chhattisgarh state power transmission company ltd. - Cspc.co.in

SAMVAD & ASSOCIATES Formerly known as Waghela & Arif Chartered Accountants

1st Floor, Marudhar Complex, Shyam Talkies Chowk, Budhapara, RAIPUR-492 001 (Chhattisgarh). E-mail: [email protected], [email protected]

Tel.: 91-0771-4051222, 093010-35111, 098261-92082

AUDITOR’S REPORT To The Members, Chhattisgarh State Power Transmission Company Limited RAIPUR. 1. We have audited the attached balance sheet of Chhattisgarh State Power Transmission Company

Limited (hereinafter referred to as CSPTCL) as at 31st march 2009 and the profit & loss account 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 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 disclosure 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 (As amended) issued by the Central Government of India in terms of section 227 (4a) of the Companies Act, 1956, we enclose an Annexure -1 Reported on 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) The Company has valued the inventory at book value and not “ at book value or net

realisable market value whichever is lower” and has not taken cognizance of the current status of inventory as to non-moving, slow moving, obsolete or defective stock. To this extent there is non compliance with Accounting Standard-2. Further, this has resulted in the understatement of loss and overstatement of inventories to that extent, the amount for which has not been ascertained by the Company.

b) The Company has not made Provision for Company’s share of deficit in gratuity & pension liabilities of Rs. 170.07 Crores, as per Actuarial Valuation. (Refer Note No.(J) to Notes on accounts). This has resulted in the understatement of loss to the extent and non compliance with Accounting Standard 15.

c) Opening balances as on 01-01-2009 transferred pursuant to the transfer scheme (Refer Note No. “c” to Notes to Accounts ( Schedule 15) are unaudited figures and are subject to audit by the Comptroller and Auditor General of India. Accordingly, opening balances notified by the government is subject to modifications, if any, arising during the course of the aforesaid audit.

d) All the transaction of CSPTCL has been allocated from centralized books of accounts of CSPHCL on the basis of State Govt. Notified Financial Restructuring plan (FRP) (Refer Note No. “b” of Schedule 16 to Notes of Accounts.

e) Balance of Share Capital Suspense Account, Debentures, Term Loans, Bank overdrafts, Loans from State Government, inter company adjustments accounts, Fixed Assets, Capital work in progress, Inventories, sundry debtors, Loans and Advances, Balances with Banks in current accounts & FDRs, Imprest & Temporary advances and current liabilities including sundry creditors are subject to confirmation and reconciliation. The effect of the adjustment

SAMVAD & ASSOCIATES Formerly known as Waghela & Arif Chartered Accountants


Tel.: 91-0771-4051222, 093010-35111, 098261-92082

arising from reconciliation and settlement of old dues and possible loss which may arise on account of non recovery or partial recovery of such dues in not ascertained. Thus we are unable to comment upon the impact thereof on the accounts and the loss for the period

f) Debentures Rs. 2,59,87,692/- has been shown under secured loan (refer Schedule -3 read with Note no. (f) to Notes on accounts). However, no document was produced to us as to substantiate such classification by the company. Accordingly, in our opinion it should have been classified under unsecured loan.

5. Our comments as per sub-directions u/s 619(3)(a) issued to us by the office of the Accountant General (Commercial Audit) vide their letter dated 7 July 2009 are as per Annexure II to this report.

6. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

7. In our opinion, proper books of account as required by law we have been kept by the company so far as appears from our examination of those books.

8. The balance sheet and profit & loss account dealt with by this reports are in agreement with the books of account.

9. In our opinion, the balance sheet and profit & loss account dealt with by this report comply with the accounting standards referred to in sub-section (3c) of section 211of the companies act.

10. The Company, being a Government Company, in view of the Notification No. GSR 829(E) dated 21/10/2003, issued by the Government of India, the provisions of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956, are not applicable to the Company.

11. In our opinion and to the best of our information and according to the explanations given to us, the annexed accounts, subject to Para 4 above, read together with notes and significant accounting policies given the information required by the Companies Act, 1956 in the manner so required and given a true and fair view in conformity with the Accounting principal generally Accepted in India:

a. In the case of the balance sheet, of the state of affairs of the company as at 31st march 2009 and

b. In the case of profit & loss account, of the profit/loss of the company for the year ended on that date.

For, SAMVAD &ASSOCIATES

(Formerly Known as Waghela & Arif) Chartered Accountants Firm Rgn No.001291C

Vikas Kumar Jain

Place: Raipur Partner Date: 20th July 2011 M. No. 078420

SAMVAD & ASSOCIATES Formerly known as WAGHELA & ARIF Chartered Accountants


Tel.: 91-0771-4051222, 093010-35111, 098261-92082

CHHATTISGARH STATE POWER TRANSMISSION COMPANY LTD (CSPTL), ANNEXURE- (1) - Referred to in paragraph 3 of our audit report of 2008-09 of even date PARA NO.

S.NO. PARTICULAR OBSERVATIONS & REASONS

01. FIXED ASSETS (i) Whether the company is maintaining

proper records showing full particulars, including quantitative details and situation of fixed assets

Company is maintaining records showing location wise details of fixed assets. However company records the various components of one unit of Assets are shown in different account heads showing their quantity.

(ii) Whether the management at reasonable intervals has physically verified these fixed assets.

Physical verification of fixed assets was not conducted during the F.Y. 2008-09

(iii) Whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account.

No comment as physical verification has not been conducted during the F.Y. 2008-09.

(iv) If a substantial part of fixed assets have been disposed off during the year, whether it has affected the going concern.

No we have not find any substantial part of Fixed Assets disposed off During the year.

02. INVENTORY (i) Whether physical verification of

inventory has been conducted at reasonable intervals by the management.

Physical verification of inventory has not been conducted during the F.Y. 2008-09

(ii) Are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business?

No comment as physical verification of inventory was not conducted during the year.

(iii) If not, the inadequacies in such procedures should be reported.


(iv) Whether the company is maintaining proper records of inventory.

Refer para 4(a) 4(c) & 4(d) & 4(e) of the Audit Report.

(v) Whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account.


03. LOANS TAKEN/GRANTED (i) Has the company either granted or taken

any loans, secured or unsecured to / from companies, firms or other parties covered in the register maintained under section 301 of the Act.

On the basis of the records verified by us, the company has neither taken nor granted any loans to / from companies, firms or other parties listed in the register maintained under section 301of the Companies Act,1956 except inter company adjustment account of Rs. 12,16,295,967/-, however in absence of complete information we are unable to comment on sub point (i) to (v) of point (3) Loan taken Granted

(ii) If so, give the number of parties and Refer remarks given in sub point (i) above.



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amount involved in the transactions. (iii) Whether the rate of interest and other

terms and conditions of loans given or taken by the company, secured or unsecured, are prima facie prejudicial to the interest of the company.

Refer remarks given in sub point (i) above.

(iv) Whether payment of the principal amount and interest are also regular.


(v)

If overdue amount is more than one lakh, whether reasonable step have been taken by the company for recovery / payment of the principal and interest.


04. INTERNAL CONTROL (i) Is there an adequate internal control

procedure commensurate with size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods?

In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory, fixed assets & services. However, internal control for the maintenance and supervision of the Party-wise and age-wise details of various liabilities and assets, maintenance of inventory records and settlement of advance payment to contractors suppliers need to be strengthened.

