Parcculera:

HIGACHAL PRADESH STATE ELECTRICITY BOARD LTD. Balance Sheet as at Jist March,2018

Nota, gat Dtst Tt As atZist Total =

1

atist | Total Asal tet

2

Accounting Policies The accompanying fetes fram 2... tn 2,25 tarms.an Integral part of the financial statements

a of Company

fer.) tata) SAanaging Director : =f

oN elo

(EVP, Singh

Director( Op}

ON O6929504

LS (Guishan Aggarwal) Thief Accounts OFlcer

Place; Shimla im

—

( Andindl Share)

Company Secretary

FOi-No 7279

ot BPo2-22p

Audltord Report

Ai Der our report of eves date

For Sant Guiatl& Ga.

Chartarted Accountants |

FRM goayON p41) po |

c- i

(Sureeh Shand Soni)

Partner

M.Ne de21N6

HIMACHAL PRADESH STATE ELECTRICITY BOARD LTD. Statement of Profit and Loss far tha year ended Jist March, 2018

Amount in Lacs

Refer | Yearended 31st | Year ended 31st path arrears NoteNo.| March,2018 | March, 2017 Income ,

1. | Revenue from Operations 229 65207613 629153.79

IL | Other Income 228 19293.25 1972099

ML | Total Revense (1+ 11) 671369.38 648074.703

WW. | Expenses: . Purchase of Power 2253, S790Z6,75 3883976.78 Employee Benefits Expense 22 1891546,70 170383,70

Finance Costs 1 45705.82 50334.65 Depreciation and Amortization expanse Sa760.51 3590069 Other expenses » 19953.64 1TAZ2A3

Total Expenses 671003.42 660018.55 |

Profit / (Loss) before excepttoyal and ; v ery ia as TEV) 365.96 (1143.77)

Vi. | Excaiptionat fens 0,00 aan ||

Profit / (Loss) before extraorilnary items j Vil tna tax (V- VI) 365.96 (11143.77)

VIL | Bxtraardinary Iteme 2a 0,00 0.00

IX [Profit / (Loss) before tax (VI- VIII] 965,95 (11343,77)

H |Taxexpense: 3 (1) Current Tax f.00 0.00 ||)

(2) Deferred Tax 0,00 00 Profit / (Loss) for the period from x1 toms (VIl-VUT) 365.96 (41143.77)

XH | Other Comprehensive income |

A (Oltem that will not be reclassified — | subsequently to nrafit or Ioas — a8 (il) Remegnurement of the net defiend aoa coo: benefits lahiltvs aanets . ; Inconm tae dn above iten *

Total o.00 o.c0 Total other comprehensive Income for the | 1.00 n.00 }) period{X1-KI)

i Earning (Loss) per equity shirc: = f

Basle [in t ' 2a 0.02 112.28] | Diluted fine. i 0.02 (12.284)!

Significant Accounting Policie

{

The accompanying notes form an integral part o‘these financial statements

For and on behalf of Company

| (Er. LP. Kalta) Auditors Report Managing Director As per our report of aven date BIND ]

reve For Soni Guiatl & Co; Director( Op) Cha Accountants

Nia

(Gulshan Aggarwal Seereary he Chief Accounts Officer Fes No 712.14 43 Chand Soni)

Place: Shimla Perinar Date Bq hy 2| >202D M.No 083106

HIMACHAL PRADESH STATE ELECTRICITY BOARD LIMITEO Cash Flow Statement for the year ended Jist March, 2018

Far ing yaar Gnine 34 Maree for (eh pear once 37 March

Beserintion 2078 tony

Cash Flow from Operating Activitigs

Profit before tan: tie? Seu, 35, (ae Tey

Adjumtmannts tors Amortization af Capites! Grants ent 4,750.51 bot eas)

Gepriciaton and Amartiaation E6 1,467 15 Asbags baterest Incocn e}3 (P67 27) 15. bah

(Previion for Doubtful Debrs £202 ah, GH hh BS.

Peancy Coot : eM BSG86. 01 SGADGE FHAE sh

Operating Profit before Working Copite Changes 46,052.16 2a 48 Changes in Working Capitials Adjustments for (Inceease) (Decrease In Operating Assets feenibories ells (737.80) ery Trase recaewahale e423 29,411 OF 2100.30 Short Term Loans and Advancia E133 (26.86) A904 ie

Long ferm Loans & Advances gant MAS? 90 La Gtnar Currant Assets e138 (TRS 7 P5F ad 0.88 Gthde Mon-Current Assets e304 (ainse 54) 26,092.01 202852 84,165.31 Aghsttmanta for Increase/(Decremec) In Qeerating Liabilitiva: |

Short born Batremings as S05 902 (0b 6,27 Traita payabes Fad pik 19} aad ae

Ochar Current then itines E100 S,08g5e ier esagas Shart Term Arowisone £ toe Sara 6,00M),9+ Other Long Teen Liahetities ; i ELBSy E Ge MASADR aa | (a sob Ay LES GAAL Fa

Cash Genorated-from Operations 110,205.38 HOLL CPRR| Uf Tas pale (Met) a.on 00 feet Prise Period Expeneay Income a aon or

Not Cast Génaratad fram Operating Actleitios (A) ro, s0348 134,048,11) Cash Finw From Investing Activia, Purghese of Fined Assets: ER (EAARACL A) WAAL AR Decrtive if Capitel scuarces, Free 6.0 (i! Be

Proceeds from Sale of Cerrent Investimonts €ul2 om 641 20 Proteads from GPE Investments: £454 6.90 ‘932s Purthasa of tnvedtinent in Jowit Vertutes ein oon (75.00) Inberest received on investmants: ena Jer? ab he

Leah Geren to Sebsidiaries (Pt, 20 Day Net Cosh Ured in Investing Activities (B) (a440.89) 7 (ator ay

Net Cash Used in rinnncing activities Proceed hom sue of Share Capital faa a7¢00 908.40) Proneed from Share Application Mosny E34 fi ie

Paymint against Balapew of Gunwrs| Aeserve £69 won i643 Other Agseree Futer oD o.0

Frocends from Capital Grants Consumer Ceathibutions 1 OF 16.97 43.29 Pym OF Long Fann Boridennya oe 3.90

Procebdk from Long term Gorromings, Elta Peaidae Wb A808 Payrnant of Flnsnce Gust: Eis (a Agree) (8) S85 O77

Net Cash Generated fram Fieoneing Activities {C | (20,051.79) FF4i4id

Net Increase/(Decrease) in Cas

| hand Cash Equivatents ( A+B4 (4.56) 2,092.71 Cash end Cash Equivalents as at ist

April (Opening Balance} E197 18,278.47 16185.74 Cash and Cash Equivalents as at 3ist March (Closing Balance) 18,273.91 18,273.46

For and on behalf of Campany Auditors Report { AS par cur report of even date

wus Auditors Report Managiig Director AG per Gur report of even cate

~

For Sont Gulati & pe, Sah Charterted ioe ‘

FRN a Aggarwal)

Chel Amacuaats Officer

(Sure h Chand Moisi (Arei area) Parner = Company Secreary

MNo. 183108 Place: Shimla

Ditte 29|02)282p

Himachal Pradesh State Elactrichty Board Limited Shimia

Statement of in Particulars Other Equity

Capital Grants & Reserve | Contributla

in equity for the year enced

carry of

Other Equity

Grants & Retained Contributio | Earnings

‘equity for the year ended

as for carry

Balance Foqand on behalf of Company

Auditors Report (er. 1 F iediea) As per our report of even date Managing Director DIN 5.

ete h} For M/s Fonl Gularie: Ar

Birecter| Op) Chart naga = ~N Gilt. . FRN tee -\

ak ee

Aggarwal) ° . | Chief Accounts Officer Company Secretary (Surdsh Chand Sant). if FCS No‘7279 Partner Samal

Place: Shima M.No O83106 pte RAID2IO.p ‘ {°>

HIMACHAL PRADESH

STATE ELECTRIGTY

BOARD

LTD. Mote

Moc 2.1

FIXED ASSETS AND PAOVISION

FOR DEPRECIATION

FOR FY 2017-48

: L

T[Amount in Lacs

‘AGROSS BLOCK

PROVISION FOR

DEPRECIATION NETBLOCK

Deductio :

ns Depreciation

Auditions =

[Adjustments [during

| Gorss

Block At

|Openingfund for the period

{Adjustments Account:

(OS: as.

on chia roe

EY duting FY

2017: [FY

2027+ [the end

ot aon

OL04 2017 to.

lor deductions|At

the end of

[Attheeandof At

the end

of

SLNo, [Asset

Group Kode

JOLOe20R7 fata y-te

1a 18

IMarch,2018 fOL042017

|31.03.2018 —(12027-18-

March'2028. jMarch2018.

[March 2017. 1

2! 3

4 5

6 7

4 3

10 tl

12 ia

l4

ijland & land

Rights 10,10)

8740.56) 345.39

0.00) 0.00

30435)

ooo

O00 o.00}-

0.00) $084.35)

8740.95 sera

be

2 Land held under lease.

sn.3n3 503

1133.16) _

200). 0.00)

0.00 1153.16

26d 3184)

G00]

#2448) 803.64

640.51) asin

FR SIRs cates

SEH Se aaa

an ata

ag) “aaa

an) aod

(eras tama

a{Hydraulic Works

10.3) 127509.74

‘Ba9.24 0.00]

6.00 125408.98

SO01.51 6161.18

co 6526275]

6114.19) 58408.13

5} Other Civil Works

10.4) 53508,55.

