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NLC India Ltd.

BSE: 513683 Sector: Infrastructure
NSE: NLCINDIA ISIN Code: INE589A01014
BSE LIVE 19:41 | 19 Oct 97.95 1.80
(1.87%)
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NSE 19:40 | 19 Oct 97.55 1.50
(1.56%)
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OPEN 96.25
PREVIOUS CLOSE 96.15
VOLUME 11933
52-Week high 123.00
52-Week low 72.60
P/E 5.72
Mkt Cap.(Rs cr) 14,972
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 96.25
CLOSE 96.15
VOLUME 11933
52-Week high 123.00
52-Week low 72.60
P/E 5.72
Mkt Cap.(Rs cr) 14,972
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

NLC India Ltd. (NLCINDIA) - Auditors Report

Company auditors report

To

The Members of M/s. NEYVELI LIGNITE CORPORATION LIMITED

Report on the Financial Statements

We have audited the accompanying standalone financial statements of M/s. NEYVELILIGNITE CORPORATION LIMITED ("the Company") which comprise the Balance Sheet asat 31 March 2016 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation.

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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company’s Directors as well as evaluating theoverall presentation of 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 31 March 2016 and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

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

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

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

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

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

Our opinion is not modified in respect of these matters.

Other Matter

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

Report on other Legal and Regulatory Requirements

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

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

a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books.

c) The report on accounts of the branch office of the company audited U/s.143(8) of theAct by the branch auditor has been sent to us and has been properly dealt with by us inpreparing this report.

d) 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.

e) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

f) As per the Notification No. G.S.R. 829(E) dated 21.10.2003 issued U/s. 620(1) ofthe Companies Act 1956 and read with Section 465(2) of Companies Act2013 Sub-section(2) of Section 164 of the Companies Act 2013 is not applicable to Government Companies.

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

h) With respect to the other matters to be included in the Auditor’s Report 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. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 24(A) to the financial statements;

ii. The company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

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

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

For M/s. P.B. VIJAYARAGHAVAN & CO. For M/s. CHANDRAN & RAMAN
Chartered Accountants Chartered Accountants
Firm Regn. No. 004721S Firm Regn No. 000571S
P.B. Srinivasan S. Pattabiraman
Partner Partner
M.No.: 203774 M.No.: 014309
Place : Chennai
Date : 26.05.2016

Annexure - I to Independent Auditors' Report

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

1) Fixed Assets

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

b) The Company has a policy of verifying all the fixed assets once in five years. Forthe cycle 2006-07 to 2010-11 physical verification of all the fixed assets has beencarried out during the financial year 2010-11.

Pending reconciliation of discrepancies observed on physical verification conductedduring the financial year 2010-11 a sum of Rs 0.41 crore has been provided for. For thecycle 2011-12 to 2015-16 the physical verification of fixed assets is in progress.Material discrepancies if any will be adjusted as and when determined.

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

(Rs in crore)
Nature of Immovable Property Total No. of cases Gross Block as on 31.03.2016 Net Block as on 31.03.2016 Remarks if any
Building Leasehold 1 2.08 1.35 Registration of Lease
Deed pending
Building Freehold 1 26.25 25.94 Execution of Sale
Deed is pending

2) Inventory

The inventory has been physically verified during the year by the management. Nomaterial discrepancies were noticed.

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

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

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

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

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

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

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

5) Public Deposits

In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from public and hence the provisions of sections 73 to76 or any other relevant provisions of the Companies Act and the rules made there underare not applicable to the Company.

6) Maintenance of Cost Records

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

7) Statutory Dues

a) The Company has generally been regular in depositing Provident Fund dues of its ownemployees. Based on the information and explanations given to us the Company has laid downsystem and procedures regarding deposit of PF and ESI dues relating to contractors’workers. The company has generally been regular in depositing Income-tax Sales TaxService Tax duty of customs duty of excise value added tax cess and any otherstatutory dues to the appropriate authorities.