(ii) Whether there is a continuing failure to correct major weakness in internal control.

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 and there is no continuing failure for the same.

05. SECTION 301 (i) Whether transactions that need to be

entered into a register in pursuance of section 301 of the Act have been so entered.

According to the information and explanations given to us, there are no contracts or arrangements with companies or other parties which need to be entered in the register maintained under section 301 of the Companies Act, 1956, subject to the sub point (i) of point (3) Loan Taken Granted.

(ii) Whether each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

N.A. subject to the sub point (i) of point (3) Loan Taken Granted.

06. DEPOSITS FROM PUBLIC (i) In case the company has accepted deposits

from the public, whether the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and rules framed there under, where applicable, have been complied with.

According to the information and explanations given to us, the company has not accepted deposits from the public within the meaning of the provisions of Sec 58A and 58AA of the Companies Act, 1956 and rules framed there under.



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(ii) If not, the nature of contraventions should be stated.

N.A.

(iii) If an order has been passed by Company Law Board whether the same has been complied with or not.

N.A.

07. LISTED COMPANIES (i) Whether the company has as internal audit

system commensurate with its size and nature of its business.

N.A.

08. COST RECORDS (i) Whether maintenance of cost records has

been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

Cost record has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

(ii) If so, whether such accounts and records have been made and maintained.

Such accounts and records have not been made and maintained by the Company. However it is informed to us that the work of maintenance of Cost Records is under process.

09. STATUTORY DUES (i) Is the company regular in depositing

undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income tax, Sales-tax, Wealth-tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities.

All the transaction of CSPTCL has been allocated from centralised books of accounts of CSPHCL on the basis of State Govt Notified Financial Restructuring Plan (FRP) (Refer Note No. “b” of Schedule 16 to Notes of Accounts) further all the transactions are done in the name of CSPHCL hence we are unable to comment on the same.

(ii) If not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor.

Please refer sub point (i) above.

(iii) In case dues of sales-tax / income-tax / custom tax/ wealth-tax/ excise duty/cess have not been deposited on accounts involved and the forum where dispute is pending may please be mentioned.


10. ACCUMULATED LOSSES/CASH LOSSES (i) Whether the company is a company,

which has been registered for a period not less than five years.

No. It has been registered in 2005-2006.

(ii) In such a case, whether its accumulated losses at the end of the financial year are not less than fifty per cent of its net worth.

N.A.

(iii) Whether it has incurred cash losses in such financial year and in the financial year immediately preceding such financial year also.

No.

11. DEFAULT IN REPAYMENT OF DUES (i) Whether the company has defaulted in

repayment of dues to a financial All the transactions of CSPTCL has been allocated from centralized books of accounts



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institution or bank or debenture holders? of CSPHCL on the basis of State Govt. Notified Financial Restructuring plan (FRP) ( Refer Note No. “b” of Schedule 16 to Notes of Accounts) further all the transactions are done in the name of CSPHCL and complete information including relevant documents and evidences not produce before us hence we are unable to comment on the same. However as per the information and explanation given by the management, Company has not defaulted in repayment of dues to financial institutions and banks in respect of the existing loans, which were originally raised by the Company or the erstwhile board.

(ii) If yes, the period and amount of default to be reported.


12. LOANS AND ADVANCES (i) Whether adequate documents and records

are maintained in cases where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities?

According to the information and explanation given to us, the company has not granted any loans or advances against pledge of shares, debentures or other securities.

(ii) If not, the deficiencies to be pointed out. N. A. 13. SPECIAL STATUTE -CHIT FUND COMPANIES (i) Whether the provisions of any special

statute applicable to chit fund have been duly complied with?

N.A.

(ii) If not, the nature of contraventions should be stated.

N.A.

14. NIDHI/ MUTUAL BENEFIT FUND/ SOCIETIES-SPECIAL A SPECTS (i) Whether the net owned funds to deposit

liability ratio is more than 1:20 as on the date of balance sheet.

N.A.

(ii) Whether the company has complied with the prudential norms on income recognition and provisioning against sub-standard / default / loss assets.

N.A.

(iii) Whether the company has adequate procedures for appraisal of credit proposals / requests, assessment of credit needs and repayment capacity of the borrowers.

N.A.

(iv) Whether the repayment schedule of various loans granted by the nidhi is based on the repayment capacity of the borrower and would be conducive to recovery of the loan amount.

N.A.

15. FINANCING COMPANIES- SPECIAL ASPECTS (i) If the company is dealing or trading in

shares, securities, debentures and other investments the auditor has to consider the

N.A.



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certain additional points. (ii) Whether proper records have been

maintained of the transactions and contracts.

N.A.

(iii) Whether timely entries have been made therein.

N.A.

(iv) Whether the shares, securities, debentures and other securities have been held by the company, in its own name except to the extent of the exemption, if any, granted under section 49 of the Act.

N.A.

16. GUARANTEE FOR LOANS (i) Whether the company has given any

guarantee for loans taken by others from bank or financial institutions, the terms and conditions where of are prejudicial to the interest of the company.

All the transactions of CSPTCL has been allocated from centralized books of accounts of CSPHCL on the basis of State Govt. Notified Financial Restructuring plan (FRP) ( Refer Note No. “b” of Schedule 16 to Notes of Accounts) further all the transactions are done in the name of CSPHCL and complete information including relevant documents and evidences not produce before us hence we are unable to comment on the same. However, according to the information and explanation given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions..

17. TERM LOANS (i) Whether term loans were applied for the

purpose for which the loans were obtained.

All the transactions of CSPTCL has been allocated from centralized books of accounts of CSPHCL on the basis of State Govt. Notified Financial Restructuring plan (FRP) ( Refer Note No. “b” of Schedule 16 to Notes of Accounts) further all the transactions are done in the name of CSPHCL and complete information including relevant documents and evidences not produce before us hence we are unable to comment on the same. However, in our opinion and according to the information and explanations given to us, and on overall examination of the balance sheet of the company, the term loans raised during the year have prima facie been applied for the purpose for which they were raised.

18. USAGE OF FUNDS (i) Whether the funds raised on short-term

basis have been used for long term investment.

All the transactions of CSPTCL have been allocated from centralized books of accounts of CSPHCL on the basis of State Govt. Notified Financial Restructuring plan (FRP) (Refer Note No. “b” of Schedule 16 to Notes of Accounts) further all the transactions are done in the name of CSPHCL and complete information including relevant documents and



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evidences not produce before us hence we are unable to comment on the same. However, according to the information and explanation given to us, and on 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 investments.

(ii) Whether the funds raised on long-term basis have been used for short term investment.


(iii) If yes, the nature and amount is to be indicated.


19. PREFERENTIAL ALLOTMENTS (i) Whether the company has made any

preferential allotment of shares to parties and companies covered in the Register maintained under section 301of the Act.

The company has not made any preferential allotment of shares during the year ended on 31 March, 2009.

(ii) If so whether the price at which shares have been issued is prejudicial to the interest of the company.

N.A.

20. CREATION OF SECURITIES (i) Whether securities have been created in

respect of debentures issued? As per explanation given to us, dentures have been secured by government guarantee. However no documents were produce to us in support. Accordingly, in our opinion, debentures are unsecured.

21. DISCLOSURE OF END USE OF FUNDS (i) Whether the management has disclosed on

the end use of money raised by public issues and the same has been verified?