ADAO.BF 0.00)

0.00) 6245.42

TSRS2 Ag 2268.83

0,00 1793132}

4461801 A246.07

6) Plant

& Machinery 10.5

2762U.05 574.24

0.00) 0.00

30178730 3233144

3445671 0.00

86788,15 294999-15

193821.61 Filines

& Cable Net

10.6 29440014

23761,79 0.00)

0,00 318161,54)

6964259 11259.90

0.00) BOBS2.4!

237259.)

‘22476755

8) Vehicles

10.7 1771.09

4,31 0.00)

6.00 1775.40

1371.98) 38.34)

oon 1410.37)

365.08 399.10]

5| Furniture &

Fixtures 10.8

1192.04 19.49)

co] 6.00)

itghad 849.94

13958 oto

989.49 132.95

283,04 10)

Office Equipments 10.9

5695.40 254

0.00] 0.00)

6ao7.84 4224.05]

356.27 a.00

5190.36 1707.48)

2461.21 11/Dste

Processing Euloments

10.55 45th 64)

G00)

0.00) o.08

4312.64 o.o0

O00

0.00 0.00)

4312 64) AF12.64

10{s) oOo)

0.05 OuK)

ocd 6.00

0.00 0.00

2a

0.00 0.00

0,00) Sub-Total

7O4185.71 6A212.58

0.00 0.00)

B52598.29[ —

24Bd46.18 a5933,14

Doo). -FRI27931

57611898 5472399.53

0.00 0.00

0.00) o.00|

ao 0.00)

0.00) 0.00

0,00) 0,00

6.00 Capital

expenditure resulting

i ‘in

an aisets mot

belonging to

. *

10|the Board.

11.101 0.00]

0.00 6.00}

0.00 0.00

a.00 ooo

0.00 0.00

0.00] 9,00

ii 11.102

0.00 0.00)

6.00) O00

0.00) G00

0.00 0.00

O00 0.00}

0.00) Assets

Transfer Ward

iia ono

o.00] o.co]

0.00) 6.00)

0,00 0,00

0,00 oo)

0,00] Ou

Total 600

0:00) 0.00)

0.00 0.00

0.00 0:00)

0,00) 0.00)

0.00 Q.o0;.

0.00) ‘O00

0,00) 0.0

0.00 o.00

oo

0:00 G.00;

000} 0.00

‘Grand Total

7OSEES.71 A712

58 0.00

0.00 358393.29!

266345.18 15533-13

0200 25227931

STOLE;

547839,.53

r ?

Gross Block does not include

value of small

and low

value asseti

each casting

Below As. 500/- charged

to revenue accounts inthe

year In w

ea

they gre

first put to use

Value of such assets charges

to revenue accounts during the year 2017-18

As, Mil

j

HIMACHAL PRADESH STATE

ELECTRICITY BOARD

LTD. Note

No. 2.2

|

Accounts

Additions during

the |Transfers/

Capitaised during

Sr.No. [Particulars

Code

Agcct Ist

April, 2017

year 2017-18

Adjustment |Total

the year

2017-18 |As

at 31st March, 2018

iftand &

Land Rights

14.1 5735.47

816.57 6.00)

6552.05 356.37]

— 6195.68

2|Building&: civil

structure 1a?

7878.47 5126.32

0.00. 13004.69

1234.85 Liv6s.84

3] Hydraulic

Works 14.3

6.91]. 361,71

G.00 264.79

328.75 -63.96|

4/Other Civil

Works: 14.4,

6244.04 iby

.06 6955.31

1521.77 5433.54

5|Plant &

Machinery-T&0 14.5

23442.13) 68957,91

0.00 92400.04

36830.76 $5569.29

6 {Lines

& Cable

Network ete.

14.6) 45596. 72

14011.14 0.00

59607,86 31809.78)

27798.58 Ay

Wehiclas. =

5 i447

Be

pdBib4t 0.00

SoPT Bl

S2n ete

| ke

22.38 ;

8] Furniture & Fixtures

14.8 “So ea]

15.38] 0.00

pee] Tg

——5 58

9/ Office

Equipments 14.9

189.45 335.64

6.00) 525.10

$13.54) 111.56

145 0.00

(0.00 0.00

0.00, 0.00

0.00 Sub-Total

é 89606,39)

$0317.41 0.00;

, 179923.90

7303348

106890.32 Other Assets.at construction

stage 0.00)

0.00 0.00

0.00 0.00)

0,00 1|Contract-in-Progress

15.1 44,37

22.47, o00

66.55 6.00

66-55) 155

0.00 0.00

0.00) 0.00

0.00 0.00

2]/Revenue Expense

Rectassified 15:2

0.00 0.00

0.00 0.00

0.00 0.00

Sub Total

4437 PAT

0.00 66,55

0.00 66.55

Tatal:- BS650.77

90339.538 0.00

179°90.35 73033.48

106956.87 i

0.00) 0.00

0.00 0.00

0.00 0.00

Previous Year

97194.35 B1S37.79

6.00 178732,17

89081.41 4965.76

;:-

= \

4 —

“n if

A Na

| 1

[HIMACHAL PRADESH

STATE ELECTHNCITY BGARD LTD.

i | Note No. 2.3-

INTANGISLE ASSETS AND PROVISION

FOR DEPRECIATION FOR FY 2017-18

ane [iAmiount in

Lac)

: :

GROSS BLOCK :

: PROVISION FOR DEPRECIATION

[NET BLOCK

Oeprecistion Adtjuisiivine

Additicns Adjustment

|Deductions | Gorss Glock Ar

[Opening forthe period

jntso AL the

end ;

OBason — fduring FY

during F¥ jduring FY

— jthe enc of

furidason- |OL042017

to [deduction jof March

JAR the end of March

Ar the end

of

;No. Asset

Group Account

Code |OLO2017

(2017-18 7-18

[017-18 March,

2018 —

fox.aa.2017..|31.032008 — |s 2007-18

[7078 2008,

March 2017.

2 3

4 3

6 7

a 3

10 it

23 33]

[initiangitile Ascéts tant

man] ar]

oeofaeol~

ae st ee

6.75) Ooh

2045, 7o) = RS

ae

Total 724370]

7a3.78 0.00]

Oo 3027.49

1537.96 70575

O00} 223.70]

7.7

HIMAICHAL PRADESH STATE

ELECTRICITY BOARD

LTD. Note

No, 2.14

[FINED ASSETS AND

PRCIVISION FOR DEPRECIATION

FOR F¥ 201617

| hee.

[Amount

in Lacsl). ;

GROSS BLOCK

PROVISION FOR DEPRECIATION

NET BLOCK Deductic ns

Depr-dation _|Adjustmen

Additions Adjustments

during | Gorss

Glock AL j/Opening

fund’ [for the period.

[ts or Account

(OB-38 on

during FY

durifig

FY 2015- FY

2016- |the

end of

as an

LO

2016 te

fdedwctions|at the endo!

{Attheend of

[At the end of

Sl.No. [Asset Group

Code 0t042036

— frore-17

17 17

arch, 2007

(01.08.2016 —fat.03.4077

2026-17 march

2017, March

3017, [March

2016, 1

z 3

4 5

6 7

8 3

10) ii

12 13

ia

Iland & Land Rights:

10.101 8309.83]

431,08 0.00

o.00) 8740.96

6.00 f.00

0.00 6.00

8740.96 8309.85)

2jLand held under lease

hota Rana

1086:33] 46.83

0.00] G00]

1133.46

196.04) 96.60)

8.00) 29264

240.51 890.29

S]Bundigs dg}

>" @3Sh57)-~

506.55] {[Te0Gh

Gon)” = 2a9se

iF Saasa.oo)

B1543] 0.00]

2B ae)

Ube

0s7.57) _ a[Hydraulic Works

ina] i174195.96

313.78 0.00;

aco) 117508.74

5IR39, 6261.73)

9.00 59101 61

SB408. 13 ES6.08

S[Other Gvil Works 10.4

S7iig.23 790.33

0.00] “ape

$8508.56 1a764.63

1897.85 6.00)

15662.43| 42846,07

43953.60 6] Plant &

Machinery 1035|

248973,08 17240,08

Ooo] —o.o9

276233.05 7005532

12276.12 0.00)

‘82733144 19388161

LPESL7F1 7}Lines

& Cable

Net 10.6]

27273860] 2166154

0,00] _-a.0¢)

2eas00.1d 58895. 60)

11037,00 odo,

6963259) 22476755

214144. 8] Vehicles

TO7] *

174aa7 36.82

O.0G/ 0.00

1771.09 1255.62)

* 76.36

0.00) 1371.99)

399.10 449.55

$/Furniture

& Fixtures 10:8

1096.74 6.20

6.00] o.00

1102.94 802.94

46.97 0.00

849.91 253.04)

293.50 10

[Office Equipments

10.9 a700.80

“5.50 0.00

0.00) 6655.30}

7080.82 1153.28

00 4234.06

2461.24) 3619.99

11 Dete Processing

Euloments 10,85

4303.98 8.66

o.cor oy

4212.64 0.00

o.00| 0.00

0.00 4312.64

4303.08 10s)

6.00 6.00)

coo} o.00)

a.00 0.00

0200 0.09)

0.00 6.00)

0.00 Sub-Total

743159.30| 58026.44

0.00] 0.00)

796185.73/ 1 7RBA Ba

23461,35 0,00]

24634618 547839.53

530274.46 0.09

0,00) 0.00

0.00 0.00

o.08 ooo

0.00 0.00

0.00 C00

Capital expenditure

resulting

in. an assets not

belonging ‘to, 5

. 10|

the Board.

