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Rural Electrification Corporation Ltd.

BSE: 532955 Sector: Financials
NSE: RECLTD ISIN Code: INE020B01018
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VOLUME 2153875
52-Week high 223.80
52-Week low 112.33
P/E 5.45
Mkt Cap.(Rs cr) 33,406
Buy Price 169.15
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Sell Price 0.00
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OPEN 164.65
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VOLUME 2153875
52-Week high 223.80
52-Week low 112.33
P/E 5.45
Mkt Cap.(Rs cr) 33,406
Buy Price 169.15
Buy Qty 41.00
Sell Price 0.00
Sell Qty 0.00

Rural Electrification Corporation Ltd. (RECLTD) - Auditors Report

Company auditors report

To

The Members

Rural Electrification Corporation Limited

New Delhi

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of RuralElectrification Corporation Limited ("the Company") which comprise the BalanceSheet as at 31st March 2016 the Statement of Profit and Loss the 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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 and MCA General Circular No. 15/2013 dated 13thSeptember 2013. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial 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.

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 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 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 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 circumstances. 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:

(a) In the case of Balance Sheet of the state of affairs of the Company as at 31stMarch 2016

(b) In the case of Statement of Profit & Loss of the profit for the year ended onthat date

(c) In the case of Cash Flow Statement of the cash flows for the year ended on thatdate.

Emphasis of Matter

We draw attention to the following matter in the notes to the financial statements:-

(a) Note No. 11.2.7 in respect of classification of one of the borrower account asstandard asset in view of ad-interim order of Hon'ble High Court of Madras.

Our opinion is not modified in respect of above matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure-A a statement on the matters specifiedin paragraphs 3 and 4 of the Order.

2. We are enclosing our report in terms of Section 143 (5) of the Act on the basis ofsuch checks of the books and records of the Company as we have considered appropriate andaccording to the information and explanations given to us in Annexure B on the directionsand sub-directions issued by Comptroller and Auditor General of India.

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 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 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 aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 and MCA General Circular No. 15/2013 dated 13thSeptember 2013.

(e) Vide Notification No. G.S.R. 463(E) dated 5th June 2015 issued byMinistry of Corporate Affairs Government Companies have been exempted from applicabilityof the provisions of Section 164(2) of the Companies Act 2013.

(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-C"; and

(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) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 24.1 to the financial statements;

(ii) The Company does not have any such long-term contracts including derivativecontracts for which there are 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.

For Raj Har Gopal & Co. For A.R. & Co.
Chartered Accountants Chartered Accountants
Firm Regn. No. 002074N Firm Regn. No. 002744C
Gopal Krishan Pawan K Goel
Partner Partner
M. No. 081085 M. No. 072209
Place : New Delhi
Date : 27th May 2016

ANNEXURE-A TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 1 under 'Report on Other Legal and Regulatory Requirements'Section of Our Report of Even Date on the Accounts of Rural Electrification CorporationLimited for the Year ended on 31st March 2016

(I) (a) The Company has maintained fixed assets records to show full particularsincluding quantitative details and situation of its fixed assets.

(b) According to the information and explanations given to us the company has thepolicy of verifying the fixed assets in a phased manner but the physical verification ofIT assets has not been completed during the year. Discrepancies arising from such physicalverification have been suitably accounted for in the books of accounts. In our opinionthe periodicity of physical verification is reasonable having regard to the size of thecompany and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except for the following:

(Rs. in Crores)
Particulars No. of cases Gross Block Net Block Remarks
Freehold Land 1 45.92 45.92 Conveyance Deed by Haryana Urban Development Authority is yet to be executed.
Building 1 4.59 2.39 Conveyance Deed by Standing Committee of Public Enterprises is yet to be executed.

(II) The company being Non Banking Financial Company (NBFC) does not have anyinventory; as such this clause is not applicable.

(III) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to any Companies firms or other parties coveredin register maintained under section 189 of the Companies Act 2013. Accordingly clause3(iii) (a) (b) and (c) of the Order are not applicable.

(IV) In our opinion and according to information & explanations given to us theCompany being NBFC is exempt from the provisions of Section 185 and 186 of the Act andthe relevant rules in respect of loans and guarantees. Further in respect of theinvestments the Company has complied with the provisions of section 185 and 186 of theAct.

(V) According to the information and explanations given to us the Company has notaccepted any deposits from public to which the provisions of Sections 73 to 76 or anyother relevant provisions of the Companies Act 2013 and the Rules framed thereunderapply.

