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SJVN Ltd.

BSE: 533206 Sector: Infrastructure
NSE: SJVN ISIN Code: INE002L01015
BSE 00:00 | 22 Oct 29.10 -0.15
(-0.51%)
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29.20

HIGH

30.20

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28.90

NSE 00:00 | 22 Oct 29.10 -0.10
(-0.34%)
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29.35

HIGH

30.20

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28.95

OPEN 29.20
PREVIOUS CLOSE 29.25
VOLUME 709650
52-Week high 33.80
52-Week low 21.25
P/E 6.15
Mkt Cap.(Rs cr) 11,436
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 29.20
CLOSE 29.25
VOLUME 709650
52-Week high 33.80
52-Week low 21.25
P/E 6.15
Mkt Cap.(Rs cr) 11,436
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SJVN Ltd. (SJVN) - Auditors Report

Company auditors report

To

The Members of SJVN LIMITED

Report on the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of SJVN LIMITED("the Company") which comprise the Balance Sheet as at 31st March 2020 andthe Statement of Profit and Loss Statement of Changes in Equity and statement of cashflows for the year then ended and notes to the financial statements including a summaryof significant accounting policies and other explanatory information.

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 including the Ind AS of the state ofaffairs (financial position) of the Company as at 31st March 2020 and its profit/loss(financial performance including other comprehensive income) changes in equity and itscash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. 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 together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to the following matters in the Notes to the standalone financialstatements:

a) Note No. 2.30 and 2.57 (V)to the standalone financial statements in respect ofbilling and accounting of sales on the basis of provisionally approved tariff.

b) Note No. 2.63 to the standalone financial statements which describes the assessmentof the impact of Covid-19 pandemic by the management on the business and its associatedfinancial risks.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current period.These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. For each matter below description of how our auditaddressed the matter is provided in that context. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.

Key Audit Matter How our audit addressed the key audit matter
1. Contingent Liabilities and Provisions
There are a number of litigations pending before various forums against the Company and the management's judgement is required for estimating the amount to be disclosed as contingent liability and for creating the adequate amount of provision wherever required. We have obtained an understanding of the Company's internal instructions and procedures in respect of estimation and disclosure of contingent liabilities and adopted the following audit procedures:
We identified this as a key audit matter because the estimates on which these amounts are based involve a significant degree of management judgment in interpreting the cases and it may be subject to management bias. (Refer Note No. 2.39 to the Standalone Financial Statements read with the Accounting Policy No.1.17) - understood and tested the design and operating effectiveness of controls as established by the management for obtaining all relevant information for pending litigation cases;
- discussed with the management any material developments and latest status of legal matters;
- examined management's judgements and assessments whether provisions are required;
- considered the management assessments of those matters that are not disclosed as the probability of material outflow is considered to be remote;
- reviewed the adequacy and completeness of disclosures; Based on the above procedures performed the estimation and disclosures of contingent liabilities and creation of provisions are considered to be adequate and reasonable.
2. Property Plant & Equipment
There are areas where management judgement impacts the carrying value of property plant and equipment and their respective depreciation rates. These include the decision to capitalise or expense costs; the annual asset life review; the timeliness of the capitalisation of assets and the use of management assumptions and estimates for the determination or the measurement and recognition criteria for assets retired from active use. Due to the materiality in the context of the balance sheet of the Company and the level of judgement and estimates required we consider this to be as area of significance. (Refer Note No. 2.1 to the Standalone Financial Statements read with the Significant Accounting Policy No. 1.3) We assessed the controls in place over the fixed asset cycle evaluated the appropriateness of capitalisation process Performed tests of details on costs capitalised the timeliness and accuracy of the capitalisation of the assets and the de-recognition criteria for assets retired from active use.
In performing these procedures we reviewed the judgements made by management including the nature of underlying costs capitalised; determination of realizable value of the assets retired from active use; the appropriateness of asset lives applied in the calculation of depreciation; the useful lives of assets prescribed in schedule II of the Companies Act 2013 and the useful lives of certain assets as per the technical assessment of the management. We have observed that the management has regularly reviewed the aforesaid judgements and there are no material deficiencies in measurement and recognition of property plant and equipment.
3. Capital work-in-progress (CWIP)
The company is involved in various capital works like construction of new power projects installation of new plant and machinery civil works etc. These projects/works take a substantial period of time to get ready for intended use and due to their materiality in the context of the balance sheet of the Company this is considered to be an area which had the significant effect on the overall audit strategy and allocation of resources in planning and completing our audit. (Refer Note No.2.2 to the Standalone Financial Statements read with the Significant Accounting Policy No. 1.4) We performed an understanding and evaluation of the system of internal control over the capital work-in-progress with reference to identification and testing of key controls.
We assessed the progress of the project and the intention and ability of the management to carry forward and bring the asset to its state of intended use.
We assessed the timeliness and accuracy of capitalisation of assets when it is ready for the intended use.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Director'sReport including Annexures Management Discussion and Analysis Business ResponsibilityReport Report on Corporate Governance Shareholders Information and other information inintegrated Annual Report thereon but does not include the standalone financial statementsand our auditor's report.