The company has not raised any money by making a issue of shares during the year covered by our report.

22. FRAUDS (i) Whether any fraud on or by the company

has been noticed or reported during the year?

No fraud on or by the company has been noticed or reported during the year

(ii) If yes, the nature and the amount involved is to be indicated.

N.A.

For, SAMVAD &ASSOCIATES (Formerly Known as Waghela & Arif) Chartered Accountants Firm Rgn No.001291C

Vikas Kumar Jain

Place: Raipur Partner Dated : 20.07.2011 M. No. 078420

CHHATTISGARH STATE POWER TRANSMISSION COMPANY LIMIT EDBALANCE SHEET AS AT 31st MARCH, 2009

Particulars Sch. No. 31 March 2009 31 March 2008in Rs. in Rs.

I. Sources of Funds (1) Shareholders funds: (a) Share Capital 1 500,000 500,000 (b) Share Capital Suspense A/c 6,551,035,000 -

(2) Reserves & Surplus 2 - 9,014

(3) Loan Funds: (a) Secured Loans 3 2,380,813,531 - (b) Unsecured Loans 4 804,980,374 - (4) Deferred Tax Liabilities (net) 109,435,164 (5) Intercompany Adjustment Account (CSPHCL) 1,216,295,967 -

Total 11,063,060,035 509,014

II. Application of Funds(1) Fixed Assets: (a) Gross Block 5 10,552,539,372 - (b) Less: Depreciation 2,670,907,183 - (c) Net Block 7,881,632,189 - (d) Capital work-in-progress 2,338,863,554 -

(2) Current Assets, Loans and Advances 6 (a) Inventories 404,047,509 - (b) Sundry Debtors 444,313 - (c) Cash & Bank Balances 139,095,953 511,096 (c) Cash & Bank Balances 139,095,953 511,096 (d) Loans and Advances 2,210,836,933 -

(A) 2,754,424,708 511,096

Less : Current Liabilities and Provisions (a) Current Liabilities 7 1,745,757,986 - (b) Provisions 8 536,505,457 4,032

(B) 2,282,263,443 4,032 Net Current Assets (A) - (B) 472,161,265 507,064

(3) Miscelleneous Expenditure 9 - 1,950 (4) Profit & Loss Account 10 370,403,028 - Total 11,063,060,035 509,014

Significant Accounting Policies and Notes to accounts 16

For, Chhattisgarh State Power Transmission Company Limited

Managing Director Director

As per our report attachedSamvad & AssociatesFRN No. 01291C

Vikas JainPartnerMembership No.078420Place: Raipur [C.G.]Dated: 20.07.2011

CHHATTISGARH STATE POWER TRANSMISSION COMPANY LIMIT ED

PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED ON 31st MARCH, 2009

Particulars Sch. No. 31 March 2009 31 March 2008

in Rs. in Rs.

INCOME:

Transmission Charges 556,164,349 -

Other Income 11 10,252,775 13,046

566,417,124 13,046

EXPENDITURE:Repairs, Administration and Other expenses 12 82,297,314 Employee Costs 13 322,311,960 Depreciation/ Amortisation 4 282,074,547 Interest and finance charges 14 107,739,386

794,423,207 - Net Profit/(Loss) Before Tax (228,006,083) 13,046

Less: Provision for TaxationFor Current Tax - 4,032 For Deferred Tax 109,435,164 -

For Fringe Benefit Tax 381,208 109,816,372.00 - 4,032

Net Profit/(Loss) After Tax

Prior period credits/charges (net) 15 32,589,587 - Balance carried to Balance sheet (370,412,042) 9,014

Earnings Per Share (in in Rs.) (2.26) 0.18 Basic & Diluted Earnings Per ShareBasic & Diluted Earnings Per Share(Refer Note no.y of the Notes to Account) Significant Accounting Policies and Notes to accounts 16





SCHEDULE FORMING PART OF BALANCE SHEET 31 March 2009 31 March 2008

in Rs. in Rs.

SCHEDULE -1SHARE CAPITAL AUTHORISED :250,000 Equity share of Rs.10/- Each 2,500,000 2,500,000

ISSUED,SUBSCRIBED AND PAID UP50,000 Equity shares of in Rs.10/- each fully paid up 500,000 500,000 (All the above shares are held by Chhattisgarh State Power Holding Company Limited)(Previously held by erstwhile Chhattisgarh State ElectrcityBoard)Total 500,000 500,000

SCHEDULE -2RESERVES & SURPLUSOpening Balance - - Add: Profit during the year - 9,014 Total - 9,014

SCHEDULE -3SECURED LOANS Debentures 25,987,692 - (Refer Note f (i) of the Notes to Accounts)

Term LoansFrom Power Finance Corporation Limited 2,288,120,450 - (Refer Note f (ii) of the Notes to Accounts)

Bank Overdraft 66,705,389 - (Refer Note f (iii) of the Notes to Accounts)

Total 2,380,813,531 -

SCHEDULE -4UNSECURED LOANS Loans from State Government 804,980,374 - (Refer Note g of the Notes to Accounts)Total 804,980,374 -

SCHEDULE FORMING PART OF BALANCE SHEET CONT…31 March 2009 31 March 2008

in Rs. in Rs.SCHEDULE -6Current Assets, Loans & Advances

CURRENT ASSETS(a) Inventories (As valued and certified by the management)Stores and Spares 391,738,142 - Add: Shortage/ (Excess) pending investigation 12,309,367 - Total 404,047,509 -

(b) Sundry Debtors(Unsecured, considered good)- Debts outstanding for more than six months - - - Other debts 444,313 -

Less: Provision for doubtful debts - Total 444,313 -

(c) Cash and Bank Balances (1) Cash and stamps on hand - - (2) Balances with scheduled banks in current accounts 10,050 10,050 (3) Balances with Scheduled and Other banks in Fixed Deposits 137,303,685 501,046 (4) Imprest and Temporary Advance 1,782,218 - (5) Remittance in transit - - Total 139,095,953 511,096

LOANS AND ADVANCES(Unsecured, considered good unless otherwise specified) (1) Advances recoverable in cash or in kind or for value to be received - Advances for O & M supplies / works 439,441,868 - (2) Advances to staff 26,146,303 - (2) Advances to staff 26,146,303 - (3) Deposits 1,327,878,414 - (4) Prepaid expenses 682,500 - (5) Accrued Interest on FDR 1,054,221 (6) Claims receivable and other current assets 415,633,626 -

2,210,836,933 -

Less: Provision for doubtful loans and advances - - 2,210,836,933 -

Total 2,754,424,707.53 511,096

SCHEDULE -7CURRENT LIABILITIES Sundry CreditorsFor goods and servicesDue to Micro, Small and Medium Enterprises (Refer Note no. t ofNotes on Account )Due to others 109,056,174 - Deposits and retentions from contractors, consumers and others 213,749,893 - Other Liabilities including Employee Liabilities 929,953,949 - Payment Due on Capital Libilities 176,027,668 - Interest accrued and due on borrowings 316,970,302 - Total 1,745,757,986 -

SCHEDULE FORMING PART OF BALANCE SHEET CONT…31 March 2009 31 March 2008

in Rs. in Rs.SCHEDULE -8PROVISIONS :Provision for DA Arrear of Employees 7,355,693 - Provision for Income Tax including FBT 529,149,764 4,032 Total 536,505,457 4,032

SCHEDULE -9MISCELLENEOUS EXPENDITUREPreliminary Expenses (to the extent not written off) 1,950 1,950 Less: Written off during the year 1,950 - Total - 1,950

SCHEDULE -10PROFIT & LOSS ACCOUNTOpening Balance (9,014) - Add: Loss during the year 370,412,042 - Total 370,403,028 -

SCHEDULE FORMING PART OF PROFIT AND LOSS ACCOUNT31 March 2009 31 March 2008

in Rs. in Rs.