110 0.00)

0.00 00]

0.00 g,00

0.00 o.oo

o.00 0.00

o.00 0,00)

li 11.102]

0.00 0.00)

G00] o.oo}

0.00 0.ca

o.00 0,00

6.00 9.00)

0.60) Assets

Transfer \/Ward “433.4

0.06 0.00

0.00] 0.00

0.00) 0,00)

g,00) 0.00}

6.00) 0.00]

d.06 Total

00 0.00)

0.00] 6.00]

0.00 0.00)

Q.00 0.00

O.co 0.00

0.00 0.00

@.00 ooo}

G00 0.00)

0.00 0.00

a.00 0.00

0.00 0.00

Grand Total

74315930) 5026.41

ono] o.oo)

794198.71| —

212684.83 B2461.35

G00} 24538618

547839,53 530074.46

Gross Ohock

does net

include value of small and

law value assets aach

costing below

Rs. SO0/-

charged to avenue

accounts in the

year in which they

are first put

to use.

Value of such assets charges

to revenue accounts during

the year 2016-17

Rs. S066000/-

Tee ee

[HIMACHAL PRADESH

STATE ELECTRICITY

BOARD LTO.

Hote Nou2d? INTANGISLE

ASSETS AND

PROVISION FOR

DEPRECEATIOM FOR FY 2006-17,

{Amount in Lac}

__|SROS5 BLOG

IM FOR DEPRECIATION MET BLOCK

— /

Depracttion jAdjusime

Additions jAdiustment

|Deductions | Gorss

Bock At

[Opening for the period

|nts or At the

end ,

: O8ason

— fduring Fy. during FY

jduring FY

= [the end of

|fund'as on 02,04,2026

to [deduction jaf March — | At the end

of March

At the end of SiNo.

[Asset Group Account

Code [OCH 2017

[2016-17 20bb-17

|20b-17 March, 2017

GLO 201G

[SLC

fe ue-ty

[2o17. O17,

March 2006.

1 2

a 4

5 5

7 4

5 410

i az

i 14

~ Tlintenigible' Assets ”

~_ 1a30i|

— 2easgo]

oa eet

anol gata

ve| tease]

aaa] >

ouopassnaeboo Gao

705.754- LIS4.49,

Total 2243.70.

0,09 oo

‘1.00 724370)

1089.23] aan

74 2.00

1537.96) 705.75

1154.4)

HIMACHAL PRADESH

STATE ELECTRICITY

BOARD LTD.

Note No,

2.13

Accounts Additions during

the |Transfers/

Capltalised during

Sr. No.

[Particulars Code

Asat Ist

April) 2016

year 2016-17

Adjustment [Total

the year

2016-17 |Agat

3st March,2017

1jLand &

Land Rights

14.1 -1361.27

15895.98 0.00

14534.71 8799.24

5735.47) 2 |Building&

civil structure 14.2

6909.92 1547.81

o.00 BAS7.72

579.35 7878.37

aj Hydraulic

Works 143

1454.47 8055.60

0.00 9510.07)

9606.99 -96.:91,

4] Other Civil Works

14.4 1737781

4293.45) 0:00

2167428 15427.22

6244.04) 5}

Plant & Machinery-T&D

14.5 20412,13

36612.34 0.00

5702447 33582.34

7344213 Lines &

Cable Network

etc. 14.6

51984.91 15093,11

0.00 66473.02

20881,30 45596.72

7 {Vehicles ..

ope 555.45!

.- 32.36

. 000

SaT.B1 21.51

566,30 8)

Furniture &

fixtures 14.8)

ie

aa ODOT

BEG gp eS gags

ees

50.82 9)

Office Equipments

14.59 185.74

3.71 o.00

189.45 0.00

189,45 14s

0.00 0.00

0.00 0.00)

0.00 0.00)

Sub-Total 96966,75

81537.79 0.00

178504,54 88898.15

89606.39 Other Assets

at construction stage:

0.00 0.00

0.00 0.00

0.00 =

2.00 1/Contract-

in Progress 15.1

44.37 0.00

0.00 44,37]

0.08 |

84.37) 15s

183.26 0.00

0.00 183.26]

183.26 0:00

2/Revenue Expense

Reclassifind 15.2¢

0,00 6.06

0.00 0.00

0.00 0:00);

Sub Total

227.63 0.00

0.00 227.63)

183.26 84.37

Total: 97194,39

$1537.79, 0.00

178732.17 89081.41

‘89650.77 0.00

0.00) 0.00

0.00) 0.00

0.00 Previous

Year 93777.89

7483.85 0.09

172266.74 75072.35

97194.39

Non Current Assate 2.4 Financial

As at As at 34st March,

Non Current Assets 28

As at 31st March, 2016.

Non Current Assets 26

As al 31st March, Ag at dist March,

Non Current Assets 27 Non

As at 3ist March, As.at 3at'March, ‘As at 31st March, 2018 7 26

Currant Assets 28

As at J1at March, As-atd4st March, at3tst March,

40 1

Current Assets

29 As at 3tst As at dist

Current Assets 2.10

As at 31st March, As at 31st March, 2018 2017

As-at 31st 2076

45

In-opinion of the Company, trade receivable ara valued as stated In accounts, lf realised In the-ordinary course of businads. Current Assets

2.17 and Bank Balances

at 31st As at 342t March,

t

Current Assets

St March, As at 31st As-at 31st March, t

aa

15302.94

1

Current Assets: 243

Asat D4st March, As at 31et March, As at 31st 204 17 6

i 68 22990.42

Current Assets 2.14

61575.53

ANNUAL REPORT

2047-18

Notes to Accounts

245 Equity

Share Capital

{Amount’in Lakh)

As at Jist

March, 2018

As at

dist March,

2017 As al

dist March,

2046 No.of

Shares |

Amount No.

of Shares Amount

No, of Shares

Ameuarit Authorised

f Equity

Shares at per valine”

100 each

TiOtooooA 110600.00

T1taO0G00 110000,.00)

i1ooeddda 11G009.06)

EQUITY SUBSCRIBED AND

FULLY PAID UP =

Equity Shares at par value” 100- each fully pad

67058580 ‘7056.58

beazaigo 65928: 15)

‘B02 5R) 60929

58) (

Totat 67 056,58

5328.18 cal

60320.58

Aourethwe soe

hee

Tho reconciliation

of the number

of Shares outstanding is

set out below: '

| ea

ee :

| In Lakh

Peutioufars, As at

3tst March,

2078 As-at3ist

March, 2017

As at3ist March,

2046 No.of

Shares |

Amount

No, of

Shares Amount

No. of Shares Amount

Number of

shares: Outstanding

at the beginning

: B5228

180) 65225,

18) BO320580

Bi

28.55 52203180)

52200, 15) Ni

of shares igsued-during

the year iree4oo

1728.40 aes8600

4596.60 eize4c0

8126.40 Share bought

back during the year

0 lt

5 O01

Nomber of shares outstanding at ihe end, S7055580

87055,50) aaa2e180

6552818 60329590

6029.58 Terms!

Rights attached

to Equity

Shares:-

The Company has only one class of equity shares

having par vue

of Res 100

per-share: Holders of equily shares are

entited to voting figtts

prdpodtionaly to their share halding at the meeting of sharebolders, No tems

and conditions have been mentioned

in investment,

mada by

Gavt in

HPSEBL

As at

34st March, 2047

As at

dist March,

2076

No. of Equity Shares |% of Sharehokding. | Ne. of Equity

Shares /% cf Sharahotting | No,

of Equity Shares |% of Shareholding

_| 1, G

overnor

of Himachal

Pradesh “67056580

100 653,28

100 |

GO320580 100,

2.16 Shara Application Money

Asal dist March, As at 34st March, As at3tst March, 2018 2017 2076 Share Application Money pending allotment ‘0 1.40 : : 200 Equity shares for Rs.1.40 lekh pending for allotment, recaverable fram GoHP, has bean received and shares have been is in favour of GOHP vide agenda item 32.09 on deted:7,302018. :

ZF

As ag 31st

As an 3ist As as Jist Mare, 2017 Marech,2016

T

Non Current Financial Liabilities ' 2:18 \

‘otal

from were

with the loans are hypothecated with the REC/PFCILIC. schemes for creation

* There has bean ne defaults In repayiients of apy cf the loan oF Interest thereon at-the-end of the year * The Company had borrowing limit Rs. S000 Cr. which has now been inéreased upto Rs, 6500-Crore during FY 248-49

Non Currant Financial Liabilities 2.49

Non Current Liabilitias 2.21 Non

SY or *| SHIMLA “| 2 S| e ay

ML

_ Current Financial Liabilities

Current Financial Liabilities

2:23 E AS at 31st Mal As at‘3tst March, AS at 31st March,

7

i}

Current Financtlal Liabilities 2.24

2.25 Other Current Liabilities

00 00 oo Current Uabilities 2.26 T

March, As at dist March,

04

00

80

=) Pavitue from Operations

La

ended Fist | Veurended dist March, 2010 March, 2047

OOF 00

13593.61 T4543

Sab4 177

ThLTLAT

lin 219 4377

6 to

S124 to 250.8 379

$1261 to B69

SL27L te

L301 te

to BST,

Year ended Sist March, 2018

40.40

267.

8910.19

3705,

96,74

Accoun? Code

219.

to

780)

251692.