(VI) To the best of our knowledge and as explained the Central Government has notprescribed the maintenance of cost records for the products/services of the Company underCompanies (Cost Records and Audit) Rules 2014 read with Companies (Cost Records andAudit) Amendment Rules 2014 prescribed by the Central Government under Section 148 of theCompanies Act 2013. Accordingly this clause of the order is not applicable to theCompany.

(VII) (a) The Company is generally regular in depositing undisputed statutory duesincluding Provident Fund employees' State Insurance Income-tax Sales-tax Service Taxduty of customs duty of excise value added tax cess and any other statutory dues to theappropriate authorities. There were no undisputed statutory dues in arrears as at 31stMarch 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 the disputed statutorydues aggregating to Rs. 0.96 crores have not been deposited on account of matters pendingbefore appropriate authorities as detailed below:

(Rs. in Crores)
Name of Statute Nature of Dues Amount Disputed Amount paid/ refund adjusted Net Amount Unpaid Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax and Interest 22.35 22.35 - AY 2005-06 AY 2006-07 AY 2008-09 to AY 2011-12 Income Tax Appellate Tribunal Delhi
Income Tax Act 1961 Income Tax and Interest 12.08 12.08 - AY 2012-13 AY 2013-14 Commissioner of Income Tax (Appeals) Delhi
Income Tax Act 1961 Fringe Benefit Tax 0.48 - 0.48 AY 2008-09 Commissioner of Income Tax (Appeals) Delhi
Income Tax Act 1961 Tax Deducted at Source 0.12 - 0.12 FY 2007-08 to FY 2015-16 CPC TDS
Chapter V of Finance Act 1994 Service Tax Penal Interest u/s 73(4A) 0.36

-

0.36 FY 2008-09 to 2011-12 Commissioner of Service Tax (LTU) Delhi
Total 35.39 34.43 0.96

(VIII) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the company has not defaulted in repaymentof loans or borrowing to a financial institution bank government or dues to debentureholders as at the Balance Sheet date.

(IX) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has utilized the money raised byway of public offer of debt instruments during the year for the purposes for which theywere raised. Further no moneys were raised during the year through further public offeror term loans.

(X) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company no fraud by the company or any fraud on thecompany by its officers or employees has been noticed or reported during the year.

(XI) According to the information and explanations given to us Central Government hasexempted the Government Companies from the provisions of Section 197. Accordingly thisclause of the Order is not applicable to the Company.

(XII) According to the information and explanations given to us the Company is not aNidhi Company. Accordingly this clause of the Order is not applicable to the Company.

(XIII) According to the information and explanations given to us and on the basis ofour examination of the records of the Company transactions with the related parties arein compliance with section 177 and 188 of the Act where applicable and the necessarydisclosures have been made in the financial statements etc. as required by the applicableaccounting standards.

(XIV) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(XV) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly this clause of theOrder is not applicable.

(XVI) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company being a NBFC is required to beregistered under Section 45-IA of the Reserve Bank of India Act 1934. The registration asrequired has been duly obtained and registration number issued to the Company is14.000011.

For Raj Har Gopal & Co. For A.R. & Co.
Chartered Accountants Chartered Accountants
Firm Regn. No. 002074N Firm Regn. No. 002744C
Gopal Krishan Pawan K Goel
Partner Partner
M. No. 081085 M. No. 072209
Place : New Delhi
Date : 27th May 2016

ANNEXURE-B TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 2 under 'Report on Other Legal and Regulatory Requirements'Section of Our Report of Even Date on the Accounts of Rural Electrification CorporationLimited for the Year ended on 31st March 2016

