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Power Finance Corporation Ltd.

BSE: 532810 Sector: Financials
NSE: PFC ISIN Code: INE134E01011
BSE 14:07 | 05 Dec 138.45 -0.85
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NSE 13:59 | 05 Dec 138.50 -0.80
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OPEN 139.50
PREVIOUS CLOSE 139.30
VOLUME 233172
52-Week high 140.85
52-Week low 97.15
P/E 3.62
Mkt Cap.(Rs cr) 36,552
Buy Price 138.45
Buy Qty 45.00
Sell Price 138.55
Sell Qty 383.00
OPEN 139.50
CLOSE 139.30
VOLUME 233172
52-Week high 140.85
52-Week low 97.15
P/E 3.62
Mkt Cap.(Rs cr) 36,552
Buy Price 138.45
Buy Qty 45.00
Sell Price 138.55
Sell Qty 383.00

Power Finance Corporation Ltd. (PFC) - Auditors Report

Company auditors report

TO THE MEMBERS OF POWER FINANCE CORPORATION LIMITED

REPORT ON THE AUDIT OF THE STANDALONE

FINANCIAL STATEMENTS

1. OPINION

We have audited the accompanying Standalone Financial Statements ofPower Finance Corporation Limited ('the Company') which comprise the Balance Sheet as atMarch 31 2022 the Statement of Profit and Loss (including Other Comprehensive Income)Statement of Changes in Equity and the Statement of Cash Flows for the year then ended andNotes to the Standalone Financial Statements including a summary of SignificantAccounting Policies and other explanatory information (hereinafter referred to as"the Standalone Financial Statements").

I n our opinion and to the best of our information and according to theexplanations given to us the aforesaid Standalone Financial Statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2022and its profit (including other comprehensive income) changes in equity and its cashflows for the year ended on that date.

2. 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 thoseStandards are further described in the Auditor's Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia ("ICAI") together with the ethical requirements that are relevant to ouraudit of the Standalone Financial Statements under the provisions of the Act and the Rulesmade thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the ICAI's Code of Ethics.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the Standalone Financial Statements.

3. EMPHASIS OF MATTER

(i) We draw attention to Note 40.1.2 (iii) of the Standalone FinancialStatements regarding the provision of impairment allowance in respect of loan assetsundisbursed letter of comfort and guarantee. The Company has recognised expected creditloss in respect of loan assets undisbursed letter of comfort and guarantee as requiredunder Ind AS 109 on the basis of documents provided by independent expert agencyappointed by the Company. Since the calculation parameters require certain technical andprofessional expertise we have relied upon the basis of determination of impairmentallowance in so far as it relates to technical aspects/parameters considered by the saidindependent expert agency and management's judgement on the same.

(ii) We draw attention to Note 58 of the Standalone FinancialStatements regarding the impact of COVID-19 pandemic on the Company. Management is of theview that there are no reasons to believe that the pandemic will have any significantimpact on the ability of the Company to continue as a going concern. Nevertheless theimpact in sight of evolvement of pandemic in future period is uncertain and could impactthe impairment allowance in future years.

Our opinion is not modified in respect of these matters.

4. KEY AUDIT MATTERS

Key audit matters ("KAM") are those matters that in ourprofessional judgement were of most significance in our audit of these StandaloneFinancial Statements of the current period. These matters were addressed in the context ofour audit of the Standalone Financial Statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. We have determined thematters described below to be the key audit matters to be communicated in our report:

No Key Audit Matter Auditors' Response
(i) Credit impairment of financial instruments - Loan Assets Our audit procedures included:
The Company follows a Board approved methodology wherein assessment for allowance is carried out by an external agency for impairment based on certain guidelines and procedures in respect of criterion/framework classifying the assets into various stages depending upon credit risk and level of evidence of impairment. • Company has availed services of independent expert to estimate the carrying value of the loan assets. We verified the criterion/ framework with various regulatory updates along with Company's internal guidelines and procedures in respect of the impairment allowance as well as the completeness and accuracy of the data shared with the independent experts.
• Recoveries are verified applying the standard audit procedures.
Impairment loss measurement requires use of statistical models to estimate the Probabilities of Default (PD) Loss Loan balances are confirmed and quality of the borrower is evaluated and tested with key control parameters.
Given Default (LGD) and Exposure at Default (EAD). These models are key driver to measure Impairment loss. • We have reviewed the underlying assumptions and broad methodology of ECL assessment and shared our inputs.
The key indicators underlying for assessment of impairment allowance are appraised on the ongoing basis by the management.
The most significant areas where we identified greater levels of management Judgement are: • Components and calculations in the study for impairment allowance carried out by the third party are test checked discussed with management and relied upon by us. Our audit procedure in the same is limited in view of not sharing certain parameters of study being considered confidential by such third party.
Significant Increase in Credit Risk (SICR) - Company has classified SICR based on the indicator defined in Ind AS estimate the Probabilities of Default (PD) Loss Given Default (LGD) and Individually assessed Stage 3 carrying value. The carrying value of loans and advances to borrowers may be materially misstated if individual impairments are not appropriately estimated based upon certain estimates future cash flow and asset valuations. We considered the credit impairment charge and provision recognised and the related disclosures to be acceptable & satisfactory.
The effect of these matters is that as part of our risk assessment we determined that the value of ECL has a high degree of estimation & uncertainty. In view of the significance of the amount of loan assets in the Standalone Financial Statements i.e. 94.61% of total assets impairment of loan assets there on has been considered as Key Audit Matter in our audit.
(ii) Fair Valuation of Derivative financial instruments Our audit procedures included:
Company enters into derivative contracts in accordance with RBI guidelines to mitigate its currency and interest rate risk in accordance with Company's board approved currency risk management policy. Discussing and understanding management's perception and studying policy of the Company for risk management. Verification of fair value of derivative in term of Ind AS 109. Evaluation of key internal control over classification of derivative instruments.
Derivative contracts are either categorised at Fair Value through P&L (FVTPL) or under cash flow hedge (Hedge Accounting). Mark to market gain/loss on derivatives categorised at FVTPL is recognised in P&L and that of Hedge Accounting is recognised in the other comprehensive income.
We consider the valuation of the derivative financial instruments and hedge accounting as a key audit matter due to material exposure and the fact that the inappropriate application of these requirements/ assumptions/ estimate by contracting bank could lead to a material effect on the income statement. Company obtains fair value of derivative from the counterparty banks. Our procedure includes evaluation of details of various financial derivative contracts outstanding as on March 31 2022 and fair value thereon. Additionally we verified the accounting of gain or loss on mark to market basis of derivative contracts in profit & loss account and other comprehensive income in case of derivatives contracts under cash flow hedge.
We did not find any material misstatement in measuring derivative contracts at fair value obtained from counterparty banks.

5. OTHER MATTERS

The Standalone financial information of the Company for the year endedMarch 31 2021 included in the Standalone Financial Statements were audited by jointstatutory auditors of the Company one of whom was predecessor audit firm and they hadexpressed an unmodified opinion on Standalone Financial Statements vide their report datedJune 15 2021.

6. INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS ANDAUDITOR'S REPORT THEREON

The Company's Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in theDirector's Report including Annexures to Director's Report Management Discussion andAnalysis Business Responsibility Report and Report on Corporate Governance but does notinclude the Standalone Financial Statements and our auditors' report thereon. Theabove-referred information is expected to be made available to us after the date of thisAuditor's report.

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

I n connection with our audit of the Standalone Financial Statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the Standalone Financial Statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

When we read the other information if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance and take appropriate actions if required.

7. RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FORTHE STANDALONE FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these Standalone FinancialStatements that give a true and fair view of the financial position financial performance(including comprehensive income) changes in equity and cash flows of the Company inaccordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgements and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting

records relevant to the preparation and presentation of the StandaloneFinancial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

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

The Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.

8. AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIALSTATEMENTS

Our objectives are to obtain reasonable assurance about whether theStandalone Financial Statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Financial Statements.

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

• Identify and assess the risks of material misstatement of theStandalone Financial Statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)

(i) of the Companies Act 2013 we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the Standalone Financial Statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of theStandalone Financial Statements including the disclosures and whether the StandaloneFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatement in the StandaloneFinancial Statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonable knowledgeable user of the Financial Statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) Planningthe scope of our audit work and in evaluating the results of our work: and (ii) toevaluate the effect of any identified misstatements in the Financial Statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the FinancialStatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

9. 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 Companies Act 2013 and on the basis of such examination of thebooks and records of the Company as we considered appropriate and according to informationand explanation given to us we give in "Annexure-A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

II. The Comptroller and Auditor General of India has issued thedirections indicating the areas to be examined in term of sub-section 5 of Section 143 ofthe Act the compliance of which is set out in "Annexure B".

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

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

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

(c) The Standalone Balance Sheet the Standalone Statement of Profitand Loss (including Other Comprehensive Income) the Standalone Statement of Changes inEquity and Standalone Statement of Cash flows dealt with by this Report are in agreementwith the books of account;

(d) In our opinion and to the best of our information and explanationgiven to us the aforesaid Standalone Financial Statements comply with the Ind ASspecified under Section 133 of the Act read with relevant rules;

(e) As per notification number G.S.R. 463(E) dated June 5 2015 issuedby Ministry of Corporate Affairs Section 164(2) of the Act regarding thedisqualifications of Directors is not applicable to the Company since it is a GovernmentCompany;

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure C";

(g) As per notification number G.S.R. 463 (E) dated June 5 2015 issuedby Ministry of Corporate Affairs Section 197 of the Act regarding remuneration toDirector is not applicable to the Company since it is a Government Company; and

(h) 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 (asamended) in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Standalone Financial Statements

- Refer Note 46 to the Standalone Financial Statements;

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.

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

iv. (a) The Management has represented (refer Note 10.4 ) that to thebest of its knowledge and belief no funds (which are material either individually or inthe aggregate) have been advanced or loaned or invested (either from borrowed funds orshare premium or any other sources or kind of funds) by the Company to or in any otherperson(s) or entity(ies) including foreign entities ("Intermediaries") withthe understanding whether recorded in writing or otherwise that the Intermediary shalldirectly or indirectly lend or invest in other persons or entities identified in anymanner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") orprovide any guarantee security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented that (refer Note 10.4) to the bestof its knowledge and belief no funds (which are material either individually or in theaggregate) have been received by the Company from any person(s) or entity(ies) includingforeign entities ("Funding Parties") with the understanding whether recordedin writing or otherwise that the Company shall directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf of the Ultimate Beneficiaries.

(c) Based on audit procedures that we have considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause (i) and (ii) of Rule 11(e) as providedunder (a) and (b) above contain any material mis-statement.

. As stated in Note 24.2(iii) to the Standalone

Financial Statements:

(a) The final dividend proposed for the previous year declared andpaid by the Company during the year declared is in compliance with Section 123 of theCompanies Act 2013 as applicable.

(b) The interim dividend declared and paid by the Company during theyear and until the date of this report is in compliance with Section 123 of the CompaniesAct 2013.

(c) The Board of Directors of the Company have proposed final dividendfor the year which is subject to the approval of the members at the ensuing Annual GeneralMeeting. The amount of dividend proposed is in accordance with Section 123 of the Act asapplicable.

