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Tata Power Investor Relations
Home > Investor Relations > Financials > Financial Results Summary > Auditor's Report

Auditor's Report

TO THE MEMBERS OF THE TATA POWER COMPANY LIMITED

1. We have audited the attached balance sheet of THE TATA POWER COMPANY LIMITED, as at 31st March, 2007, and also the profit and loss account and the cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section(4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

  • (a) We have obtained all the information and explanations, which to the best of 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 the Company, so far as appears from our examination of those books. The report on the accounts of Bangladesh branch audited by other auditors has been forwarded to the Company and has been appropriately dealt with;
  • (c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;
  • (d) Without qualifying our opinion:
    • (d) (i) We draw attention to Note 11 (i) to the Notes forming part of the Accounts. As stated in the note, subject to the outcome of the Appeal filed before the Appellate Tribunal of Electricity against the Order of Maharashtra Electricity Regulatory Commission (MERC) no adjustments have been made for net deficit of Rs.164.45 crores as determined by MERC for the financial years 2004-05 and 2005-06 (as against a surplus of Rs.81.62 crores determined and accounted by the Company) and other consequential effects in the accounts for the year ended 31st March, 2007. The impact of the above on the results for the year cannot presently be determined pending the ultimate outcome of the matter. The Company is of the view, supported by legal opinion, that the Order given by MERC can be successfully challenged. In view of this no provision/adjustment has been considered necessary.
    • (d) (ii) We draw attention to Note 11(g) of the Notes forming part of the Accounts. As stated in the note, subject to the outcome of the Appeal filed before the Supreme Court, no adjustment has been made by the Company in respect of the standby charges accounted for as revenue in earlier periods estimated at Rs. 519 crores and its consequential effects for the period upto 31st March, 2007. The impact of the above on the results for the year cannot presently be determined pending the ultimate outcome of the matter. The Company is of the view, supported by legal opinion, that the Tribunal's Order can be successfully challenged. In view of this no provision/adjustment has been considered necessary.
    • (d) (iii) We draw attention to Note 11(f) of the Notes forming part of the Accounts. As mentioned in the note the Company has filed an appeal in the Supreme Court, in connection with an Appellate Tribunal Order setting aside the Maharashtra Electricity Regulatory Commission (MERC) Order confirming the Company's right of distribution in certain areas and related matters thereto and allowing as a whole the appeal preferred by Reliance Energy Ltd.,and the hearing of the appeal has been concluded and the Order is reserved. The financial consequences of the Appellate Tribunal Order have neither been quantified in the Order nor been ascertained by the Company. The Company is of the view, supported by legal opinion, that the Tribunal's Order can be successfully challenged. In view of this no provision/ adjustment has been considered necessary.
  • (e) In our opinion, the balance sheet and the profit and loss account and the cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;
  • (f) On the basis of written representations received from the directors, as on 31st March, 2007 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2007 from being appointed as a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956;
  • (g) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
    • (g) (i) In the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2007;
    • (g) (i) In the case of the profit and loss account, of the profit for the year ended on that date; and
    • (g) (i) In the case of the cash flow statement, of the cash flows for the year ended on that date.

For Deloitte Haskins & Sells Chartered Accountants:
UDAYAN SEN
Place: Partner Mumbai,
Dated: 30th May, 2007
Membership Number: 31220

Annexure to the Auditors' Report

Referred to in paragraph 3 of our report of even date.

  • (i) (a) In respect of fixed assets, the Company has maintained proper records showing full particulars including quantitative details and situation in most cases of such assets.
  • (i) (b) Physical verification of fixed assets was carried out during the year by the management, in accordance with the established system of periodical verification of fixed assets once in two / three years. In our opinion, the frequency of verification is reasonable, considering the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.
  • (i) (c) During the year, in our opinion, a substantial part of fixed assets has not been disposed off by the Company
  • (ii) (a) The inventory of the Company has been physically verified during the year by the management under a perpetual inventory system, except for fuel which was verified during the year and / or at the end of the year. In respect of materials lying with third parties,these have substantially been physically verified or confirmed by third parties. In our opinion the frequency of verification is reasonable.
  • (ii) (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management were found reasonable and adequate in relation to the size of the Company and the nature of its business.
  • (ii) (c) On the basis of our examination of records of inventory, in our opinion, the Company has maintained proper records of inventory and the discrepancies noticed on physical verification between the physical stocks and book records were not material in relation to the operations of the Company.
  • (iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly provisions of Clause (iii)b, (iii)c, (iii)d, (iii)f and (iii)g of the Order are not applicable.
  • (iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items are of a special nature and their prices cannot be compared with alternative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. Further, on the basis of our examination, and according to the information and explanations given to us, we have neither come across nor have we been informed of any instance of major weaknesses in the aforesaid internal control system.
  • (v) According to the information and explanations given to us, the Company has not entered into any contract or arrangement with other parties, which needs to be entered in the register maintained under section 301 of the Companies Act, 1956.
  • (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public during the year covered by our audit report. In respect of unclaimed deposits matured in earlier years, that are outstanding during the year, the Company has complied with the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. According to the information and explanations given to us, no order under the aforesaid sections has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, on the Company.
  • (vii) In our opinion, the internal audit function carried out during the year by a firm of Chartered Accountants appointed by the management have been commensurate with the size of the Company and the nature of its business.
  • (viii) We have broadly reviewed the books of account maintained by the Company in respect of the electricity business and electronic products of the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been maintained and are being made up. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.
  • (ix) (a) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion,the undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to the Company have generally been regularly deposited during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, customs duty, excise duty and cess were in arrears, as at 31s' March, 2007 for a period of more than six months from the date they became payable.
  • (xi) (b) As at 31st March, 2007 according to the records of the Company and the information and explanations given to us, the following are the particulars of disputed dues on account of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess matters that have not been deposited:

Name of the Nature of Amount Period to Forum where pending statute the Dues (Rs. in which the Crores) amount relates

Customs Laws Customs duty 3.92 1999-2000 to Appellate Authority- 2003-2004 upto Commissioner level

Central Excise Duty 13.78 1992-1993 to Appellate Authority- Excise Laws 2001-2003 upto Tribunal level

Sales Tax Sales tax 0.80 2001-2002 to Appellate Authority-Laws 2002-2003 Deputy Commissioner level

Cess Laws Cess 7.78 1992-2003 Appellate Authority of The Water (Prevention and Control of Pollution) Cess Act, 1977

  • (x) The Company does not have accumulated losses as at 31st March, 2007 and has not incurred cash losses during the financial year ended on that date or in the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or to debenture holders during the year.
  • (xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
  • (xiii) The provisions of any special statute as specified under Clausel
  • (xiii) of the Order are not applicable to the Company.
  • (xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.
  • (xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.
  • (xvi) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purposes for which they were obtained and to the extent that these have not been utilized, term loans of Rs. 254.54 crores, as explained, are invested in working capital and short term investments.
  • (xvii) Based on the information and explanations given to us and on an overall examination of the balance sheet of the Company, in our opinion, there are no funds raised on short term basis which have been used for long term investment.
  • (xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.
  • (xix) In our opinion and according to the information and explanations given to us, the Company has created securities / charges in respect of the debentures issued.
  • (xx) The Company has not raised any money by public issue during the year.
  • (xxi) According to the information and explanations given to us, during the year, no fraud on or by the Company has been noticed or reported.

For Deloitte Haskins & Sells Chartered Accountants
UDAYAN SEN
Place: Mumbai Partner
Dated: 30th May, 2007
Membership Number: 31220
Source : www.capitalmarket.com

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