Directions/Sub-Directions Action Taken Impact on Financial Statements
A. Directions
1. Whether the company has clear title/ lease deeds for freehold and leasehold land respectivelyRs. If not please state the area of freehold and leasehold land for which title/ lease deeds are not available. The company has clear title/ lease deeds for freehold and leasehold land respectively. However the formalities regarding registration of conveyance deed in respect of one freehold residential plot of land allotted to the Company amounting to : 45.92 Crores and measuring 39770 Sq. Mtrs. and one Land & Building amounting to Rs. 4.59 Crores and measuring 5911.69 Sq. Mtrs. are yet to be executed. The impact has already been mentioned in the 'Action Taken' column which is not material.
2. Whether there are any cases of waiver/ write off of debts/ loans/ interest etc. If yes the reasons therefore and amount involved. Delayed interest/ penal interest amounting to Rs. 11.50 Crores has been waived off after the approval of the competent authority including Rs. 11.42 Crores waived in pursuance of Ujwal DISCOM Assurance Yojana (UDAY) launched by Ministry of Power (MoP). Further no prepayment charge has been levied on the DISCOM debt so prepaid under the said scheme. The impact has already been mentioned in the 'Action Taken' column which is not material.
Further considering the practical problems being faced by the borrowers in submission and adherence to the drawl schedule the Company has revised the loan policy by waiving off the clause for requirement of Commitment Charges/ upfront fees for all ongoing as well as future projects of State Sector Generation and T&D projects including waiver of outstanding commitment charges of Rs. 8.83 Crores.
An amount of Rs. 2.30 Crores incurred in respect of Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) scheme without appropriate sanction of Ministry of Power and booked as recoverable in the books of accounts has also been written off with the approval of the Competent Authority in view of the amount pending outstanding since long period.
3. Whether proper records are maintained for inventories lying with third parties and assets received as gift/ grant(s) from the Government or other authorities. The Company being an NBFC the clause with respect to inventories lying with third parties and assets received as gifts from Govt. and other authorities is not applicable. NIL
B. Sub-Directions
1. In respect of provisioning requirements of all restructured rescheduled or renegotiated loan whether a system of periodical assessment of realizable value of securities available against all such loans is in place and adequate provision has been created during the yearRs. The company is following a system of periodical assessment of realizable value of securities available against all restructured rescheduled or renegotiated loan based upon management assessment and review/progress report of lenders engineers lenders financial advisor and project monitoring group. In our opinion the system of company needs improvement to be commensurate with the size and nature of its business. However adequate provision as per significant accounting policies of the company has been created during the year on all such loans. NIL

 

For Raj Har Gopal & Co. For A.R. & Co.
Chartered Accountants Chartered Accountants
Firm Regn. No. 002074N Firm Regn. No. 002744C
Gopal Krishan Pawan K Goel
Partner Partner
M. No. 081085 M. No. 072209
Place : New Delhi
Date : 27th May 2016

ANNEXURE-C TO THE INDEPENDENT AUDITOR'S REPORT

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

We have audited the internal financial controls over financial reporting of the Companyas of 31st March 2016 in conjunction with our audit of the standalonefinancial 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 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 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 judgment 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 aspects an adequate internalfinancial controls system except improvement in ERP system relating to classification ofloans & advances as secured or unsecured determination of non-performing assets inthe ERP system shift in the moratorium period due to structuring/restructuringrevalidation of the sanctions of loans and recording ofnon-entertaining/rejection/disposal of applications of the loans and time frame forfurnishing replies of Internal audit reports by concerned offices over financialreporting and such internal financial controls over financial reporting were operatingeffectively as of March 31 2016 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India.

We have considered the areas of improvement identified which needs furtherstrengthening as reported above in determining the nature timing and extent of audittests applied in our audit of the March 31 2016 standalone financial statements of theCompany. However these areas of improvement do not affect our opinion on the standalonefinancial statements of the Company.

For Raj Har Gopal & Co. For A.R. & Co.
Chartered Accountants Chartered Accountants
Firm Regn. No. 002074N Firm Regn. No. 002744C
Gopal Krishan Pawan K Goel
Partner Partner
M. No. 081085 M. No. 072209
Place : New Delhi
Date : 27th May 2016

NON-BANKING FINANCIAL COMPANIES AUDITORS' REPORT FOR THE YEAR ENDED 31stMARCH 2016

The Board of Directors

Rural Electrification Corporation Limited

Core-4 SCOPE Complex

7 Lodhi Road New Delhi - 110003

As required by the Non-Banking Financial Companies Auditor's Report (Reserve Bank)Directions 2008 issued by Reserve Bank of India (RBI) on the matters specified in Para 3and 4 of the said Directions to the extent applicable to the Rural ElectrificationCorporation Limited (REC) and according to the information and explanations given to usfor the purpose of audit we report that:

1. The Company had applied for registration as provided in section 45-IA of the ReserveBank of India Act 1934 (2 of 1934) and has been granted certificate of registration byReserve Bank of India on 10th February 1998 having Registration No. 14.000011.RBI issued Certificate dated 17th September 2010 in lieu of earliercertificate having categorized REC as an Infrastructure Finance Company in terms ofinstructions contained in RBI Circular CC No. 168 dated 12th February 2010.Further that company is entitled to continue to hold such registration in terms of itsasset/income pattern as on 31st March 2016.