The other 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 the other informationand we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the StandaloneFinancial Statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

If based on the work we have performed on the other information that we obtained priorto the date of this auditor's report we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take appropriate actions if required.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs(financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and 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.

In preparing the financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the company's financialreporting process.

Auditor's Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit it procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(I) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 in terms of Section 143 (11) of the Act we give in the "AnnexureA" a statement on the matters specified in paragraphs 3 and 4 of the Order tothe extent applicable.

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 considered appropriate andaccording to the information and explanations given to us in the "AnnexureB" on the 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 (including Other ComprehensiveIncome) the Statement of Cash Flows and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid Standalone Financial statements comply with the IndianAccounting Standards prescribed under section 133 of the Act read with the relevant rulesissued there under.

e) In view of the exemptions given vide Notification No. G.S.R. 463 (E) dated 5th June2015 issued by the Ministry of Corporate Affairs the provisions of Section 164 (2) of theCompanies Act 2013 regarding disqualification of directors are not applicable to thecompany.

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 theseparate Report in "Annexure C".

g) As per Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry ofCorporate Affairs Government of India section 197 of the Act is not applicable to theGovernment Companies. Accordingly reporting in accordance with requirement of provisionsof section 197(16) of the Act is not applicable on the Company.

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

I. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements. Refer Note No. 2.39 to the standalonefinancial statements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;

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

“ANNEXURE A” TO THE AUDITOR'S REPORT

(Referred to in Paragraph 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of SJVN LIMITEDfor the year ended 31st March 2020)

I. (a) The company has generally maintained proper records showing full particularsincluding quantitative details and situation of its fixed assets.

(b) As per information and explanation provided to us on the basis of our examinationof the records of the company physical verification of fixed assets is carried out onceina year which in our opinion is reasonable having regard to the size of the company andnature of its business. However physical verification of the fixed assets was not carriedout during the year.

(c) According to the information and explanations given to us the title deeds of allthe immovable properties are held in the name of the company except the following:

Description of Asset No. of cases Area in Acres Gross block as on 31.03.2020 Net block as on 31.03.2020 Remarks (If Any)
(Rs.Lakh) (Rs.Lakh)
Building 1 _ 15 3 Title deed is yet to be executed.

ii. As per information and explanation provided to us on the basis of our examinationof the records of the company the physical verification of inventory is carried out oncein a year. The discrepancies noticed on physical verification of inventory have beenproperly dealt with in the books of account. However physical verification of theinventory was not carried out during the year.

iii. According to the information and explanations given to us the company has notgranted any loans secured or unsecured to companies firms or other parties covered inthe register maintained under section 189 of the Companies Act 2013. Accordingly theprovisions of clause 3 (iii) (a) (b) and (c) of the order are not applicable

iv. In our opinion and according to the information and explanations given to us thecompany has complied with provisions of section 185 and 186 of the Companies Act 2013with respect to the loans investments guarantees and securities.

v. In our opinion and according to the information and explanations given to us thecompany has not accepted any deposit from public in terms of section 73 to 76 or any otherprovisions of the Companies Act 2013 and rules made there under.

vi. The company has made and maintained cost accounts and records as specified by theCentral Government under section 148 (1) of the Companies Act 2013. However we have notmade a detailed examination of these accounts and records with a view to determine whetherthey are accurate and complete.

vii. (a) According to the information and explanations and records of the company

the company is generally regular in depositing undisputed statutory dues includingProvident Fund Income tax GST Service tax Custom Duty Excise Duty Value Added TaxCess and other statutory dues with the appropriate authorities. There are no outstandingstatutory dues for a period of more than six months from the date they became payable ason 31st March 2020. We are informed that the provisions of Employees' State Insurance Actare not applicable to the company.