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

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

Name of the Statute Nature of the dues Demand Amount Amount Deposited under protest Period to which the amount relates Forum where dispute is pending
(Rs in lakh) (Rs in lakh)
57.53 28.76 2008-09
Rajasthan 173.73 63.28 2009-10
Finance Act 2006 Land tax 173.73 86.86 2010-11 Tax Board Ajmer
192.92 99.96 2011-12
192.92 99.96 2012-13
Customs Act Customs Duty 3237.21 733.98 - CESTAT
89.56 6.72 April 2009 to June 2012 CESTAT
10.18 - CEC(A)
Finance Act 1994 Service Tax 51.34 3.85 July 2012 to March 2014 CEC(A)
1.11 0.08 April 2012 to June 2012 CEC(A)
The Central Excise Act 1944 Excise Duty 29.03 2.18 Nov 2011 to Sep 2012 CEC(A)

8) Repayment of Loans

The Company has not defaulted in repayment of loans or borrowing to a financialinstitution bank government or dues to debenture holders during the relevant financialyear.

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

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

10) Frauds

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

11) Managerial Remuneration

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

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

The Company is not a Nidhi Company and hence the provisions para 3(xii) of the orderreferred to in Companies (Auditor’s Report) Order 2016 issued by the CentralGovernment of India in terms of sub-section (11) of Section 143 of the Act does not applyto the Company.

13) Transaction with Related Parties

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

14) Preferential Allotment or Private Placement

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

15) Non-cash transactions

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

16) Registration with Reserve Bank of India

The Company is not carrying any activities which require registration under section45-IA of the Reserve Bank of India Act 1934.

For M/s. P.B. VIJAYARAGHAVAN & CO. For M/s. CHANDRAN & RAMAN
Chartered Accountants Chartered Accountants
Firm Regn. No. 004721S Firm Regn No. 000571S
P.B. Srinivasan S. Pattabiraman
Partner Partner
M.No.: 203774 M.No:. 014309
Place : Chennai
Date : 26.05.2016

Annexure-II to Independent Auditors’ Report

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 M/s.NEYVELI LIGNITE CORPORATION LIMITED ("the Company") as of March 31 2016 inconjunction with our audit of the standalone financial statements of the Company for theyear ended 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding 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 Companies Act 2013.

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 ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

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 controlssystem over 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 authorisations 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 controlsover 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 Institute of CharteredAccountants of India.

Other Matter

We did not audit the Internal Financial Control over Financial Reporting of ONE (1)branch included in the standalone financial statements of the company. The adequacy ofinternal financial controls system over financial reporting and the operatingeffectiveness of such internal financial controls over financial reporting conducted bythe branch auditor whose report has been furnished to us and our opinion in so far as itrelates to the amounts and disclosures included in respect of this branch is based solelyon the report of such branch auditor. Our opinion is not modified in respect of thismatter.

For M/s. P.B. VIJAYARAGHAVAN & CO. For M/s. CHANDRAN & RAMAN
Chartered Accountants Chartered Accountants
Firm Regn. No. 004721S Firm Regn No. 000571S
P.B. Srinivasan S. Pattabiraman
Partner Partner
M.No.: 203774 M.No.: 014309
Place : Chennai
Date : 26.05.2016

Annexure-III to Independent Auditors’ Report

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

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

Period during which land was acquired Statute under which the land was acquired Mode of acquisition Nature of ownership
From incorporation to 1977 The Land Acquisition Act 1894 Assignment Deeds Conditional Ownership
1978 to 1996 The Land Acquisition Act 1894 Government Notifications Absolute owner of the land
1997 to 2001 The Tamil Nadu Acquisition of Land for Industrial Purposes Act 1997 Government Notifications Conditional Ownership
2001 to 31.03.2016 The Tamil Nadu Acquisition of Land for Industrial Purposes Act 1997 Government Notifications Absolute owner of the land

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

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

For M/s. P.B. VIJAYARAGHAVAN & CO. For M/s. CHANDRAN & RAMAN
Chartered Accountants Chartered Accountants
Firm Regn. No. 004721S Firm Regn No. 000571S
P.B. Srinivasan S. Pattabiraman
Partner Partner
M.No.: 203774 M.No.: 014309
Place : Chennai
Date : 26.05.2016