0.00 ooo

4a

Yaar ended Fist March, 2017 (its)

$6M1

a0,

7a.

i

oa Purchase of Pewar

Your ended 34141 Marek, 201g | Yee emiled 54st March,

Account | Yearended Stet |... .. 7 Cndo March 2018 Year ended 314% March,

7

an cicla Nahan

Note 2.20 Employee Benefits Expenses , 4

(% Lakh)

Account Year ended Year ended 3is Employee Benefits Expenses peas 3i mt arch ek ag

_ 2018 af

Dearness Pay . 75.0 0.00 0.00 Grade Pay (Regular) 75.008 4069.48 6621.53 Grade Pay (work charged) 75.009 - 63.36 70.19 Salary

75.1 | 42554.09 39150.36 Overtime,

75.2 601.23 601.10 Dearness Allowance. 75.3 +42366.05 44069.06 Other Allowances. 75.4 3413.70 3499.66 Bonus. 15.5 27,99 98.44

Sub-Total $3095.89 94101.35

Fee.& Honorarium. 75.610 35.88 40.29 Medical Expenses reimbursement. 75.611 825.55 880.62 Leave Travel Assistenance, 75.612 15.90 14.02 Salar;'/ wages of outsourced /contractor 75.613 3110.60 2551.33 Earned Leave Encashment. 75.617 | 8487.35 8395.12 Payment under Workmen's Compensation Act, 75.629 :. 255,07 120,38 Leave Salary contributions.{Employees-on Deputation) 75.633 19.55 0.00 Leave encashment Fund 75.635 0.00 0.00 Sub-Total ; 12753.89 12001,77 Staff welfare expenses. Ta7 20.39 25,42 Terminal Benefits. i 75.8 B7245.41 67932.45 Sub-Total

7275.79 67957.88 Total 193125.58 174069,99 Less: Expenses Capitalised 75.9 4968.87 3677.29 Net Employees Cost 188156.70 170383.70

Note 22h Finance Cost

pron

fname A

(Lakh)

Yeur ended 31st | Year ended 31st et Ane aee ‘March, 2018 March, sees

Interest on State Government Loans. 78.1 | 22778.08 1898.18 Interest on Bonds 78.2. i 0,00 0.00 Sub-Total | 22778.08 1898.18 Interest on loans from LIC 78501 i 359.45 557.26 Interest on loans from REC 78,502 | 6799.35 10551.98 and other loans ete. 78.504 to 509 | 0.00 0.00 Interest on stock other loan 78.510 | 0.00 3534.98 Interest-on PFC Loan TES 4632.01, 4626.22 Interest on stock Punjab & Sind Bank Loan 78.514 0.00 2432.08 Interest.on Private Bonds 78.516 1. 7550.96 5728.89 Interest on loans from State Bank of India. 78.524 i 0.00 2809.42 Interest on loans from ADB against clean energy. 78.525 114.82 107.10 Interst on loan from Central Bank of India 78.529 | 0.00 457,72 Sub-Total. 735 19496.59 30805.65 Penal interest 0.00 0.00 Interest to consumers (securities) 7B.601 | 2027.42 1272.79 Sub-Total ; 2027.42 1272.79 Total interest on capital liabilities 44292.09 33976.62 Interest on borrowing For working capital, 73.7 > 2368.02 11067.61 Sub-Total 2368.02 11067.61

Rebate allowed for timely payment to Inter-state | SOP Bulk Supply under bilateral agreement CERLA BST Annas tps

Sub-Total 78.621 & 78.831 1019.04 1300.14 Other interest and finance charges 78.841 0.00 82.28 Interest on GPF 78.852 | 2220.61 504.85 Cost of raising finance. 78,861 to 869 l 0.00 109.61 | Surcharge on delayed payment of POP 73.880 { 4897.09 7943.90 Bank charges between Board offices 78.881 ! 1.12 0.58 Bank commission for collection from consumers 78.882 | 14.14 6.71 Other Bank charges 78,883. 29.39 20.15 On line bank tranction charges 78.889 0.00 4.09 Sub-Total 7162.32 8672.18 Total | 54B44.47 55016.54 Less: Interest capitalised 78.9 | 9135.65 4681.89 ‘Total 45705.82 50334.65

Mote 2.38 Deprectetion and Amortization expences

* Particulars

tt

Account Code | Yearendod dist | Yearended 21st

a7. ed a

‘33817

ey

On a Cel dervics pendared by cence! board keeping

ancien heme

pale for moa compliance of Ruankwie Power

comauitter [nr formulation at

Note asl Earning Per Share (EPS)

(Lakh)

Year ended Jist | Year ended 3ist

Fartouiats March, 2018 | March,2017

I Net Profit as per Profit and Loss A/c avallable for equity

Shareholder ( in Rupees) E 365.96 {4,421.10}

Il Weighted average number of equity shares for Earning Per Share

Computation:

(A) For Basic Earning Per Share of Rs. 100/-each ( In Nos) 16,476.42 607.46

(B) For Diluted Earning Per Share of Rs. 100/- each No of Shares of i :

Basic EPS as per Il (A) (in Nos} AOSPGHE UT AS:

Add: Weighted Average outstanding Shares related to Share o.00 0:01

Application Money (in Nos} ; J

ee for Diluted Earning Per Share of Rs. 100- each (In 1647642 Bay 49

Ill. Earning Per Share (Face Value of Rs. 100/- Each) BASIC (in Rupees) 6,02 (12.28)

DILUTED [in Rupees) Oe {12.23}

Th How much cost has been incurred on abandoned projects and of this how much cost has been written off?

Nil during the year

Is there any system to evaluate the reasonableness of Plant Load Factor including auxiliary consumption and generation loss with reference to norms fixed? Deviations if any may be quantified and commented suitably?

Yes as per HPRC regulation.

In the case of Hydroelectric Projects the water discharge is as per policy/guidelines issued by the State Government to maintain biodiversity, For not maintaining it penalty paid/payable may be reported.

Yes

For Soni Gulati & Co

Suresh Chand (Partner)

FRN: 008770N MRN: 083106

Date: 29.02.2020

2[ Page

CHARTERED ACCOUNTANTS

OX SONI GULATI & CO.

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF HIMACHAL PRADESE STATE ELECTRICITYBOARD LIMITED

Report on the Audit of the Standalone Financial Statenvents Opinion

We have audited the accompanying standalone financial statements of Himachal Pradesh State Electricity Board Limited (“the Company”), which comprise the Balance Sheet as at

March 31. 2018, the Statement of Profit and Loss (including Other Comprehensive Income). the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date. and a summary of the significant accounting policies and other explanatory information (hereinatier referred to as” the standalone financial statements”),

in our opinion and 16 the best of our information and aceording to the explanations given to us, the aforesaid standalone financial statements do not give the information required by the Companies Act, 2013 (“the Act”) in the manner $0 required and do not givea trae and fair view in conformity with the Indian Accounting Standards prescribed under section 133. of the Act read with the Companies (Indian Aceounting Standards) Rules. 2015. as amended. (Ind-AS") and other accounting principles venerally accepted in India, of the state of affairs

of the Company as at March 31,2018, the profit and total comprehensive income, changes in equity and its cash {lows for the year ended on that date

Basis for Adverse Opinio.

We conducted our audit of the standalone financial statements in accordance with the

Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities

under those Standards are further deseribed in the Auditor's Responsibilities for the Audit of

the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered

Accountants of India (IC.A1) together with the independence requirements that are relevant to

our audit of the standalone financial slatemerits under the provisions of the Act and the Rules made there under. and we have iulfilled our other ethical responsibilities in accordance with these requiremenis and the IGAI’s Cade of Ethics. We believe that the audit evidence we have obtained is-sulficient and apprepiiate to provide a bacis for our audit opinion on the standalone

financial staterrents.

Nev Audit Maticrs

Key audit matters are those matters that: in our professional Judgment. were of most significance in our audit of the standalone financial statuments of the current period, These matters were addressed in the context of our avdit of the standalone financial stulementis asa

whole, and in forming our opinion thereon, and we doe not provide a separate opmion on these inatters, We have detenuined the matters described below to be the key audit matters to be

communicated in our report, as these pose a tentative Risk of Material Misstatements.

sONl GULATI & CO, : = CHARTERED ACCOUNTANTS é ae “ROSHANLEELA", 174/2, Near Goyt, School, j % Mehli, Shien 171013 fi WN Tel. = (0177) 2626169, 2626793 Fax : (0177) 2626169 . \ 4 ee Mobile ; 9418072169, $860005189 a i Page Ma. E-mail : sonisureshd@gmad.com X 5 = if

|. Accuracy of recognition, measurement, Presentation and disclosures of revenues and other related balances in view of adoption of IND AS

The Company claimed to have adopted IND AS but we found that only regrouping of amounts in financial statement has been done. We found that the financial statements are not even GAAP compliant not to talk about AS or IND AS compliant . The Companies Act, 2013 gives great importance to the compliance of the accounting standards by the Companies as evident from Section 129(1) wherein it has been stated that financial statements shall comply with the accounting standards , the first proviso tu said section also states that the items contained in financial statements shall be in accordance with the accounting standards, We noticed that the Company has not complied with following accounting standards /IND AS : IND- AS 10] First time adoption only reclassification (not verified by us) of balance sheet & P&L account has been done otherwise there is no compliance j.IND-AS 18 Revenue ,IND-AS 19 Employee benefits , IND-AS 16 — Property Plant and Equipment , IND-AS 17 Leases IND -AS 36 Impairment of Assets IND-AS 37 contingent Liabilities and contingent Assets , IND AS 7 cash management .