(b) According to the information and explanations given to us there are no dues ofincome tax GST wealth tax service tax custom duty excise duty value added tax cessand other material statutory dues that have not been deposited on account of any dispute.

viii. Based upon the audit procedure performed and information and explanation given tous by the management the company has not defaulted in repayment of loans and borrowing toany financial institution banks government or dues to debenture holders.

ix. In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year. Accordingly paragraph 3(ix)of the Order is not applicable to the Company.

x. To the best of our knowledge and according to the information and explanations givento us no material fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the course of our audit.

xi. In view of the exemptions given vide in terms of Notification No. G.S.R. 463 (E)dated 5th June 2015 issued by the Ministry of Corporate Affairs the provisions of Section197 read with schedule V to the Companies Act 2013 regarding managerial remuneration arenot applicable to the company.

xii. In our opinion and according to the information and explanations given to us thecompany is not a Nidhi Company as prescribed under Section 406 of the Act. Accordinglyparagraph 3(xii) of the Order is not applicable to the company.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company all the transactions with the related partiesare in compliance with Section 177 and 188 of the Companies Act 2013 where applicableand the details have been disclosed in the Note No. 2.47 to the standalone financialstatements as required by the applicable accounting standards.

xiv. According to the information and explanations given to us the company has notmade any preferential allotment or private placements of shares or fully or partlyconvertible debentures during the year.

xv. In our opinion and according to the information and explanations given to us thecompany has not entered into any non-cash transaction with Directors or persons connectedwith him.

xvi. According to the information and explanations given to us the company is notrequired to be registered under schedule 45-1A of the Reserve Bank of India Act 1934.

ANNEXURE-B

COMPLIANCE CERTIFICATE

We have conducted the audit of annual accounts of "SJVN LIMITED" for the yearended 31st March 2020 in accordance with the directions/sub directions issued by theComptroller & Auditor General of India under Section 143(5) of the Companies Act 2013and certify that we have complied with all the directions/sub-directions issued to us.

“ANNEXURE-B” TO THE AUDITOR'S REPORT

(Referred to in Paragraph 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of SJVN LIMITEDfor the year ended 31st March 2020)

Directions Actions Taken Impact on Financial Statements
1. Whether the Company has system in place to process all the accounting transactions through IT system? 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 According to the information and explanations given to us and based on our audit the Company has a system in place to process all the accounting transactions through IT system and for this purpose SAP-ERP has been implemented by the Company. Period end Financial Statements are compiled offline based on balances and transactions generated from such SAP-ERP system. NIL
We have neither been informed nor we have come across during the course of our audit any accounting transactions which have been processed outside the IT system having impact on the integrity of the accounts.
2. 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 loan? If yes the financial impact may be stated. According to information and explanations given to us and based on our audit there is no case of restructuring of an existing loan or cases of waiver/write off of debts / loans / interest etc. made by lender to the Company. NIL
3. Whether funds received/ receivable for specific schemes from Central/State agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation. According to information and explanations given to us and based on our audit the Company has not received any funds from Central/ State agencies for specific schemes. NIL

“ANNEXURE C” TO THE AUDITOR'SREPORT

(Referred to in paragraph 3 (f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Report on the Internal Financial Controls under Clause (i) of sub section 3 of section143 of the Companies Act 2013 ("the Act") for the year ended 31st March 2020.

Opinion

We have audited the internal financial controls over financial reporting of SJVNLIMITED ("the Company") as at March 31 2020 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date.

In our opinion and to the best of our information and according to the explanationsgiven to usthe Company has in all material respect an adequate internal financialcontrols systems over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2020 based on the internalcontrol over financial reporting criteria established by the Company Considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India. However there are following issues in Internal Financial Control:

 

(i) In Charanka Solar Power Project the contractor has to ensure capacity utilizationfactor (CUF) at 19%. During the year there was a shortage in minimum CUF by 5.60% whichamounts to 2395363 kWh units accordingly the amount recoverable from contractor onaccount of under utilization of capacity has been shown as contingent asset instead ofimposing Liquidated Damages (LD) following the principle of conservatism (Refer Note No.2.40 to standalone financial statement).

(ii) In Sadla there was substantial delay in the operationalization of the project andit became fully operational w.e.f. 18th April 2019 (scheduled to be operational w.e.f.25-11-2017). As per terms of agreement In Sadla Wind Power Project liquidated damagesare required to be imposed on the contractor on account of performance deficiency. Duringthe year there was performance deficiency and amount recoverable on account of same hasbeen shown as contingent asset instead of imposing liquidated damages following principleof conservatism. (Refer Note No. 2.40 to the standalone financial statements).