FOR DASS GUPTA & ASSOCIATES FOR PREM GUPTA & COMPANY
Chartered Accountants Chartered Accountants
Firm's Registration No. 000112N Firm's Registration No. 000425N
Sd/- Sd/-
CA NARESH KUMAR CA PREM BEHARI GUPTA
Partner Partner
Membership No. 082069 Membership No. 080245
UDIN: 22082069AJOPOK5877 UDIN: 22080245AJOPGU1470
Place: New Delhi
Dated: May 25 2022

Annexure A

to Independent Auditors' Report on the Audit of the StandaloneFinancial Statements

(Referred to in Para I under the heading 'Report on other Legal andRegulatory Requirements' of our report of even date to The Members of Power FinanceCorporation Limited on the Standalone Financial Statements for the year ended March 312022)

To the best of our information and according to the explanationsprovided to us by the Company and the books of account and records examined by us in thenormal course of audit we state that:

(i) In respect of the Company's Property Plant and Equipment andIntangible Assets:

(a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant and Equipmentand relevant details of right-of- use assets.

(B) The Company has maintained proper records showing full particularsof intangible assets.

(b) Based on the information and explanation given to us the Company'smanagement carries out the physical verification of Property Plant and Equipment once ina year. In our opinion the frequency of physical verification is reasonable having regardto the size of the Company and nature of its assets. As explained to us no materialdiscrepancies were noticed by the management on such physical verification.

(c) Based on our examination of the records of the Company we reportthat the title deeds comprising all immovable properties of land and buildings which arefree hold are held in the name of the Company as at the balance sheet date. Further inrespect of immovable properties of land and building that have been taken on lease thelease agreements are in the name of the Company.

(d) The Company has not revalued any of its Property Plant andEquipment (including Right of Use assets) and intangible assets during the year.

(e) As informed to us no proceedings have been initiated or arepending against the Company as at the date of Balance Sheet for holding any benamiproperty under the Benami Transactions (Prohibition) Act 1988 (as amended in 2016) andrules made thereunder.

(ii) (a) The Company is a Non-Banking Financial Company and does nothave any inventory. Thus clause 3(ii)(a) of the Companies (Auditor's Report) Order 2020is not applicable.

(b) The Company has been sanctioned working capital limits in excess offive crore rupees during the year in aggregate from banks or financial institutionswhich are unsecured or on the basis of security of current assets in the form of lien overterm deposits which do not require any filing of quarterly returns or statements with thebanks by the Company.

(iii) During the year the Company has made investments in providedguarantees and granted loans/advances in the nature of loans secured/ unsecured tocompanies firms limited liability partnerships and other parties. In this regard wereport hereunder:

(a) The Company is a registered NBFC with Reserve Bank of India withprincipal business of giving loans hence clause 3(iii)(a) of the Order is not applicable

(b) In our opinion the investments made guarantees provided if anyand the terms and conditions of the grant of all loans and advances in the nature ofloans during the year are prims facie not prejudicial to the Company's interest.

(c) Being a registered Non-Banking Financial Company (NBFC) theCompany grants its loans on stipulated terms and conditions for repayment of principal andinterest. In respect of Loan assets except credit impaired assets the repayments ofprincipal amounts and receipts of interest are generally regular as per stipulation.

(d) In respect of loans and advances in the nature of loans the totalamount overdue for more than ninety days are as under. The Company takes steps forrecovery of the principal and interest as per its defined procedures which in our opinionare reasonable.

No. of borrowers Principal amount overdue (Rs in crore) Interest overdue* (Rs in crore) Total overdue (Rs in crore)
26 13183.17 10824.87 24008.04

* The same has not been recognised as income as a matter of prudence asper practices of the Company.

(e) Reporting under clause 3(iii)(e) of the Order is not applicablesince the principal business of the Company is to give loans.

(f) To the best of our knowledge and according to information andexplanation given to us the Company has not granted any loans or advances in the natureof loans either repayable on demand or without specifying any terms or period ofrepayment. Hence reporting under clause 3(iii)(f) is not applicable.

(iv) In our opinion and according to information and explanation givento us the Company has not given any loan or given any guarantee or provided any securityin contravention of Section 185 of the Companies Act 2013 to the extent applicable to theCompany.