After getting report from units that neither access to billing software nor to tenders records was given, we conducted some logistic tests at Head office &noticed significantly material understatement of revenue. To strengthen the same we performed substantive test through 25 sample bills & found that there was under billing to the tune of Rs.432 Cr. in these samples. Replies of management (dated 25 September 2019) were found to be non sequitur & evasive, as replies has nothing to do with our observations. Based upon these samples & logistic test, we are of the opinion that revenue (income) of the Company is understated by Rs.3082 Cr. This difference is in sales within the state, In reply to other question on revenue understatement the management reply (verbal) was the CMTR sale is only for calculating transmission losses & if we assume the statement of management to be right, the transmission losses declared at 15% will become 45 % .However this is not the case these are not transmission losses but combination of i) under billing ii) reversal of bills due to Court order & iii) accounting of units sold but reversal of amount for open access but non reversal of units sold.

Different sales amount (Assessment fig) are provided by different sources e.gi) Revenue report from SAP Rs.7830 Cr. Similarly Realization fig are i) Revenue CMTR 3 Rs 4684 Cr. il) Notes to Account no 24 Rs 4622 Cr.. iii) Go Live Consolidation Rs.5124 Cr,

We were told at HO that opening balances in SAP were taken wrong at Unit level but how the sale fig could be wrong as it was not opening balance, To strengthen our observation -we noticed that all sales and revenue receipts are booked through K numbers .All statements including CMTR are prepared from K numbers ,how could be there any difference .Of course some differences could be theré due to reversal upon Court order etc., but here the difference is more than 30%.

We understand that in case of all meters with20 KVA sanction load reading is taken through MRI machine but to our surprise in all case we noticed under billing, the reading was manual .In our opinion all this was:a well planned and deliberate act. Replies of the management on revenue during September & December are different from those during February 2020 given after Audit Committee Mecting'¢.g.in case of Anumita Overseas during September & Dec 2019 the Management claimed that the difference in

Page No. 2

billing Rs37,.96 Cr, has been recovered however .during February 2020 it claimed the amount has been billed during January 2020,Thus all bills of major customers will have to be checked during current year i.e. next year audit. The replies of management & Audit committee are itself contrary ,on one side the Audit committee chairman claimed that such fraud is impossible and he again insisted upon number of units which we never disputed and is separate topic latter in reply to our letter under section 143(12) ,on the other side the

Management in its letter & meeting held on 19/02/2019 claimed that under billed amount has been billed during January 2020.It is: worth mentioning that during Dec.2019 the same Management has claimed that amount of Rs 37.96 Cr, short billed to Anumita was billed & recovered during the same month of billing .now on what basis the Management has issued new bill for differential amount. .Only this one bill was discussed during the mecting held

n 15/02/29 as well 19/02/2020. no other bills and the main amount Rs 3082 Cr.was not discussed at all except that such big fraud is not possible thus ail replies are sequitur At evasive. We also understand that there are small cases where amount of bill was reduced by

Court but these were also due to continuous frauds committed by the officers of the Company. In addition in case of Ambuja open access was included in the HPSEBL bills, amount of open access was reduced by not the no of units. There may also be some more

reasons for under billing but still these amounts to frauds as per Companies Act 2013.Qur question on our observations were dodged .

As the company has not disclosed its revenue fully which is substantially under stated .and as per Management it will be reconciled & provided during next year audit (verbally) ,we will assess the Company's process to identify the impact of such billing /under billing &. report accordingly in next year audit report . In the light of our observations on revenue .tenders |Fixéd Assets .sundry debtors &

creditors .inter unit balances ,other assets and liabilities , claim of management to adopt IND AS is false jas the Financial statements are not even AS (GAAP) compliant even there is no arithmetic accuracy...

We notieed that bills of Ambuja contains large amounts of adjustment revised on the claim of ‘open Access” consumption included in‘consumption of HPSEBL but in our opinion this type of mistakes are impossible in SAP environment & will be reported during next year audit report.

After analyzing all aspects of billing, in our opinion, the management has manipulated some aspects/parameters of software e.g, demand / energy charges of billing software just to give benefit to some large customers& also billing of large customers through manual reading instead of MRI. In terms of SE in charge of IT all this is due to faulty software by HCL(verbal Claim) & that Balance Sheet cannot be revised .But in our opinion this is the outcome of manipulation of software as appears from our substantive tests because when same software is giving accurate outcome in other cases how could it provided wrong results in some large consumers. We concluded this under billing and manipulating software alter printing some bills and analyzing the same.

To counter- check such difference we visited Solan Circle again and got 4 sales fig as under:

Revenue billed as per CE (commercial) Rs 3629 .17Cr Revenue as per OP circle Solan A Rs 2512.73 Cr Revenue billed as per manual from divisions Rs 1759.82 er Revenue-as.per CMTR III Rs 1984.44 cr

Page No. 3

Revenue as per Go Live statement Rs 2237.06 cr Same was the position in some other circles also to be reported next year.

Other Major Observations:

Balances in Trial Balances given by the circle do not tally with the balances taken in consolidation at Head Office We were told that these has been adjusted at Head office but

no details-of such adjustments has been provided to us »ve cannot comment upon the accuracy or otherwise of the data in financial statements.

Debtors /Trade receivable figures do not tally through analytical method& are subject to reconciliation and adjustments. ,

Cash flow statement does not tally in itself, even some previous year fig remained in the cash flow still it was made to tally .We did not prefer to waste time upon its reconciliation being a futile exercise in the light of our other heavy qualttications..

Qpening balances in SAP at Circle offices do not tally with Closing balances at HO Balance sheet means opening balances at circle offices are different from closing balances of previous year. At the end of the year adjustment under Settlement account were made to tally the same .however no details of such adjustment were provided to us. For every such difference & adjustment ,the reply of management for details is “ we have provided you soft copy of consolidation however ,he same could not be explained from such excel

sheets. On the fag day of finalizing audit report one-such new adjustment came to notice viz difference in Lon to subsidiary as per Balance sheets of HPSEBL & BBPCL which s per HPSEBL is Rs 266 Cr.& as per BBPCL it is.219 Cr. The difference was explained due

to interest however no such interest did ‘appear in account or P&L account .At this it was told that same has been adjusted against expenses, still same could not be quantified.

Adjustments. are made through TEO but details of same &counter confirmations not available at units or at HO. At one stage one of our assistant told “ Financial statements have been prepared off the records * now we realize the same not to be totally wrong.

No physical verification reports of fixed assets and inventories were made available to us.

Looking at the status of book keeping, we are of opinion that the Fixed Assets verification is of utmost importance next to revenue accounting, but the same has not been done. Fixed Assets are swapped and also replaced but no accounting for such swapping or replacement

is done, Assets which were swapped / replaced are shown as it is and new assets also capitalized. We could not find entries for decommissioned assets or assets swapped. Thus

not to talk of safeguarding the assets, there is no proper accounting to be called as such. In addition, no improvement has been noticed regarding previous auditors reports on fixed assets, inventories& other assets & liabilities.

Differences-in Fixed Assets where no details are available Rs 163.01 Cr. Negative balances in fixed assets Rs.15,30 Cr, were noticed, Fixed Asset register prepared on eléctronic media/ physically are incomplete as to its location ,date of purchase / installation/ depreciation etc. Instances has been noticed where only amount is written in fixed assets register but details like Plant Machinery -cables ,building ete are mot mentioned nor the management has any answer for the omission of nomenclature not to talk about location

ee ete. Fixed assets which are replaced by new advanced /large capacity are continued in Carly aN fixed assets register and neither impaired in books of accounts nor in financial statements

Cg “a\ this is clear violation of IND AS 36, Mn le 3)

Page No.4

Upon test checking at some stores ,significant differences were noticed but remained unexplained ,in reply to our observation the management has replied that specific case not given jin every store such differences were noticed specifically during audit of store at Bhatta kufar management was informed ,that some items like steel ete were there in stores ledger but physically missing , being statutory auditors we cannot afford to conduct physical verification which is a separate assignment for such a large organization .The control records are missing financial statements are prepared from the financial records which can not be compared with physical balances records .For most of our questions the replies of management are” this is as per past & nobody has asked for the same neither Statutory auditors nor internal auditor or CAG auditors’.

Company claimed to have adopted IND AS but actually none has not been adopted, rather

financial statements do not comply even with AS (GAAP)

Tenders :Tenders documents were not provided to us because either the Chief engineer /SE was not available or these were avoided-as we were sent to JE whose records start from

works ‘supply order only .At Dharamshala Ist day CE was on leave ,we conducted audit at

division jnext day initially CE was not thereDy CE informed that he does not have authority to provide the documents and we were asked to wait when CE came at around

2PM .his reply was “his draftsman is on leave this way the records were avoided. At Head office CE MM we were sent to JE whose records start form works order or supply order no tender records available with him. After discussions with management it was decided to check the tender records during next year audit,

Purchase of Power: Note 2.25 —only purchase of power amount is given but quantity of purchase not given, quantity:is given only in table -3.

There are negative amounts in purchase of power and also some purchases shown without name of the seller. This. way and also negative attitude of management checking the purchase of power could

not be concluded, We have decided to chéck purchase of power during next year for both the years & report accordingly.

Thus there could be a risk of material misstatement in Revenue, Téendering& Purchase of

Power some of the same explained above.

Security Deposits: No sub ledger for security deposits has been maintained /provided to us for our verification. No sub ledger maintained/provided for deposits for electrification, service connection ete. made for'acquiring fixed assets.