(iii) Presently the Investment in TDRs/FDRs by Organization is done based on email/faxreceived from various FI/Banks. To inculcate the accountability in system good number oforganizations has moved from Manual to E-Bidding Reverse Bidding process which not onlyfetch better rate of interest but also brings transparency in system.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the company is responsible for establishing and maintaininginternal financial controls based onthe Internal Control over financial reporting criteriaestablished by the Company considering the essential components of Internal control statedin the Guidance Note on Audit of the 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 Guidance note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") and the Standard on Auditing issued by ICAI and deemed to beprescribed under section 143 (10) of the Companies Act2013 to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. 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 was established and maintained and if suchcontrols 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 and understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statement 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 thosepolicies and procedures that

(1) pertain to the maintenance of records that in reasonable details accurately andfairly reflect the transactions and disposition of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statement 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 limitation 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.

ANNEXURE-XII

Management's reply on Statutory Auditors' Observations on Internal FinancialControl-Annexure-C to the Auditors Reports

Auditors' Observations Management's Reply
(i) In Charanka Solar Power Project the contractor has to ensure capacity utilization factor (CUF) at 19%. During the year there was a shortage in minimum CUF by 5.60% which amounts to 2395363 kWh units accordingly the amount recoverable from contractor on account of under utilization of capacity has been shown as contingent asset instead of imposing Liquidated Damages (LD) following the principle of conservatism (Refer Note No. 2.40 to standalone financial statement). As per the agreement O&M Contract is operational w.e.f. 17.04.2019. The Loss of energy is to be calculated on yearly basis. The Contractor is required to explain the reasons for shortfall within reasonable time. In this case reasonable time generally considered as 3-4 months i.e. upto 16.08.2020. The Contractor has already been intimated about the recovery on account of generation loss which has been refuted by the Contractor. Contractor has been asked to explain the reasons for non- performance which is still awaited. Pending explanation/ reasons from the contractor the same has been shown under contingent asset and will be accounted for on the settlement of the issue.
(ii) In Sadla there was substantial delay in the operationalization of the project and it became fully operational w.e.f. 18th April 2019 (scheduled to be operational w.e.f. 25-11-2017). As per terms of agreement In Sadla Wind Power Project liquidated damages are required to be imposed on the contractor on account of performance deficiency. During the year there was performance deficiency and amount recoverable on account of same has been shown as contingent asset instead of imposing liquidated damages following principle of conservatism. (Refer Note No. 2.40 to the standalone financial statements). As per the agreement O&M Contract is operational w.e.f. 18.04.2019. The operational loss is to be calculated on yearly basis i.e from 18.04.2019 to 17.04.2020. The Loss has been already intimated to the Contractor. The Contractor has refuted the claim and communicated for invoking the arbitration. Since the amount is under dispute the same has been shown as contingent asset.
(iii) Presently the Investment in TDRs/FDRs by Organization is done based on email/fax received from various FI/Banks. To inculcate the accountability in system good number of organizations has moved from Manual to E-Bidding Reverse Bidding process which not only fetch better rate of interest but also brings transparency in system. Process of E-bidding for investment of surplus fund was incorporated in ERP system but could not be implemented due to some technical issue. However new E-bidding system will be implemented in the current financial year. In the meantime the investment in TDR/FDR by the company is being made on the basis of email received from various banks. Fax System has been already discontinued by the company. A dedicated email account has been opened exclusively for collecting quotation from the bank for investment purpose in TDR/FDR. No other communications are being sent from this email account.

ANNEXURE-XV

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THECOMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF SJVN LIMITED

FOR THE YEAR ENDED 31 MARCH 2020

The preparation of financial statements of SJVN Limited for the year ended 31 March2020 in accordance with the financial reporting framework prescribed under the CompaniesAct 2013 (Act) is the responsibility of the management of the company. The statutoryauditor appointed by the Comptroller and Auditor General of India under section 139 (5) ofthe Act is responsible for expressing opinion on the financial statements under section143 of the Act based on independent audit in accordance with the standards on auditingprescribed under section 143 (10) of the Act This is stated to have been done by them videtheir Audit Report dated 29 June 2020.

I on behalf of the Comptroller and Auditor General of India have conducted asupplementary audit of the financial statements of SJVN Limited for the year ended 31March 2020 under Section 143 (6) (a) of the Act. This supplementary audit has been carriedout independently without access to the working papers of the statutory auditor and islimited primarily to inquiries of the statutory auditor and company personnel and aselective examination of some of the accounting records.

On the basis of my supplementary audit nothing significant has come to my knowledgewhich would give rise to any comment upon or supplement to statutory auditor's reportunder section 143 (6) (b) of the Act.

For and on behalf of the
Comptroller & Auditor General of India
Place : New Delhi (D.K. Sekar)
Dated : 21 August 2020 Director General of Audit (Energy) Delhi

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