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REC Ltd.

BSE: 532955 Sector: Financials
NSE: RECLTD ISIN Code: INE020B01018
BSE 00:00 | 17 May 136.05 0.65
(0.48%)
OPEN

136.90

HIGH

136.90

LOW

133.00

NSE 00:00 | 17 May 136.30 0.75
(0.55%)
OPEN

136.50

HIGH

136.70

LOW

132.90

OPEN 136.90
PREVIOUS CLOSE 135.40
VOLUME 173418
52-Week high 159.30
52-Week low 89.10
P/E 5.03
Mkt Cap.(Rs cr) 26,869
Buy Price 135.50
Buy Qty 80.00
Sell Price 136.05
Sell Qty 100.00
OPEN 136.90
CLOSE 135.40
VOLUME 173418
52-Week high 159.30
52-Week low 89.10
P/E 5.03
Mkt Cap.(Rs cr) 26,869
Buy Price 135.50
Buy Qty 80.00
Sell Price 136.05
Sell Qty 100.00

REC 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 2018 the Statement of Profit and Loss the Cash Flow Statement forthe year then ended and a summary of the significant accounting policies and otherexplanatory 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 13th September2013. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments 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.

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 standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone 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 2018

(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.

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 13 September2013.

(e) Vide Notification No. G.S.R. 463(E) dated 5 June 2015 issued by Ministry ofCorporate Affairs Government Companies have been exempted from applicability of theprovisions 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 standalone financial statements - Refer Note 21.1 to the standalonefinancial 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 G.S. Mathur & Co. For A.R. & Co.
Chartered Accountants Chartered Accountants
Firm Regn No. 008744N Firm Regn. No. 002744C
S.C. Choudhary Aakansha Nigam
Partner Partner
M. No. 082023 M. No. 416425
Place : New Delhi
Date : 28th May 2018

ANNEXURE-A TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' Section of Our Report of Even

Date on the Accounts of Rural Electrification Corporation Limited for the Year ended on31st March 2018

(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. Discrepancies arising from suchphysical verification have been suitably accounted for in the books of accounts. In ouropinion the periodicity of physical verification is reasonable having regard to the sizeof the company 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 2.26 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 withrespect to the provisions of Section 185 of the Act the Company has not granted a loan toany of its directors during the year.

Further in our opinion and according to information & explanations given to usthe Company being a Non-Banking Financial Company (NBFC) is exempt from the provisionsof Section 186 of the Act and the relevant rules in respect of loans and guarantees. Inrespect of the investments the Company has complied with the provisions of section 186(1) of the Act.

(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 Tax Goods & Service Tax duty ofcustoms 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 2018 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us the disputed statutorydues aggregating to Rs 39.60 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 21.35 5.28 16.07 * AY 2008-09 AY 2010-11 AY 2011-12 AY 2012-13 Income Tax Appellate Tribunal Delhi
Income Tax Act 1961 Income Tax and Interest 55.85 41.97 13.88 AY 2011-12 AY 2012-13 Ay 2013-14 AY 2014-15 A/Y 2015-16 Commissioner of Income Tax (Appeals) Delhi

(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 Fringe Benefit Tax 0.48 0.48 AY 2008-09 Commissioner of Income Tax (Appeals) Delhi
Income Tax Act 1961 Income Tax and Interest 17.06 8.31 8.75 * AY 1999-00 AY 2003-04 AY 2004-05 Supreme Court
Income Tax Act 1961 Tax Deducted at Source 0.06 - 0.06 FY 2007-08 to 2017-18 CPC TDS
Chapter V of Finance Act 1994 Service Tax Penal Interest u/s 73(4A) 0.36 - 0.36 FY 2008-09 CESTAT Delhi
Total 95.16 55.56 39.60

* Rs 24.82 Crore though received by the Company as refund due to appeal effects offavorable decisions of various appellate forums is however being considered as unpaid onaccount of further appeals made by the Income Tax Department to higher authorities.

(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) The company did not raise any money by way of initial public offer or furtherpublic offer and term loans during the year. Accordingly paragraph 3 (ix) of the order isnot applicable.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of any material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.

(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 standalone financial statements etc. as required by theapplicable accounting 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 them. Accordingly this clause ofthe Order 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 G.S. Mathur & Co. For A.R. & Co.
Chartered Accountants Chartered Accountants
Firm Regn No. 008744N Firm Regn. No. 002744C
S.C. Choudhary Aakansha Nigam
Partner Partner
M. No. 082023 M. No. 416425
Place : New Delhi
Date : 28th May 2018