Further in our opinion and according to information and explanationgiven to us the Company being a Non-Banking Financial Company (NBFC) the Company isexempt from Section 186 of the Companies Act 2013 and relevant rules in respect of loans& guarantees. In respect of investments the Company has complied with the provisionsof Section 186(1) of the Companies Act 2013.

(v) According to information and explanations given to us the Companyhas not accepted any deposit from public

to which directives issued by Reserve Bank of India and the provisionsof Sections 73 to 76 or any other relevant provisions of Companies Act 2013 and rulesmade thereunder are applicable.

(vi) The Central Government has not prescribed the maintenance of costrecords under sub-section (1) of Section 148 of the Companies Act for any of the servicesrendered by the Company. Accordingly clause 3(vi) of the Companies (Auditor's Report)Order 2020 is not applicable to the Company.

(vii) In respect of statutory dues on the basis of information andexplanations given to us and on the basis of our examination of the records of theCompany we report that:

(a) The Company is regular in depositing with appropriate Authoritiesundisputed statutory dues including Goods and Services Tax Provident Fund Employees'State Insurance Income Tax Service Tax and other statutory dues as applicable to it andthere is no undisputed amount payable in respect of aforesaid dues outstanding for aperiod of more than six months from the date they become payable as on March 31 2022 asper the accounts of the Company.

(b) According to the information and explanations given to us and ascertified by the management on which we have relied upon the disputed statutory duesaggregating to Rs 109.84 crore have not been deposited on account of disputes/ depositedunder protest and the matters are pending before appropriate authorities as detailedbelow:

Name of the Statute Nature of the Dues Total Disputed Amount (Rs in crore) Amount paid under protest (Rs in crore) Pending Amount (Rs in crore) Period to which the amount relates Forum where dispute is pending
Chapter V of Finance Act 1994

Service Tax and Penalty

0.87 0.06 0.81 April 2011 to December 2015 CESTAT Delhi
0.17 - 0.17 January 2016 to November 2016 Commissioner CE & ST LTU New Delhi
0.14 - 0.14 December 2016 to June 2017 Pr. Commissioner CE & ST LTU New Delhi
Income Tax Act 1961 Income Tax 71.91 71.91 - AY 2016-17
20.30 20.30 - AY 2018-19 CIT (Appeals) Delhi
16.45 16.45 - AY 2020-21

(viii) As per information and explanation given to us there were notransactions relating to previously unrecorded income that have been surrendered ordisclosed as income during the year in the tax assessments under the Income Tax Act 1961(43 of 1961).

(ix) (a) According to information and explanations given to us theCompany has not defaulted in repayment of loans or other borrowing or on the payment ofinterest thereon to any lender.

(b) According to the information and explanations given to us theCompany has not been declared wilful defaulter by any bank or financial institution orgovernment or any government authority.

(c) As per the information and explanations given to us the term loanswere applied for the purpose for which the loans were obtained.

(d) According to the information and explanations given to us and theprocedures performed by us no funds raised on short-term basis have been used forlong-term purposes by the Company other than temporary usage pending receipts fromlongterm sources.

(e) According to the information and explanations given to us and on anoverall examination of the Financial Statements of the Company the Company has not takenany funds from any entity or person on account of or to meet the obligations of itssubsidiaries associates or joint ventures.

(f) According to the information and explanations given to us wereport that the Company has not raised loans during the year on the pledge of securitiesheld in its subsidiaries joint ventures or associate companies.

(x) (a) The Company has not raised money by way of initial public offeror further public offer (including debt instruments) during the year.

(b) According to information and explanations given to us and on thebasis of our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or convertible debentures during theyear.

(xi) (a) To the best of our knowledge and according to the informationand explanations given to us no fraud by the Company or any fraud on the Company has beennoticed or reported during the year.