SCHEDULE -11OTHER INCOME :Interest Income 3,477,615 13,046 Income from rent, hire charges etc. 239,643 Sale of tender forms 294,941 Other receipts 6,240,576 Total 10,252,775 13,046

SCHEDULE -12Repairs, Administration and Other expensesRepairs and MaintenancePlant & machinery 29,455,162 Building 9,074,038 Others 3,599,565 Insurance charges 25,360 Rent Rates and Taxes 3,600,724 Legal and Professional Charges 1,617,931 Auditor's Remuneration 44,120 Other administrative expenses 44,734,043

92,150,942 Less: Repairs and maintenance expenses capitalised (net) 432,385 Repairs and maintenance expenses (credits/transfers) 2,393,614 Administration expenses and HOS capitalised (net) 1,566,885 Administration expenses and HOS expenses (credits/transfers) 5,460,744 (Refer note 22(ii)(a) & (b) of Schedule 15)Total 82,297,314

SCHEDULE -13Employee Costs Salaries, allowances, bonus, etc. 152,816,609 Staff Welfare Expenses 618,895 Other staff costs 3,083,432 Leave encashment scheme 1,341,430 Gratuity & Pension 237,559,184 Contribution to Provident & Other Funds 569,551

395,989,103 Less: Employees cost capitalised (net) 10,752,755 Employees expenses (credits/transfers) 62,924,387 (Refer note 22(ii)(b) of schedule 15)Total 322,311,960

SCHEDULE FORMING PART OF PROFIT AND LOSS ACCOUNT CO NT…31 March 2009 31 March 2008

in Rs. in Rs.

SCHEDULE -14 Interest and finance chargesInterest onState Government loans 20,899,417 Bonds and Debentures 15,609,989 Other loans/ deferred credits 70,264,635 Borrowing for working capital 965,344

107,739,386 Less: Interest and Finance Charges capitalised (net) - (Refer note 22(ii)(c) of Schedule 15)Total 107,739,386

SCHEDULE -15Prior period credits/charges (net)

IncomeInterest Income 2,826,533 Other income/excess provisions 12,987,020

15,813,554 -

ExpensesEmployee costs 389,105 Material related expenses 38,610,156 Interest 9,401,930 Other Administrative Expenditure 1,950

48,403,141 Total (32,589,587) Total (32,589,587)

I. REGISTRATION DETAILSRegistration No. U 40108CT 2003PLC 15820 State Code 10 Balance Sheet Date 31st March'09

II. CAPITAL RAISED DURING THE YEAR [AMOUNT IN RS.TH OUSAND]Public issue Nil Right Issue NilBonus issue Nil Private Placement Nil

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUN DS [AMOUNT IN RS. THOUSAND]

Total Liabilities 11,063,060 Total Assets 11,063,060 SOURCE OF FUNDSPaid-up Capital 500 Reserves and Surplus NilSecured Loans 2,380,814 Unsecured Loans 804,980 Share Capital Pending Allotment 6,551,035 Deferred Tax Liability & Others 1,325,731 APPLICATION OF FUNDS Net Fixed Assets 10,220,496 Investments NilNet Current Assets 472,161 Miscellaneous Expenditure NilAccumulated Losses 370,403

IV. PERFORMANCE OF COMPANY [AMOUNT IN RS.THOUSAND]

Turnover 556,164 Total Expenditure 816,760 Profit Before Tax (260,596) Profit After Tax (370,412) Earning Per Share in Rs. (2.26) Dividend Rate % Nil

V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS OF THE COMPANY

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINE SS PROFILE

Item Code No. NA Production Description Transmission of Power





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CASH FLOW STATEMENT FOR THE PERIOD ENDING 31ST MARC H'2009

Cash Flow from Operating ActivityNet Profit Before Taxation (260,595,670) 13,046.00 Adjustment forDepreciation 282,074,547 - Interest Income (3,477,615) - Miscelleneous Expenses Written off 1,950 - Interest Expenses 107,739,386 -

386,338,267 - Operating profit before working capital changes 125,742,597 13,046.00 (Increase)/ Decrease in Sundry Debtors (444,313) - (Increase)/ Decrease in Advances & Deposits (2,210,836,933) - (Increase)/ Decrease in Inventories (404,047,509) 4,032.00 Increase/(Decrease) in Current Liabilities/Provisions 2,282,259,411 -

(333,069,344) 4,032.00 Cash Generated from Operations (207,326,746) 17,078.00 Less:Fringe Benefit Tax 381,208 Income Tax (Current) - 4,032.00

381,208 4,032 A. Net Cash from Operating Activity (207,707,954) 13,046.00

Cash Flow from Investing Activity Purchase / Transfer of Fixed Assets (8,107,251,765) - Tranfer of Fixed assets to other successor companies (After FRP) (56,454,972) - Net Investment in Capital WIP (Capitalisation) (2,338,863,554) - Interest Income 3,477,615 -

(10,499,092,674) - B. Net Cash from Investing Activity (10,499,092,674) -

Cash Flow from Financing Activity Interest Paid (107,739,386) - - Addition/ (Decrease) in Eq.Capital/ Share Application - - - Addition/ (Decrease) in Share capital suspense 6,551,035,000 - Addition/ (Decrease) in Inter company Adjustment 1,216,295,967 - Addition/ (Decrease) in Secured Loan 2,380,813,531 - Addition/ (Decrease) in Unsecured Loan 804,980,374 -

10,845,385,486 - C. Net Cash Flow from Financing Activity 10,845,385,486 -

D. Net Inc/(Dec) in Cash and Cash Activities (A+B+C) 138,584,857 13,046.00

E. Cash & Cash Equivalents 511,096 498,050.00 (Opening Balance)

F. Cash & Cash Equivalents (D+E) 139,095,953 511,096.00

(Closing Balance)

0.00 For, Chhattisgarh State Power Transmission Company Limited0.000.00 0.00 Managing Director Director0.000.000.000.00

Amount in Rs.2007-08PeriodPeriod

2008-09Amount in Rs.