2. As per Para 2 (v) of RBI Circular No. DNBR (PD) CC.No.052/03.10.119/2015-16 dated 1stJuly 2015 Sections 45-IB and 45-IC of the Reserve Bank of India Act 1934 on Maintenanceof Percentage of Assets and Reserve Fund; paragraphs 4 to 7 of the Non-Banking FinancialCompanies Acceptance of Public Deposits (Reserve Bank) Directions 1998 and Non-BankingFinancial Companies Prudential Norms (Reserve Bank) Directions 1998 (since repealed byPrudential Norms Directions Notification No 192 dated February 22 2007) except paragraph13A of the said directions relating to submission of information to Reserve Bank in regardto change of address directors auditors etc. shall not apply to any non-bankingfinancial company as defined in Section 45-I(f) of the Reserve Bank of India Act 1934 (2of 1934) being a Government Company as defined in Section 617 of the Companies Act 1956.

3. According to the information and explanations given to us the RBI Directions as todeposits are not applicable to the Company. Therefore the Board of Directors of theCompany has not passed a resolution for non acceptance of any public deposits.

4. The Company has not accepted any public deposits during the year 2015-16.

5. As per RBI's Master Circular dated 1st July 2015 REC being aGovernment Company continues to be exempt from the applicability of "SystemicallyImportant Non-Banking Financial (Non-Deposit Accepting or Holding) Companies PrudentialNorms (Reserve Bank) Directions 2015". Further RBI vide letters dated 25thJuly 2013 and 4th April 2014 has conveyed to REC to comply with theprudential norms of RBI by 31st March 2016. Regarding restructuring of assetsRBI vide its letter dated 11th June 2014 has allowed exemption to the Companyfrom RBI restructuring norms till 31st March 2017 for Transmission &Distribution Renovation & Modernisation and Life Extension projects and also theHydro projects in Himalayan region or affected by natural disasters. Further for newproject loans to generating companies restructured w.e.f 01st April 2015 theprovisioning requirement would be 5% and for stock of loans as on 31st March2015 of such projects the provisioning shall commence with a provision of 2.75% w.e.f 31stMarch 2015 and reaching 5% by 31st March 2018. Further RBI vide letter dated 5thOctober 2015 has permitted that the existing loans of the company i.e. loans sanctionedon or before March 31 2015 are permitted to be regulated under the REC's existing assetclassification norms (180 days) till March 31 2017.

For the financial year ended 31st March 2016 the Company has complied withthe prudential norms relating to income recognition accounting standards assetclassification and provisioning for bad and doubtful debts as applicable to it in terms of"Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding)Companies Prudential Norms (Reserve Bank) Directions 2015" subject to theexemptions granted to the Company as above.

6. In terms of RBI Circular No. DNBS.PD/ CC.No. 93/03.05.002 /2006-07 dated 27thApril 2007 REC being a Government Company is exempt from submitting NBS-7 to theReserve Bank of India. Being an Infrastructure Finance Company (IFC) the Company isrequired to maintain a Capital to Risk Weighted Assets Ratio (CRAR) of 15% (with a minimumTier I Capital of 10%). According to the information and explanation given to us theCompany is in compliance with the minimum CRAR prescribed.

For Raj Har Gopal & Co. For A.R. & Co.
Chartered Accountants Chartered Accountants
Firm Regn. No. 002074N Firm Regn. No. 002744C
Gopal Krishan Pawan K Goel
Partner Partner
M. No. 081085 M. No. 072209
Place : New Delhi
Date : 27th May 2016

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THECOMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF RURAL ELECTRIFICATION CORPORATIONLIMITED FOR THE YEAR ENDED 31 MARCH 2016

The preparation of financial statements of Rural Electrification Corporation Limitedfor the year ended 31 March 2016 in accordance with the financial reporting frameworkprescribed under the Companies Act 2013 (Act) is the responsibility of the Management ofthe Company. The Statutory Auditors appointed by the Comptroller and Auditor General ofIndia under Section 139(5) of the Act are responsible for expressing opinion on thefinancial statements under Section 143 of the Act based on independent audit in accordancewith the Standards on Auditing prescribed under section 143(10) of the Act. This is statedto have been done by them vide their Audit Report dated 27 May 2016.

I on behalf of the Comptroller and Auditor General of India have conducted asupplementary audit under Section 143(6)(a) of the Act of the financial statements ofRural Electrification Corporation Limited for the year ended 31 March 2016. Thissupplementary audit has been carried out independently without access to the workingpapers of the Statutory Auditors and is limited primarily to inquiries of the StatutoryAuditors and Company personnel and a selective examination of some of the accountingrecords. On the basis of my audit nothing significant has come to my knowledge which wouldgive rise to any comment upon or supplement to Statutory Auditors' report.

For and on the behalf of the
Comptroller & Auditor General of India
(Ritika Bhatia)
Principal Director of Commercial Audit & Ex-officio Member Audit Board-III New Delhi
Place : New Delhi
Dated: 22 July 2016