Ny Ey

wy ’) Information Other than the Standalone Financial Statexaents and Auditor’s Report

i} es Page No. 5

Thereon

The Company's Board of Directors is responsible for the preparation of the other information.

The other information comprises the information included in the Management Discussion and Analysis, Board's Report including Annexure to Board’s Report, Business: Responsibility

Report, Corporate Governance and Shareholder’s Information, but does not include the

standalone financial statements and our auditor’s report thereon.

The standalone financial statements provided to us do not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements. our responsibility is to

read the other information and, in doing so, consider whether the other information is material ly inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears lo be materially misstated.

However, no-such other information has been made available to us.

If, based on the work we have performed, we concluded that there is a material misstatement of this other information, we are required te report that fact. We have nothing to report in this

regard, as the statements like Board Report, business Responsibility Report, Corporate

Governance Report &-shareholder’s information has not been verified by us.

Management's Responsibility for the Standalone Financial Statements

‘The Company’s Board of Directors is responsible for the matters stated in section 134(5)

ofthe Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive

income, changes in equity and cash flows of the Company in accordance with the IND-AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments

and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the

Company’s ability to continue-as'a going concern, disclosing, as applicable, matters related to going concern and using the Going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do 80,

The Board of Directors are responsible for overseeing the Company's financial reporting . process.

leat oA 4 Auditor's Responsivilitics for the Audit of the Standalone Financial Statements Was cy Page No. 6

Our objectives are to obtain reasonable assurance about whether the standalone financial

statements as a whole are fice from material misstatement, whether due to fraud or error, and

to issue an auditor's report that includes our opinion. Reasonable assurance is a high level af

assurance, but is nota guarantee that an audit conducted in accordance with SAs will always

detect a material misstatement when itexists. Misstatements can arise from fraud or error and

are considered material if, individually or in the aggregate. they could reasonably be expected

to influence the economic decisions of users taken on the basis of these standalone financial

statements.

As part of an audit in accordance with SAs, we exercise professional judgment and

maintain professional skepticism throughout the audit. We also:

* Identify and assess the risks of material misstatement of the standalone financial

statements, whether due to fraud or error, design and perform audit procedures responsive to

those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for

our opinion. The risk of not detecting a material misstatement resulting from fraud is higher

than for one tesulting from error. as fraud may involve collusion, forgery, intentional

emissions, misrepresentations, or the override of internal control.

* Obtain an understanding of internal financial controls relevant to the audit in order to

design ‘audit procedures that are-appropriate in the circumstances. Under section 143(3){i) of

the Act. we are also responsible for expressing our opinion on whether the Company has

adequate internal financial controls system in place and the operating effectiveness of such

controls,

* Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.

* Conclude on the appropriateness of management's use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists

related to events or conditions that may cast significant doubt on the Company's ability to

continue as a going concern. If we conclude that a material uncertainty exists. we are. required

to draw attention in our auditor’s report to the related disclosures in the standalone 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's report: However, future events or condilions may cause the Company to cease to continue as a going concern.

« Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures; and whether the standalone financial statements

represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements. that, individually or in agpregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative

materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (il) to evaluate the effect of any identified misstatements in the

financial statements,

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant

deficiencies in internal control that we identify during our audit, Page No. 7

4

NY : , of / a

et |

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all

relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when,

in-extremely rare circumstances, we determine that-a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. From the behavior of the Management we concluded that the two key audit matters we selecied, one is of very serious

nature and must be reported viz understatement of revenue on a large scale, as the sales fig disclosed in financial statements is only Rs.6503 Cr. Instead:of Rs9585Cr. Balance Rs.3082 Cr. is

embezzlement /fraud against the Company committed by the management Second Key matter was Tendering ,but records of tenders were not provided to us..the JEs.start the tenders from

Works’/ supply order only , the process before this is foreign to them .However the management has assured (verbally) to provide complete records during next year audit including for this year.

Report on Other Legal and Regulatory Requirements

|. As required by Section 143(3) of the Act, based on our audit we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except the following

information was partially /not provided to us: i) Tender documents were either not provided or if provided they start from purchase order or works order.

it) Minutes Books of Board Meetings & General Meeting, accounts being in arrear & going through all these records in single year is just impracticable when these are allowed to-aceess at the figure end,

iil) Register of Charges not provided

iv) Register of Investments & Loans/Advances to subsidiaries, joint ventures & other entities.

v) The Company has not complied with the provisions of section 186(5) of the Companies

Act, 2013. Company has.advanced loan to its subsidiary company (BVPCL) form time to

lime and during this year also outstanding on 31.3 2018was Rs 266 crore while outstanding

on 31.3,.2018 was Rs 219 crore. Difference reported to be due to interest but no interest fig

could be seen in books of accounts, One youcher was shown but not entered in books of

account and was claimed to be squared up with expenses no stich squaring could be seen in

books of accounts. This is all bogus clams of management .management is not prepared to

put in writing any such claims .ihis violation of Companies Act 2013 violation of

Accounting standards & Income tax Act.

vi) As reported by previous auditors, Yearend provisions for liabilities / expenses booked at

the close of the year are reversed in the subsequent accounting year by the Company,

vii) The Company has not complied with the provisions of section 188 of the Companies

Page No. 8

Act2013 in making advances to its subsidiary

We further report, that during the year under review Company has made provision for expenses on the basis of budgets approved for particular works irrespective of the fact that actual expense accrued! incurred and same is reversed in the subsequent period on receipt of actual bill / invoice of the vendor / contractor. The same results in overstatement of other current liabilities and revenue expenses / capital work in progress: The sufficient information with regard to quantum of such liabilities provided in financial statements has not been made available to us,

2.As required by Companies (Auditors Report) order 2016 (“the order”) issued by the Govi of India in terms of sub-section (11) of the section 143 of the Act we give in the annexure

“B” a statement on the matters specified in paragraph 3 & 4 of the order to the extent applicable.

3,We-are enclosing our report in terms of section 143(5) of the Act jon the basis of such checks of the books & records of the Company as we considered appropriate & according to the information and explanations given to us in the annexure” A “ on the directions issued by Comptroller & Auditor General of India.

4. we also attach annexure “C” report on the internal controls over financial reporting under

clause (1) of subsection 3 of section 143 of the Companies Act 2013.

5, In view of following, in our opinion, proper books of accounts as required

by Law have not been kept by the company so far as it appears from our examinations of

those statement, registers and related records produced for our verification.

i. The sub divisions prepare CMTR &expenses statement and forward the same to Division & Divisions of the Company has maintained cash & bank book and no

corresponding transactions are recorded in ledger accounts. The adjustment entries were passed in the memorandum statement maintained to compile these financial statements, which is in contrary to the double entry system of recording of transactions as required by the Companies Act 2013.

The Divisions extracts monthly Trial Balance (known as “CS-1") for the purpose of

consolidation of financials by Circle and Wings, The Head Office on the basis of memorandum statements submitted by Circles and Wings compile these financial statements. The adequacy and correciness of memorandum statements and transmission of financial data do not ensure the correctness and sufficiency of accounting and recording of transactions and compilation of Balance Sheet and Profit & Loss account of the Company.

ii. The Divisions do not compile the trial balance with balances of the previous accounting month. The Circles consolidates the Trial Balance provided by the Divisions on monthly basis and Head Office merges the monthly Trial Balance and at the end of year consolidated balances are drawn on the basis of memorandum record for the purpose of preparation of financial statements. The Company does not record balances provided by Divisions at Circle or at Head Office in proper financial books of accounts. These financial

Page No. 9

statements have been compiled on the basis of statements prepared on the basis of merged

Trail Balances provided by Circles and not on the basis of books of accounts.

iii. The consolidated statements / record compiled at Head Office and Circle do not provide complete details of Main Accounting Code and or Sub-Account Code’. The memorandum consolidated record does not provide Circle or Division wise detail of transactions disclosed in these financial statements.

iv. The cash beok maintained at Division is: not balanced on daily basis,

therefore, the cash book do not refleet the cash in hand on daily basis.

(a) The Balance Sheet and Statement of Profit and Loss deait with by this report

are in agreement with the books of statements except our observations in Para,5(i)(ii)

(iii),(iv),

(b) Due to undetermined effects of the matter described in the Basis for Adverse Opinion

paragraph, other qualifications and non compliance of IND AS, in our opinion, the

Balance Sheet. Statement of Profit and Loss does not comply with the accounting standards

referred to in section 133 of Companies Act, 2013 ead with Rule 7 of the

Compantes(Accounts) Rules 2014.As reported in earlier years audit reports the

Company has ‘not complied with most of the AS (GAAP) but claimed to be IND AS

Compliant this year.

(ce) We were informed In terms of Exemption Notification Government of India,

Ministry of Corporate Affairs Notification No 372 dated 05 June2015 Government

companies are exempted from the applicability of section 164 of Companies Act 2013,

therefore, no written representation from Board of Directors have been obtained.