Schedule 16 Significant Accounting Policies

a. Basis of Preparation of Financial Statements

The Company is a Public Limited Company registered under the Provisions of Companies Act, 1956. The Company is governed by the Electricity Act, 2003. The provisions of the Electricity Act, 2003 read with the rules made there under prevails wherever the same are inconsistent with the provisions of the Companies Act, 1956 in terms of Section 174 of the Electricity Act, 2003. The financial statements are prepared under the historical cost convention and on an accrual basis and in accordance with the applicable mandatory Accounting Standards issued by the Companies (Accounting Standards) Rules, 2006 as per notification no. G.S.R.739 (E) dated 7th December, 2006. However, following items are accounted for on cash basis – • Rental from staff quarters. • Liquidated damages and warranty claims. .

b. Going Concern Concept Financial statements of the Company are drawn up on the premise that its business will continue indefinitely.

c. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and the liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Differences between actual results and estimates are recognized in the period in which results are known / materialized.

d. True and fair Presentation Accounts of the Company present a true and fair view of the financial position and results of operations of the Company. True and fair view implies the disclosure of all information necessary for reader’s understanding of the financial position and results of operations of the Company. The objective of prescribing the forms of annual accounts of the Company is to prescribe the minimum and uniform disclosure required. Additional information in the accounts or by way of notes is given where it is necessary to ensure true and fair presentation.

e. Offsetting of Assets and Liabilities In the balance sheet of the Company, assets and liabilities are set off against each other only when a legal right of offset exists. Payables to one party are therefore not set off against receivables from the same-party unless the Company has a legal right to offset the two.

f. Events Occurring after the Balance Sheet Date: All events or transactions occurring after the date of balance sheet and before the date of the auditors report are treated in the following manner: Two types of subsequent events and transactions require consideration by the Company: a. The first type consists of those events that provide additional evidence with respect to the

conditions that existed at the date of the balance sheet and affect the estimates necessary for accrual etc in the process of preparing annual accounts. All information that becomes available prior to the finalization of the annual accounts should be used in evaluating the conditions on which the estimates were based. The annual accounts are adjusted for any changes in estimates resulting from the use of such evidence.

b. The second type consists of events that provide evidence with respect to conditions that did not exist at the balance sheet date but arose subsequent to that date. These events are not adjusted in the accounts however necessary disclosures are provided in the notes annexed.

g. Revenue Recognition:

Mercantile method of accounting is employed unless otherwise specifically stated. However, where the amount is immaterial /negligible and/or establishment of accrual/ determination of amount are not possible, no entries are made for the accrual.

h. Fixed Assets: Fixed Assets of the company are recorded in the books of account and disclosed in annual accounts at Historical Cost. This policy implies that no revaluation of fixed assets is done for adjusting them to replacement cost, current cost etc. All material related cost, labour or contractor charges payable to outsider for work by them in respect of capital jobs are included in the cost of concerned capital assets. Land cost comprises of its purchase price, compensation, if any, paid on acquisition of land, legal charges and stamp duties, site preparation cost such as cost of leveling and filling and all incidental expenses incurred on the transfer, development and improvement of such land. Any expenditure on repairs or rehabilitation of an asset purchased by the company (whether second hand or new) incurred before commissioning of asset or putting the asset in usable condition are treated as a cost of the capital assets. An expenditure having the effect of extending the useful life of an asset or increasing output or capacity or efficiency of an asset or decreasing operating costs of an asset is ‘improvement’. Expenditure on improvement may involve replacement of an existing asset or may not involve replacement of an existing asset. All expenditure on improvements is capitalized. All capital expenditure is accounted for through capital work-in-progress accounts. On commissioning of the assets, the expenditure is transferred to appropriate fixed assets accounts. Commissioning of an asset is a technical matter, which involves consideration of various factors such as trial, testing to ensure whether the asset is usable condition etc. Capitalization of assets is therefore done on issue of Asset Commissioning Certificate from the relevant Technical Authority/ management certificate of the Company.

i. Impairment of Assets

Impairment loss is provided to the extent the carrying amount exceeds their recoverable amount. An impairment loss is charged to the profit & loss Account in the year in which an asset is identified as impaired.

j. Investment: Current investments are carried at the lower of cost or quoted/ fair value computed category wise. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such decline is other than temporary.

k. Contributions, Grants & Capital Subsidies towards Cost of Capital Assets Amount receivable as consumer’s contribution, subsidy or grant towards capital assets are credited to appropriate account set out in chart of Accounts only if the following conditions are satisfied: a. The amount is not subject to any conditions to be fulfilled by the Company; or b. The conditions attached to the amount have been fulfilled by the Company. Capital subsidies and grants related to depreciable fixed assets are treated as deferred income and are recognized in the profit and loss statement on a systematic and rational basis over the useful life of the asset, i.e., such amounts are allocated to income over the periods and in the proportions in which depreciation on those assets is charged. Accounting for cost of a capital asset is done in the normal course without considering any contribution, subsidy or grants towards the cost of the asset. Depreciation are been charged in the normal course on the ‘full cost’ of the asset. Capital subsidies and grants related to non-depreciable assets are credited in capital reserve. However, if a grant related to a non-depreciable asset requires the fulfillment of certain obligations, the grant are credited to income over the same period over which the cost of meeting such obligations is charged to income.

l. Expenditure on Project identification Survey and Feasibility Studies: Expenditure incurred on identification, survey and feasibility studies of a project before the project is considered for sanction or rejection are accumulated in an account provided for the purpose. Later, if the project is rejected, the full amount of expenditure is charged to Revenue as infructuous capital expenditure in the year in which the project is rejected. If the project is sanctioned, the expenditure is charged to capital work-in-progress account for that project. Any expenditure incurred on detailed feasibility studies etc. after a project is sanctioned shall also be charged to the capital work-in-progress account for that project. The aggregate of expenditure incurred before and after sanction of a project are allocated over the ‘‘tangible’’ assets acquired /constructed under the project, in the same manner as the revenue expenditure chargeable to capital works are to be allocated.

m. Depreciation: Depreciations on assets are provided on written down value method (WDV) on the gross block at the rates specified in the Schedule XIV to the Companies Act, 1956. Depreciation on additions/deductions to fixed assets is being provided on pro-rata basis from/to the month of acquisition/disposal.

Full cost of all small and low value assets each costing Rs.5000/- or less under Plant and Machinery is fully charged to revenue in the year in which the assets are put to use. No part of the cost of such items shall therefore be included in the cost of fixed assets nor shall any depreciation be charged thereon.

n. Inventories: Items of inventories are measured at lower of cost or net realizable value after providing for obsolescence, if any. Cost comprises of all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Accounting for all materials transactions are in the same period, in which the physical event of receipts, issues etc. take place. Similarly, liability for all materials received and accepted by the company is created in the month in which the materials are accepted. Shortages/ Excesses found during the course of physical verification or otherwise are transferred under account head namely “Stock excess/ shortage pending investigation” classified under inventories. The cases of such excesses/ shortages are referred to a committee formed for the very purpose, balance under these account heads are transferred to profit and loss account only after final disposal of the case from the said committee.

o. Intangible Assets: Intangible assets are stated at cost including the expenses related to the development of asset less accumulated amortization.

p. Retirement Benefits: (i) Short Term Employee Benefits

The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as liability (accrued expense) after deducting any amount already paid.

