.The Company has complied with the provisions of Section 186 of the Act in respect ofinvestments made by the Company.

'ANNEXURE A' REFERRED TO IN OUR REPORT OF EVEN DATE

v. The Company has not accepted any deposits from public covered under Sections 73 to76 or any other relevant provisions of the Act and rules framed thereunder.

vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by Central Government for the maintenance of cost records under section148(1) of the Act and are of the opinion that prima facie the prescribed records havebeen made and maintained. We have however not made a detailed examination of the saidrecords with a view to determine whether they are accurate or complete.

vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company has generally been regular indepositing during the year the undisputed statutory dues including provident fundemployees' state insurance income-tax sales tax service tax duty of customs duty ofexcise value added tax cess and other material statutory dues as applicable with theappropriate authorities. According to the information and explanations given to us andrecords of the Company examined by us there are no undisputed amounts payable in respectof above dues which were outstanding as at 31.03.2016 for a period of more than six monthsfrom the date they became payable.

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income tax sales tax service taxDuty of custom Duty of excise and cess as applicable as at 31st March 2016 which havenot been deposited on account of dispute are as follows:

Name of the Statute Nature of dues Amount (Rs in lakhs) Period to which amount relates Forum where dispute is pending
West Bengal Sales Tax Act 1994 Sales Tax and Purchase Tax 2.23 Financial Year 2004-2005 West Bengal Commissioner Taxes Appellate & Revisional Board
VAT and Purchase Tax 6.63 Financial Year 2009-2010 West Bengal Commissioner Taxes Appellate & Revisional Board
Finance Act1994 (read with Service Tax Rules 1994) Service Tax 21.49 Financial Year 2008-2009 to 2012-2013 Commissioner of Service Tax (Appeals)

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to a financial institutionbank government or dues to debenture holders.

ix. The Company during the year has not raised monies by way of Initial Public Offeror Further Public Offer (including debt instruments). Out of the Term loan of Rs.28637.03 lakhs received during the year Rs. 5932.00 lakhs from two banks have beenappropriated against reimbursement for net working capital and capital expenditureincurred in the past as against the sanction for subsequent expenditure and necessary

acceptance from the banks have been received/sought for in this respect. The remainingamount of loan of Rs. 22705.03 lakhs from a bank is renewal cum sanction of workingcapital facilities for cash flow mismatch and is a general purpose loan. In absence of anystipulation regarding the utilization of fund for fixed purpose we are neither requirednor able to ascertain and comment on utilization thereof for the purpose these wereobtained.

x. During the course of our examination of the books of account carried out inaccordance with the generally accepted auditing practices in India and according to theinformation and explanations given to us we

have neither come across any incidence of fraud by the Company or on the Company by itsofficers or employees nor have we been informed of any such case by the management.

xi. In our opinion and according to the information and explanation given to usmanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by provisions of Section 197 read with schedule V of the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

xiii. According to the information and explanations given to us the Company is incompliance with Section 188 and 177 of the Act where applicable for transactions withthe related parties and the details of related party transactions have been disclosed inthe financial statements as required by the applicable accounting standards.

xiv. During the year the Company has not made any preferential allotment or privateplacement of shares

or fully or partly convertible debentures and therefore paragraph 3(xiv) of the Orderis not applicable to the Company.

xv. According to the information and explanations given to us during the year theCompany has not entered into any non-cash transactions with Directors or persons connectedwith the Directors and therefore provisions of Section 192 of the Act are not applicableto the Company.

xvi. According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For Lodha & Co.
Chartered Accountants
Firm's ICAI Registration No.:301051E
H.K Verma
Place: Kolkata Partner
Date:14th May 2016 Membership No: 055104

''ANNEXURE B' REFERRED TO IN THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONEFINANCIAL STATEMENTS OF EVEN DATE OF INDIA POWER CORPORATION LIMITED (FORMERLY DPSCLIMITED)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of India PowerCorporation Limited (Formerly DPSC Limited) ("the Company") as at March 31 2016in conjunction with our audit of the financial statements of the Company for the yearended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAl and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisation ofmanagement and Directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany'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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controls

over financial reporting were operating effectively as at March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.

For Lodha & Co.
Chartered Accountants
Firm's ICAI Registration No.:301051E
H.K Verma
Place: Kolkata Partner
Date:14th May 2016 Membership No: 055104