(d) The Company has taken some’ steps to remove the qualifications reported in

earlier year reports while adopting the accounts for the current year, such old qualifications

has been deleted & non complied has been considered in the current year report also,

Other Matters

i) Bank accounts are not reconciled although reconciliation statements are

prepared but are in the nature of formality only as, very old transaction of even cash are appearing in reconciliation statements .In some divisions negative balances shown in CS-1

ii) Capital Work in progress registers are not updated in divisions& on the top of it adjustments in Capital W-I-P are made at Head office .This is not practicable to verify or comment upon the CWIP in any unit. iit) Odd balances noticed in sundry debtors accounts in many units. iv) Details of head44.11,44.120, 44.310. 44.330 not provided nor there is no system of reconciliation of various interconnected heads of account, Actuarial Valuation not available & amount of provisions created is as per Management estimates. v) Details of amounts in ‘CS-1 not provided for many accounting heads, on checking it was noticed that many balances are carried forward from earlier years. v1) We have noticed cases for which neither any provision has been created nor has

GUE St any contingent liability been shown in notes. NSN Vil) No entries has béen passed for Land/ properti¢s acquired by NHAI at unit or Head

Page No. 10

office. We were told this will be done next year.

viii) CWIP remained unverified duc to non availability of work/scheme wise details and

work register,

ix) Large amounts under head 22.810 & 22.830 being stock excess/ short pending

Investigation but units do.not have any details.

x) Debtors/ creditors have adverse balances which remained unexplained.

xi) | Unexplained staff related provisions appearing in units viz 44.110, 44.120, 44.130

xi) Balance of O & M material stock account shown in CS-1 does not mateh with

balance in critical & non critical.

xiii) | Stock shortage pending investigation shown in CS-! remained unexplained amount

are large & significant. xIVv) Receivables as per CS-1 differs from Balances as per manual accounts in many

units. xv) ‘It. was noticed that balance as per books was significant but as per Bank it was NIL.

Differences remained unexplained. Negative bank balances are very common in units.

xvi) Interest payable on consumer deposit shown in CS-1 is odd compared to interest

accrued during the year as interest accrued during the year are adjusted in next year.

xvii) In-some units where stock statements were made available to us stock as per CS-1

do not tally with stock statement. xvili) Differences were noticed in Provision for unbilled Revenue (23.401 to 3.413)

xix) Many balances are carried over from year to year in many units but details are not

available. Some of such balances may be due to wrong entries. xx) Pending ATDs odd balances are shown inCS-1.

xxi} Provision for sundry creditors (46.410) details not available in unit.

xxii) The Company has not disclosed the impact of pending litigation on its financial

position in financial statements.

xxiii) The Conipany has not made provision, as required under applicable law or

accounting standards, for material foreseeable losses. if any. on long term contract

including derivative contracts xiv) No amount has been transferred to investor Education and Protection Fund by the

Company during the -year ended March 31, 2018

a) Loan agreements with various lenders were made available to us at Head office but the

compliance of terms & conditions are to be checked at unit level ,this thing we realized only at Head office .The same will be checked during next year audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books except the following: i) Fixed Assets records are incomplete il) No statements not even Trial balance is prepared at sub-division or division level,

although all primary transactions are entered at subdivision/division level. Trial Balance is prepared at circle level & Financial Statements are prepared at Head office. Due to this reason the financial statements prepared at Head do not tally with the tral balances we got from circle offices. We were informed that differences have been rectified at Head Office but our question like “when the CWIP at subdivisions is X how could HO change it to Y No explanation for this has been provided. iii) Fixed Assets records aré incomplete, neither correct physical verification nor

providing accurate depreciation is possible, under such circumstances how to safeguard the

fa \ fixed assets is also 1 question mark. i Y re iv) Inventories. at stores does not tally with the quantitative records kept at stores. The

Wel SA fa Page No. 11

balance sheet figs are from books of accounts and never tallied with physical/stores records

wAs required by Law no valuation of inventories has been done . v) Negative balances in most type of assets and liabilities are noticed Explanation given

is only eye wash under such circumstances ,balance confirmation from parties are not

possible Means third party confirmation is not practicable. vi) No ledgers are prepared by the company, only excel sheets of transactions are there of course now in online circles it is possibly from HO.

2. Observations of Previous years Auditors to the extent not rectified by the

management :

As reported by previous auditors:

1. It has been observed that expenses approved by Head Office till the year end are only provided in the financial statements. The work completed / services rendered / goods supplied till 31° March. 2018 and not approved by Head Office, has not been provided in the financial Statements, however, the same have been recorded in the subsequent period on receipt of approv al from Head Office. The information with regard to assets / expenses-and liabilities has not been made available to us, therefore, impact of

same on noncurrent assets / current assets/ noncurrent liabilities’ current liabilities / losses

cannot be quantified.

3 Nether the Company has disclosed the facts in- notes nor given any information-as to‘settlement for those casés which were disclosed in earlier years balance

sheet as notes to account / audit report / CAG comments / comments of works audit party/ comments of RA audit /pending court case / settlement where the Company had deposited deposits with various authorities amounts some of them may have been settled

/ awarded by the Court / Govt. / Arbitrator but the status was not disclosed by the

Company. This may.affect the profit & loss account and the balance sheet

4 Old assets (recoverable) and old liabilities (Payables) in all the divisions being time barred mostly remained unconfirmed / un-reconciled. The adjustment required if any may affect the profit & loss account and the balance sheet.

5 The Company has not provided sufficient physical verification records in respect ef Tangible Assets, Capital Work in progress and Contracts in progress at the Division level. The adjustment required if any may affect the profit & loss.account and the balance sheet.

6 The Compary has not taken any reasonable steps to remove the qualifications reported in previous year report and earlier year reports of HPSEB by CAG while adopting the accounts for the current year, therefore old material qualifications has been considered

_ in the current year report where the same is quantifiable as no information for the same has -, been provided by the company.

Page No, 12

7 The Head Office has not provided complete details’ information of the closing balance of sub heads operated by them in respect of respective DDO's except, banks section, loan section, investment section-and Pension Il. The subsidiary records /

register of individual DDO has not been produced for our verification. No sufficient information has been provided in respect of the lability of expenses, other liabilities and provisions at Head Office Level.

8 The reconciliation of the Fixed Assets Register and the Fixed Assets account in the account statement is pending sinée miany years. The pendency is due to non availability of records/ information of earlier years or in some divisions the earlier years records has been burnt. The above pendency has been observed in almost all circles also. The adjustment required if any may affect the profit & loss account and the balance sheet.

9 The reconciliation of the Works register and the Capital Work in progress

account in the account statements is pending since many years. The pendency is due to non availability of reeords/ information of earlier years or in some divisions the earlier year’s records has been burnt. The above pendency has been observed in Solan Circle, Rampur

Cirele, Rohru Circle and other circle also, The adjustment required if any may affect the profit & loss account and the balance sheet.

10 No sufficient information and evidence in support of revenue expenses pending allocation over Capital Works has been provided to us. The adjustment required if any may affect the profit & loss account and the balance sheet.

11 The subsidiary records in relation to consumer ledgers at the end of the year is pending for reconciliation at all divisions of the operation circles The adjustment required if any may affect the profit & loss account and the balance sheet.

12 The Company has not provided any information about those consumers who has gone to the courts on account of disputes’in the bills raised for energy charges.

13 The Company has not settled the old un-reconciled entries in the bank

reconciliations statements. The adjustment required if any may affect the profit & loss account and the balance sheet.

14 The Head office has not supplied to us the employees wise details of loans and advances to staff and interest acerued thereon, The adjustment required if any may affect the profit & loss accaunt.and the balance sheet.

15 The Company has not provided complete details of amount recoverable on account of thelt of property pending investigation (Account Code 28.885). The adjustment required if any may affect the profit & loss account and the balance sheet.

16 The Company has not been able to provide sufficient information/ confirmation from the parties in respect amount payable for purchase of power. The adjustment required if any may affect. the profit & loss account and the balance sheet.

: fay iT The Company has not able to provide reconciliation in respect of deposits and ae Gp \))\ retentions from suppliers and contractars with the subsidiary records maintained.

ies) Serie cn. Val zs it i .

ey Page No, 13

18 The Company has not been able to provide reconciliation in respect of

Deposits for Electrification Services Connections Account Code 47.1 with the subsidiary

records maintained.

19 No sufficient Information has been provided in respect of the Contingent

Liabilities provided in the notes to accounts and further no information for contingent

assets has been provided.

20 The divisions have not provided suffictent information in respect of those assets where the consumer has deposited the departmental charges and executed the work by their own. The adjustment required if any may affect the Value of assets created and the

reserves on the other hand.

21 During the year under review the financial statements are prepared as per

schedule [II of the Companies Act 2013 .The basis for grouping of noncurrent liabilities/

assets and current liabilities and assets as per the requirements of Schedule [II for the. cutrent and previous year has not been produced for our verification. It was also observed

that Figures of previous year was also regrouped in the schedules of balance sheet but the

basis of regrouping was not provided to us.

As per management these 21 paras has been deleted by the previous auditors but did

not have any certificate for the same.

Other observations of previous auditors to the extent not rectified by the

Management:

i) Share Capital: Special Way & Means Advance nonrefundable from H.P. Govt amounting to Rs.49807.75 Lac as per balance sheet dt 13.06.2010 financial year 2010-11 along with other reserves Rs704.78 lakh has been adjusted with carried forward losses of erstwhile Board totaling Rs:50512.53, in response to the audit qualification from

year to year.

ii) Reserves and Surplus (Note 2.2) a) Capital Reserves/Capital Grants from GOHP & GO!

ai) During the year under review the Company has Amortized Rs.6446.40 Lakh on the assets created from Government Grants and Consumer Contribution, The Amount of Amortization has been arrived at after applying the Depreciation Rates on the cost of such assets on yearly basis as per the accounting policy on depreciation refer Note

2.33 (A) 8 .The Company has no system in Place where the assets can be identified as if

these were created from Government Grants / Consumer Contribution. There is no Fixed Assets Register from where the cost of these assets along with date of it being put to use can be verified. The company has arrived at the cost of these assets on Adhoc basis where

it has capitalized the Grant réceived to particular year in which it was received without verifying the actual creation of the assets and without having sufficient records to verify the

actual cost of bringing the asset to use along with the date of it being put to use. It was also observed that in many Divisions the amount of Consumer Deposits was not transferred

fram Account Code 47 to Account Code 55 in the absence of Completion certificates therefore assets created from government grants ete are subject to reconciliation

: é&confirmation.