(ii) Post-employment benefits: Defined contribution/ benefit plans

In respect of gratuity and pension benefit including leave encashment, an appropriate charge should be made on the Profit and Loss for the year for a provision for the accruing liability; however the company has charged the actual payouts to the retired employee and the contribution paid to the designated trust during the relevant previous year in its profit and loss account.

q. Borrowing Cost: Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalized upto the date when such assets are ready for its intended use and other borrowing costs are charged to Profit & Loss Account.

r. Provisions, Contingent Liabilities and Contingent Assets: Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements. This accounting practice is in accordance with AS-29 ”Provision, Contingent Liabilities and Contingent assets” issued by the Institute of Chartered accountants of India.

s. Foreign Currency Transaction excluding export turnover: All foreign currency transactions are accounted for at the rates prevailing on the dates of the transaction. Foreign currency assets/ liabilities are translated at the year end rates as applicable. Any income or expense on account of exchange rate difference either on settlement or on translation is recognized in the profit or loss account.

t. Prior Period Items and Extra-Ordinary Items Adjustments arising due to errors or omissions in the financial statements of earlier years are accounted under “Prior Period”.

u. Earning per Share In determining earning per share, the company considers the net profit/ loss after tax. The number of shares used in computing basic and diluted earnings per share is the weighted average number of shares outstanding during the period and equivalent number of shares held under share capital suspense account.

v. Provision for Current and Deferred Tax: Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period and in accordance with the provisions as per Income Tax Act, 1961. Deferred tax resulting from ''timing difference" between book and taxable profit for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be adjusted in future.

Note to Accounts

a. Restructuring of Chhattisgarh State Electricity Board: In exercise of the powers conferred by Section 131 read with sub-section (1) and (2) of Section 133 of the Electricity Act, 2003 (Central Act 36 of 2003), State Government (means the Government of Chhattisgarh) vide notification no. F-21/13/2009/13/2 dt.31.03.2010 notified the Chhattisgarh State Electricity Board Transfer Scheme Rules, 2010 (hereinafter referred to as ‘transfer scheme rules’) in regard to the transfer of properties, undertakings, interests, rights, obligations, liabilities, personnel and proceedings from Chhattisgarh State Electricity Board (hereinafter referred to as Board) to its Successor Companies viz., Chhattisgarh State Power Generation Company Ltd. (CSPGCL), Chhattisgarh State Power Distribution Company Ltd (CSPDCL), Chhattisgarh State Power Transmission Company Limited (CSPTCL), Chhattisgarh State Power Trading Company Limited (CSPTrCL) and Chhattisgarh State Power Holding Company Limited (CSPHCL). Under rule (3) (ae) of the transfer scheme rules “Transmission Company” or “CSPTCL” means the Chhattisgarh State Power Transmission Company Limited, a company incorporated under the Companies Act-1956 with the main object of undertaking the transmission of electricity in the State of Chhattisgarh and to function as State Transmission Utility and perform SLDC functions as per the provisions of the Act.

b. Appointed Date and the transition period: Under rule (3) (c) of the transfer scheme rules, appointed date means the date of 01st January’09 for effecting transfer of functions, properties, interests, undertaking, rights and liabilities, proceedings or personnel of the erstwhile Board to the relevant successor companies in accordance with the act and transfer scheme rules for all objects and purposes under this Scheme. Under rule (3) (ad) of the transfer scheme rules, transition period means the period beginning from 1st January 2009 and ending on 31st March 2010. Cash flow arrangement and Accounting Procedure during transition period: The State Government vide rule no.12 of the transfer scheme rules had notified that Holding Company (CSPHCL) shall put in place necessary arrangements for management of the cash flows for the successor companies and among the successor companies to ensure smooth functioning of cash related transactions, dealings, cash in-flow, cash out-flow and accounting thereof during the transition period. In addition, CSPHCL shall also be responsible for establishing the necessary accounting procedures to be followed by the successor companies for their day-to-day accounting transactions and maintaining of their books of accounts as per the applicable provisions under law during the said period. Further vide circular no.05-01/RP/08 dt.01st May’2010, CSPHCL has provided the methodology for cash flow arrangement and accounting procedures, which has been briefly described hereunder: i. During the transition period, the Successor Companies shall continue to follow the existing

centralised Cash Flow Arrangement as was being followed in the erstwhile CSEB. In the centralised Cash Flow Arrangement, all the cash inflows from all the RAOs/ CAU and all other receipts shall flow into the bank account maintained by CSPHCL. CSPHCL shall transfer the funds from the Central Bank Account from time to time as per requirement to the specified bank accounts maintained by the RAOs and CAU to meet all the routine expenses of Successor Companies. Other expenditure, such as interest and repayment of loans, power purchase cost, fuel cost in respect of coal and secondary fuel, payment of bills for works and supplies beyond the prescribed limit of the RAOs and CAU, etc. shall be made centrally by CSPHCL from its Central Bank Account on the basis of advice received from the RAOs / CAU.

ii. The accounting procedure to be followed by successor Companies during transition period is the centralised accounting procedure as was being followed in the erstwhile CSEB and initial accounting of all the transactions shall be made in the books of accounts of CSPHCL. CSPHCL shall segregate the transactions made for each of the Successor Companies based on the Financial Restructuring Plan (FRP) notified by State Government and accordingly transfer the debit / credit to the respective Successor Companies to which the transaction pertains with corresponding adjustment, wherever required, in the intercompany adjustment account. The transactions which may not be identifiable to any single Successor Company shall be allocated in the successor companies on the same ratio as was used in FRP.

iii. Further as per Schedule V Part II para (a) (v) of the transfer scheme all expenses incurred by the Holding Company including Administration and General expenses, legal and consulting fees, etc. shall be shared by Generation Company, Transmission Company, Distribution Company and Trading Company in the ratio of their respective equity, accordingly net expenses of CSPHCL after offsetting income has been absorbed by other successor companies as per the provision of transfer scheme rules. CSPTCL has been charged Rs.1.55 crores as their share of expenses allocated from CSPHCL, the same has been included in “Other Administrative Expenses” in Schedule 11of the profit and Loss Account.

c. Opening Balances transferred pursuant to transfer scheme:

The Government of Chhattisgarh vide notification no.2020/F-21/13/09/13/2/ED dt.29th October’2010 has notified the opening balance sheet as on 01st January’2009 of CSPTCL of which detail is an under:

Sl. No. Particulars Rs. In crores. ASSETS

A Fixed Assets 892.82 B Less: Depreciation 236.41 C Net Assets 656.41 D CWIP 373.03 G Investment 14.31 H Stock 8.54 J Cash & Bank 0.19 K Inter company Receivable/Payable (10.56) L Loans & Advance 128.54 M Sundry Receivable 1.28 O Other Current Liabilities (173.59) P Subsidy Receivable from Government 41.54 Total Assets 1,039.69 LIABILITIES

A Surplus + Equity Adjustment 625.51 B Reserve and Reserve Funds 29.60 C Sub Total: Shareholder Equity 655.11 D Total Funds from State Gov. 92.44 E Payment Due on Capital Liabilities 56.34 F Capital Liabilities 235.80 Total Liabilities (C to F) 1,039.69

i. As per the said notification, figures derived for opening balance sheet are from the unaudited

balance sheet of erstwhile CSEB as on 31st December’2008 and are subject to audit by the Comptroller and Auditor General of India. Accordingly, opening balances notified by the government are subject to modifications, if any, arising during the course of statutory audit.

ii. CSPTCL was incorporated on 2nd June’2005. The above balances notified by Government of Chhattisgarh on restructuring of erstwhile CSEB has been incorporated in the account of company on 01st January’09 and accordingly independent operations of the company has commenced with effect from 01st January’09.

iii. The amount of Rs. 655.11 crores shown under shareholders equity has been classified as “Share Capital Suspense Account” below Share Capital in the Balance Sheet. As per the scheme the Company is required to issue equity shares of the said amount to CSPHCL. The company has raised its authorized capital to Rs.2000 crores on 26th February’2011 and accordingly the allotment of shares held under share capital suspense account will be allotted within the due course.