(b) As informed to us no report under sub-section (12) of Section 143of the Companies Act has been filed by the auditors in Form ADT-4 as prescribed under rule13 of Companies (Audit and Auditors) Rules 2014 with the Central Government during theyear and up to the date of this report.

(c) We have been informed by the management that no whistle blowercomplaints have been received by the Company during the year.

(xii) According to information and explanation given to us the Companyis not a Nidhi Company. Hence the Nidhi Rules 2014 are not applicable to the Company.Accordingly clause 3(xii) of the Companies (Auditor's Report) Order 2020 is notapplicable to the Company.

(xiii) According to information and explanations given to us and on thebasis of our examination of the records of the Company all transactions with the relatedparties are in compliance with Sections 177 and 188 of the Companies Act 2013 whereapplicable. The details have been disclosed in the Financial Statements as per therequirement of the applicable accounting standards.

(xiv) (a) I n our opinion and based on our examination the Company hasan internal audit system commensurate with the size and nature of its business.

(b) We have considered the internal audit reports for the year underaudit issued to the Company during the year and till date in determining the naturetiming and extent of our audit procedures.

(xv) According to the information and explanations given to us in ouropinion during the year the Company has not entered into any non-cash transactions withits directors or persons connected with its directors and hence provisions of Section 192of the Companies Act 2013 are not applicable.

(xvi) (a) The Company is a Non-Banking Financial Company and hasobtained registration under Section 45-IA of the Reserve Bank of India Act 1934. Theregistration number issued to the Company is B-14.00004 dated 28-07-2010.

(b) According to the information and explanations given to us theCompany has not conducted any non-banking financial or housing finance activities withouta valid certificate of registration from the Reserve Bank of India as per Reserve Bank ofIndia Act 1934.

(c) According to the information and explanations given to us theCompany is not a core investment company (CIC) as defined in the regulations made by theReserve Bank of India hence reporting under clause 3 (xvi) (c) of the order is notapplicable.

(d) In our opinion there is no core investment company within theGroup (as defined in the Core Investment Companies (Reserve Bank) Directions 2016) andaccordingly reporting under clause 3 (xvi) (d) of the order is not applicable.

(xvii) On the basis of our examination of the records of the Companythe Company has not incurred any cash losses in the financial year and in the immediatelypreceding financial year.

(xviii) There has been no resignation of statutory auditors of theCompany during the year.

(xix) On the basis of the financial ratios ageing and expected datesof realisation of financial assets and payment of financial liabilities other informationaccompanying the Financial Statements our knowledge of the Board of Directors andmanagement plans and based on our examination of the evidence supporting the assumptionsnothing has come to our attention which causes us to believe that any materialuncertainty exists as on the date of the audit report that Company is not capable ofmeeting its liabilities existing at the date of balance sheet as and when they fall duewithin a period of one year from the balance sheet date. We further state that ourreporting is based on the facts up to the date of the audit report and

we neither give any guarantee nor any assurance that all liabilitiesfalling due within a period of one year from the balance sheet date will get dischargedby the Company as and when they fall due.

(xx) (a) There are no unspent amounts towards Corporate SocialResponsibility (CSR) on other than ongoing projects requiring a transfer to a Fundspecified in Schedule VII to the Companies Act in compliance with second proviso tosub-section (5) of Section 135 of the said Act. Accordingly reporting under clause3(xx)(a) of the Order is not applicable for the year.

(b) In respect of ongoing projects the Company has transferred unspentCorporate Social Responsibility (CSR) amount as at the Balance Sheet date to a specialaccount within a period of thirty days from the end of the financial year in compliancewith Section 135(6) of the Companies Act.