d. Provisional allocation of Personnel pursuant to Transfer Scheme: i. Under rule 8 (b) of the transfer scheme rule, the Personnel of the erstwhile Board shall stand

assigned to the services of the Generation Company, Distribution Company, Transmission Company, Holding Company and Trading Company as the case may be on the appointed date, on as is where is basis, namely, that they will continue to serve in the place where they are working on the Appointed date, till further orders of the State Government.

ii. The Personnel transferred to the Transferees, shall be deemed to have entered into an agreement with the Transferee concerned to repay loans, advances and other sums due or otherwise perform obligations undertaken by them to the erstwhile Board which remain outstanding as on the Appointed Date, on the same terms and conditions as contained in the arrangement with the erstwhile Board.

e. Final Absorption of Personnel in Transferee Company

i. The State Government shall, in consultation with the Successor Companies, finalize the transfer to and permanent absorption of the Personnel in a Transferee taking into account the suitability, ability and experience of the personnel, number and nature of the vacancies and other relevant factors and issue appropriate orders, as it may think fit, for such permanent absorption within forty eight months from the Appointed Date.

ii. Accordingly the State Government has constituted a Grievance Committee to receive representations and submit recommendations on transfer and absorption of Personnel to the Successor Companies. The final report of the Grievance Committee is still awaited.

f. Secured Loans:

i. Liabilities of debentures amounting to Rs.2.60 crores have been vested on the erstwhile CSEB on reorganization of MPEB into MPSEB and CSEB on 15th November’2000 which is thereafter transferred to CSPTCL on restructuring of CSEB on 31st December’2008. These debentures are secured against the guarantee of Government of Madhya Pradesh.

ii. Out of the total secured loans, loans amounting to Rs.228.81 crores payable to Power Finance Corporation of India are secured by following securities:

(Amt in crores) Sl. No.

Outstanding as on 31st March’09

Nature of Security

1. 1.50 Old loan transferred to erstwhile CSEB on reorganization of MPEB into MPSEB and CSEB on 15th November’2000 and to CSPTCL on restructuring of CSEB as on 31st December’2008 secured by guarantee of State Government of Madhya Pradesh.

2. 227.31 Secured by mortgage and charge of immovable and moveable fixed assets both present and future of power evacuation project set up for DSPM, TPP, Korba Project.

228.81

iii. Share of Bank Overdraft of Rs.6.67 crores allocated to CSPTCL by CSPHCL as on 31st March’09 is secured by Term Deposits held in the name of CSPHCL.

iv. The charge/mortgage created against assets of the Company as securities in respect of the loans including debentures, taken by the erstwhile Chhattisgarh State Electricity Board, which are subsequently transferred to the Company on December 31, 2008 pursuant to the transfer scheme notified by the State Government, continues to be valid and binding on the Company.

g. Unsecured Loan from Government of Chhattisgarh:

The share of Government loan allocated to CSPTCL vide notification no. no.2020/F-21/13/09/13/2/ED dt.29th October’2010 is Rs.92.44 crores. CSPHCL for and on behalf of successor companies have repaid/adjusted Rs.68.18 crores during the period January’09 to March’09. Share of repayment allocated to the company is Rs.11.94 crores, accordingly closing balance of loan in the balance sheet is Rs.80.50 crores.

h. Inventories

Accounting of inventories is done under the Material Management Module of SAP implemented by erstwhile CSEB with effect from 01st October’2007. The balance of inventory in the financial accounts and balance under SAP as on 31st December’08 i.e. date of restructuring of the erstwhile CSEB are in reconciliation, however company-wise identification of inventory could not be done on the aforesaid date. Accordingly, balance of inventories of T&D RAOs namely Raipur, Bilaspur, Durg, Rajnandgaon, Ambikapur and Jagdalpur and the central accounting unit (CAU) at Raipur has been segregated based on CWIP (Capital WIP) + R&M ratio prevailing as on the date of restructuring. Since the process of company-wise of identification of inventory is still not completed, accordingly inventory of above referred RAOs have been segregated on the same basis as was done on the date of restructuring but applying ratio as on 31st March’09. The Company has not made any provision towards non-moving and obsolete stock as on 31st March, 2009.

i. Cash & Bank Balances

Balance with scheduled bank and other bank in fixed deposits Rs. 13,83,57,906/-(alongwith interest accrued thereon) have been received from erstwhile Board under Transfer Scheme and are in the name of CSPHCL. However in the year 2009-10, these FDRs have been matured in the hand of CSPHCL and shares of maturity have been passed to the Company squaring up the fixed deposits received under transfer scheme.

j. Employees Retirement Benefit The actuarial valuation of past service liability of gratuity and pension scheme was undertaken by erstwhile Chhattisgarh State Electricity Board on 31st December’08. The actuarial liability towards pension and gratuity of employees of erstwhile CSEB has been assessed at Rs.3771.60 crores as on the said date. The erstwhile CSEB has formed a self managed CSEB Gratuity and Pension Fund Trust recognized under part B of Schedule IV of the Income Tax Act’1961 for mitigating the liabilities towards gratuity and pension of retired employees of CSEB and successor companies formed on restructuring of erstwhile CSEB. The balance of corpus and accumulated surplus of the trust as on 31st March’09 is Rs.2144.08 crores resulting in total deficit of Rs.1627.52 crores (considering the actuarial valuation as on 31st December’08). The share of CSPTCL out of the total employees of all successor companies as on 31st March’09 is 10.45%, accordingly share of deficit pertaining of CSPTCL is Rs.170.07 crores, however as mentioned in point no. q of the significant accounting policy, no provision for deficit has been provided in the profit and loss account, however the company has charged the actual payouts to the retired employee and the contribution paid to the said trust during the relevant period in its profit and loss account.

k. Estimated value of contracts remaining to be executed on capital accounts. The Company is in the process of ascertaining the estimated amounts due and remaining to be executed on capital contracts for the financial year 2008-09.

l. Revenue Details of Electricity transmitted in MUs and Rs in crores:

Energy Transmitted FY 2008-09 FY 2007-08

In MU Rs. in cr In MU Rs. in cr

For CSPDCL 4336.06 55.10 Nil Nil

For Other Power Utilities - 0.52 Nil Nil

Total 4336.06 55.62 Nil Nil

m. Managerial Remuneration:

Details 2008-2009 (Rs.) 2007-08 (Rs.) Salary & Allowances 3,36,309/- Nil Total 3,36,309/- Nil

n. Sitting fees paid to the Directors including Managing Director is Rs. Nil (PY Nil)

o. Remuneration to Auditors: Details 2008-2009 (Rs.) 2007-08 (Rs.) For Audit 44,120/- 4,964/- Total 44,120/- 4,964/-

p. Pursuant to para b (ii) regarding the cash flow arrangement and accounting procedure followed by

successor companies during the transition period, the company has not entered into any transaction with any company that are covered under sub section 1(B) of section 370 of the Companies Act’1956.

q. Expenditures/Earnings in foreign currency: Nil r. The current assets, loans and advances are good and recoverable and are approximately of the

values, if realized in the ordinary courses of business unless and to the extent stated other wise in the Accounts. Subject to the notes regarding depreciation, other notes and the method of accounting followed by the Company, provision for all known liabilities is adequate and not in excess of amount reasonably necessary. There are no contingent liabilities above Rs.1.00 crores except those stated in the notes.

s. Balance Sheet, Profit & Loss Account and Cash Flow statement read together with the schedules to the accounts and notes thereon, are drawn up so as to disclose the information required under The Companies Act, 1956 as well as give a true and fair view of the statement of affairs of the Company as at the end of the year and results of the Company for the year under review.

t. Company is in the process of identifying Micro, Small & Medium Enterprises as mentioned in the Micro, Small & Medium Enterprises Act, 2006. Hence, relevant disclosures as required by the provisions of Schedule VI have not been made. Company has neither received any claims for interest nor provided any interest payable to Micro & Small Enterprises, as required by the aforesaid Act, in the absence of any information.

u. Contingent liability above Rs.1.00 crores not provided in the profit and loss account are as

follows:

a. Contingent Liabilities arising due to Reorganization of MPEB into MPSEB and CSEB

i. Vide notification dated 2nd November 2004, Central Govt. has appointed 15th November

2000 as date of dissolution of erstwhile MPEB. Further, vide notification dated 4th November 2004, assets & liability of erstwhile MPEB has been finally allocated between successor SEBs i.e. MPSEB and CSEB. Both orders has been challenged in Supreme Court by Govt. of Madhya Pradesh and MPSEB. The Hon'ble Supreme Court has dismissed the petition filed by MPSEB on dt. 13.9.2006 and the review petition filed were also dismissed on 18.01.2007. However, the civil suit filed by Govt. of MP is pending. As per transfer scheme, CSPHCL is handling the pending court cases of CSEB. Accordingly, any liability arising on the settlement of civil suit may have an adverse implication on the successor companies of erstwhile CSEB.

ii. On bifurcation of erstwhile state of Madhya Pradesh, MPEB had sustained tax loss of Rs.1,422.46 Cr and Rs.993.65 Cr in FY 1999-2000 and FY 2000-01 respectively, aggregating to Rs.2,416.11 Cr. As per section 65 of Madhya Pradesh Reorganization Act (MPRA), the Central Government has been empowered to make rules for bifurcation of these tax losses of MPEB between MPSEB and CSEB. However, no such rules have been made by the Central Government so far.

iii. In the absence of such rules, for the purpose of this computation, CSEB has claimed its

share of Rs.554.98 Cr in the brought forward tax losses of MPEB in power consumption ratio of 77.03:22.97 (MPSEB:CSEB), as laid down by the Central Government in its Notification dated November 4th, 2004 for allocation of current assets and liabilities of MPEB. Board's tax liabilities may vary based on the outcome of Rules to be issued by Central Government u/s 65 of MPRA 2000. Accordingly, any liability arising on non-framing of said rules may have an adverse financial implication on the successor companies of erstwhile CSEB.

iv. Erstwhile MPEB has filed Income Tax Return for FY 1999-2000 and 2000-01 beyond the

due date as prescribed in the Income Tax Act. Further, in the tax assessments of MPEB for FY 1999-2000 and 2000-01, the Revenue authorities made additions to the returned losses of MPEB, which resulted in conversion of such losses to profits. These additions have been confirmed by the Assessing officer. It is understood that decision has been challenged before appropriate appellate authority. The appeal is pending before appellate authority. In case it is ultimately held by the appellate authorities that the additions made to returned losses of MPEB were justified, CSEB may not be entitled to its share of tax losses of MPEB. Further, if loss return is accepted by Tax Authority even then they may not allow brought forward losses to be carried forward on the plea that returns were filed beyond the due date. In this case also CSEB may not be entitled to its share of tax losses of MPEB. Accordingly, any adverse outcome of the case may have financial implication on the successor companies of erstwhile CSEB.

b. The demand has been raised against Board by Income Tax department after income

assessment of AY 2003-04 & onwards. The Board has file appeal against order and cases are pending before various authority. The liability may be arising based on outcome of the case. The year wise gross disputed demand and taxes paid against such liabilities are as under :-

Sl. No. Assessment Year

Gross Tax Liability demanded in Crores

Taxes Paid against such liability in Crores

Authority before which case is pending

1 2003-04 426.91 243.30 Pending before Income Tax Appellate Tribunal (ITAT), Mumbai

2 2004-05 135.97 167.67 Case set aside by ITAT, Mumbai to the file of Jurisdictional Assessing Officer i.e. ACIT (2) 1 Raipur

3 2005-06 109.98 136.06 Case set aside by ITAT, Mumbai to the file of Jurisdictional Assessing Officer i.e. ACIT (2) 1 Raipur

4 2006-07 272.27 85.89 Pending before Income Tax Appellate Tribunal (ITAT), Mumbai

5 2007-08 222.60 220.60 Pending before Commissioner of Income Tax (Appeals), Raipur

6 2008-09 112.00 32.64 Pending before Commissioner of Income Tax (Appeals), Raipur

Any adverse outcome in the Income Tax cases referred above will have an adverse financial implication on the successor companies i.e. CSPGCL, CSPDCL and CSPTCL of erstwhile CSEB.

v. Claims lodged by the Company not acknowledge as debt is Rs. Nil.

w. The Company is involved only in one activity namely ‘transmission of electricity’ in the state of

Chhattisgarh. Hence Segment Reporting is considered as not applicable.

x. In view of paragraph 9 of AS-18, no disclosure is required as regards related party relationships with other state controlled enterprises and transaction with such enterprises. Other disclosures as required by AS-18 are as under:

Remuneration paid to directors including Managing Director:

Name of Related Party

Nature of relationship 2008-09 (Rs.) 2007-08(Rs)

Shri S.N. Chauhan Managing Director/ Key Management Person

3,36,309/- Nil

y. Earnings Per Share (EPS)

Sl. No.

Particulars 2008-09 (Rs.) 2007-08(Rs)

1 Net Profit after tax as per profit and loss account -37,04,12,042/- 9,014/- 2 Net Profit Attributable to Equity Shareholders -37,04,12,042/- 9,014/- 3 Weighted Average number of equity shares used as

denominator for calculating EPS 16,38,14,625 50,000

4 Basic Earnings per share -2.26 0.18 z. In compliance with the accounting standards relating to “ Accounting for Taxes on Income” (AS-

22) issued by The Institute of chartered Accountants of India, the company has debited Rs.10,94,35,164/- (Previous Year Rs. Nil) in the profit & loss Account for the year ended March 31’2009 towards deferred tax liability for the year, arising on account of timing differences, of which details are as follows:

Sl. No. Particulars Amount (Rs.) a. Depreciation as per Income tax Act 60,40,81,492/- b. Depreciation as per Company Act 28,20,74,547/- c. Net timing difference arising due to higher depreciation

claimed under Income Tax Act 32,20,06,945/-

d. Disallowance of Statutory Audit Fees due to implication of section 40 a

44,120/-

e. Net timing difference (d-e) 32,19,62,825/- f. Net Deferred Tax Liability (@ 33.99%) 10,94,35,164/-

aa. Figures of previous years have been split up and regrouped wherever necessary so as to

correspond to current year's figures.

As per our report attached For, Chhattisgarh State Power Transmission Company Limited Samvad & Associates FRN No. 01291C Vikas Jain Partner Membership No.078420 Place: Raipur [C.G.] Managing Director Director Dated:

chhattisgarh state power transmission company ltd. - Cspc.co.in

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