FOR DASS GUPTA & ASSOCIATES FOR PREM GUPTA & COMPANY
Chartered Accountants Chartered Accountants
Firm's Registration No. 000112N Firm's Registration No. 000425N
Sd/- Sd/-
CA NARESH KUMAR CA PREM BEHARI GUPTA
Partner Partner
Membership No. 082069 Membership No. 080245
UDIN: 22082069AJOPOK5877 UDIN: 22080245AJOPGU1470
Place: New Delhi
Dated: May 25 2022

Annexure B

to the Independent Auditors' Report on the Audit of the StandaloneFinancial Statements

(Referred to in Para II under the heading 'Report on other Legal andRegulatory Requirements' of our report of even date to The Members of Power FinanceCorporation Limited on the Standalone Financial Statements for the year ended March 312022)

As required under Section 143(5) of the Companies Act 2013 withrespect to the directions issued by The Comptroller & Auditor General of India wereport that:

Directions Replies
Whether the Company has system in place to process all the accounting transactions through IT systemRs 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. Yes the Company has system in place to process all the accounting transactions through IT system. Based on the verification carried out by us during the course of our audit and based on the information and explanations given to us we have not come across any instance having significant implications on the integrity of accounts.
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 loanRs If yes the financial impact may be stated. whether such cases are properly accounted forRs (In case lender is a Government Company then this direction is also applicable for statutory auditor of lender company) There is no such case and the Company is regular in servicing its debts and borrowing obligations.
Whether funds (grants/subsidy etc.) received/ receivable for specific schemes from Central/ State Government or its agencies were properly accounted for/ utilised as per its term and conditionsRs List the cases of deviation. GoI funds released by Ministry of Power to the Company for the projects sanctioned under various schemes have been properly accounted for and released onward to concerned beneficiary for implementation of Projects as per specified scheme guidelines and terms & conditions of the sanction.
FOR DASS GUPTA & ASSOCIATES FOR PREM GUPTA & COMPANY
Chartered Accountants Chartered Accountants
Firm's Registration No. 000112N Firm's Registration No. 000425N
Sd/- Sd/-
CA NARESH KUMAR CA PREM BEHARI GUPTA
Partner Partner
Membership No. 082069 Membership No. 080245
UDIN: 22082069AJOPOK5877 UDIN: 22080245AJOPGU1470
Place: New Delhi
Dated: May 25 2022

Annexure C

to the Independent Auditors' Report on the Audit of the StandaloneFinancial Statements

(Referred to in Para III(f) under the heading 'Report on other Legaland Regulatory Requirements' of our report of even date to The Members of Power FinanceCorporation Limited on the Standalone Financial Statements for the year ended March 312022)

Report on the Internal Financial Controls with reference to StandaloneFinancial Statements under Clause (i) of sub-section 3 of Section 143 of the CompaniesAct 2013 ("the Act")

We have audited the internal financial controls with reference to theStandalone financial statements of Power Finance Corporation Limited ("theCompany") as of March 31 2022 in conjunction with our audit of the StandaloneFinancial Statements of the Company for the year ended on that date.

1. MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors the accuracyand completeness of the accounting records and the timely preparation of reliablefinancial information as required under the Act.

2. AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to Standalone Financial Statements based on our audit.We conducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the "Guidance Note") and the Standards onAuditing issued by ICAI and deemed to be prescribed under sub-section 10 of Section 143of the Act to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting were established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe 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 Standalone Financial Statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.

3. MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Standalone Financial Statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol over financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of Standalone Financial Statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of theCompany are being made only in accordance with authorisations of the Management of theCompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assets thatcould have a material effect on the Standalone Financial Statements.

4. INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIALREPORTING

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

5. OPINION

In our opinion the Company has in all material respects an internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2022 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.

FOR DASS GUPTA & ASSOCIATES FOR PREM GUPTA & COMPANY
Chartered Accountants Chartered Accountants
Firm's Registration No. 000112N Firm's Registration No. 000425N
Sd/- Sd/-
CA NARESH KUMAR CA PREM BEHARI GUPTA
Partner Partner
Membership No. 082069 Membership No. 080245
UDIN: 22082069AJOPOK5877 UDIN: 22080245AJOPGU1470
Place: New Delhi
Dated: May 25 2022

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