Page No. 14

(aii) Assets created from loans under Government Schemes. Refer Note

2,33(A) 14 The Company and erstwhile Board have created assets under various Central Government

and State Government schemes financed by government agencies. The assets created from

such schemes are subject to reconciliations and confirmations. The Company has not

disclosed the nature and extent of government grants recognized in the financial statements

including grants of non monetary assets given at a concessional rate or free of cost. Asset

corresponding to this reserve is un-identified and also depreciation on such asset is subject

to reconciliation.

b) Long Term Borrowings (Note 2.18)

bi) Loans under APDRP Schemes Part A and B

(i) The company has taken loans from APDRP (Part A) scheme amounting to

Rs.2219.87 (previous year Rs.3149.82) towards 100% financing of its approved projects

which is subject to a condition requiring that projects to be completed within five years

(extended up to 30" September 2017) of the awards with 100% conversion of loan along

with interest into grant else otherwise the same will be treated as loans and interest will be

paid on them.

(ii) The company has taken loans from APDRP

(ili) (Part B) scheme amounting to Rs. 20728.81 Lac (previous year Rs.

21608.95 Lac) towards 100% financing of its approved projects which is subject to a

condition requiring that projects to be completed within five years (extended up 31.03

2018) of the awards with 100% conversion of loan along with interest into grant else

otherwise the same will be treated as loans and interest will be paid on them,

(iv) The sariction letter stipulates the moratorium of principal and interest during

moratorium period, The Company has made provision for the interest on loan amounting to

Rs.103.69 Lae (P.Y Rs.9600.40) Lac in the books of account on provisional basis up to 31

March 2018 and the same is subject to confirmation. Refer Note 2.33 (B)9.

¢) Loans under ADB though GOHP Scheme

The Company has taken loan under the scheme from the slate Government under ADB

Loan amounting to Rs. 1219.80 Lae (previous year Rs.1163.15 Lac), The government has

not yet provided the terms and conditions of the loan and the payment of interest thereon.

al) Other Long Term Liabilities (Note 2.19)

i) Deposits, Retention Money from Contractors and Others

We report that, an amount of Rs.11021.53 appeared as Deposit in Shape of Deposits.

Retention Money from Contractors and others. Accompanying schedules and details in Sub

ledgers for the same was not provided to us. These Balances are subject to confirmation

and reconciliation at Divisions and Unit level. In the absence of complete information we

are unable to comment on the Current and Non Current Portion of these deposits and

Retention Money. Internal Controls in respect of such deposits seems weak and Subsidiary

records to verify the same were inadequate at unit levels.

Page No. 15,

ii) Amount payable for Employees Provident Fund (GPF)

We report that, contribution towards Provident Fund collected from employees have been

retained and invested in Fixed Deposits with Banks by the Company. The Company has

neither obtained registration with ‘Employer’s Provident Fund Authorities’ nor exemption

for creation of Trust as specified in Employer's Provident Fund Act, 1952 and scheme framed there under. The Company has shown the same under other long term liabilities after netting off the investment made in the banks on account of GPF investments.

The amounts payable/ recoverable to employees GPF are subject to reconciliation and confirmations.

During the year under review, the Company has neither made own contribution nor has made provision for same in these financial statements. The amount of contribution of

employer's share is subject to confirmation by Company.

The following is the position of Assets and Liabilities of the employees GPF at the close of

the year and should be transferred toa trust and séparate accounts of the same should be prepared as the same is not part of the accounts of the Company,

Amount in lacs |

‘Current Year Previous Year _Assests | | investments In Fixed deposits of Banks | 105,126.85 | 102,433.51 | ‘Interest Accured on Investments. | 3,717.24 | 2,519.92 | |Recoverable from HPSEB ‘Limited 20,017.24 | 22,460.48 | 128,261.33 127,413.91

adabitliems a) [Members Aecount | 128,201.27 | 127,918.75 |

‘Excess of Expenditure over Income = | Payable to HPSEB Limited i = 504.85

t 128,261.27 127,413.30 |

We further report that liabilities and corresponding assets transferred from Board to Company have not been deposited with EPF or Trust. In terms of information and

explanations given to us, the Company has accumulated total contribution of Rs128261.27 lac (previous year Rs.127413.90 Lac) and has deposits there against a sum of Rs.108244.09. lac (previous year Rs.115529.12 lac) which has resulted in amount recoverable form company amounting to Rs. 20017.18 Lac. In our opinion, ihe said assets.and liabilities do not relate to Company and sum of Rs.. 20017. 18Lac-is payable to General Provident Fund (GPF). We further report that the Company has obtained Overdraft facility of Rs.24163.94 lac. (Previous year Rs.12240.28 lac) against GPF Fixed Deposits which has been utilized for operations .Refer Note 2.33(B)(28)

iii) Non refundable advances from industrial consumers for infrastructure development charges Note No 2.21

The erstwhile HPSEB and the company have received Non refundable advances from industrial consumers for infrastructure development chargesfrom

consumers. The company has received Rs.22625.67 Lac (previous year Rs.16242.68 Lac) _~) under the above head up to 31“ march 2018. In our opinion the other long term liabilities

Page No, 16

are overstated to the extent of above as they are not payable to the consumers and is part of

the revenue of the company and income of the company is understated to that extent.

e) Long Term Provisions

(i) Leave Salary Payable The Company has not made provision of Leave salary payable to present

employees as per the requirements of IND- AS 19- Accounting for Employees Benefits issued by The Institute of Chartered Accountants of India. As explained by the Company the estimated liability on account of leave salary at end of the year is Rs,

50413.15 Lac (P.Y Rs.51429.39) against which the company has created reserve fund of Rs6993.80 lac. (P.Y Rs.55965.04 Lac) .Thus in our opinion the long term provisions are understated and Income is overstated to the extent of Rs. 4341935 Lac (P.Y Rs. 45834.35Lac).No certificate from actuarial taken, amount is as per management Estimate

(ii) Gratuity Payable to Employees The Company has not made provision of gratuity payable to present

employées as per the requirements of IND- AS19- Accounting for Employees Benefits issued by The Institute of Chartered Accountants of India, As explained by the Company the estimated liability on account of leave salary at end of the year is Rs.61432.02 Lac (previous year Rs.69938.15Lac) against which the company has created provision of Rs. 5657.81 (previous year Rs.4114.36Lac). Thus in our opinion the long term provisions are understated to the extent of Rsi55774.21 Lae({previous year Ks.65823.79 Lac.) No certificate from actuarial taken, amount is as per management Estimate

(iii) Pension Payable to Employees The Company has not made provision of pension payable to present

employees as per the requirements of IND- AS19- Accounting for Employees Benefits:

issued by The Institute of Chartered Accountants of India. As explained by the Company The estimated liability on account of Pension at end of the year is Rs.123553.14

Lac (Previous Year —Rs..166659.91 Lac) against which the company has created provision of Rs 5142.95 (Previous Year —Rs.4526.25 Lac). Thus in our opinion the long term

provisions are understated to the extent of Rs.118410.19 Lac. No certificate from

actuarial taken, amount is as per management Estimate

f Short Terni Borrowings(Note 2.7)

Overdraft and Cash Credit from Banks

(i) References invited to note no 2.35(B)(28) where the Company

has obtained Overdraft facility’ Loans of Rs. 24163.94 Lac (previous year Rs, 6130.99 Lac) against GPF Fixed Deposits which has been utilized for operations refer Note 2.33B (28). Which in our opinion should not have been taken and a trust for GPF must be created.

#) Trade Payables (Note 2.8)

Liability for Purchase of Power

Page No, 1?

i) It was observed that SL&D Section did not prepare reconciliation of Late

Payment Surcharge (LPS) in respect ofvall parties. Therefore amount of LPS included

under the head “Liability for purchase of Power” is subject to reconciliation &

confirmation. Party wise reconciliation regarding purchase of power was not produced

before us, In the absence of party recoriciliation statement, the balances of parties for

purchase of power and purchase of power is subject to reconciliation.

h) Other Current Liabilities (Note 2.18)

a) Liability for Purchases Capital and Others

(i) The above account code shows a sum of Rs.18486.9]1Lae Note 2.23 payable as liability on account of capital materials O & M Supplies/ Works. The Subsidiary record in respect of the below mentioned accounts codes at division level is not reconciled. The above liabilities are subject to confirmations from the Parties.

(i) It has been observed that divisions charge full liability of the bills of the suppliers when the materials are received. However in some case the bills are not fully

passed by the Head Office and certain deductions on account of liquidity damages and price differences-etc. from the final bills is being made. All such deductions which are done by the Head Office and not accounted for by the divisions may affect the other current liabilities and income of the company. In the absence of information we are unable to comment on the same.

(iii) In certain cases the payment of bills of the suppliers are to be made in phases on some percentage basis and will not be due at the end of the financial year, The Divisions has booked the bills with the full amount and no bifurcation has been made for current and

noncurrent liability. In the absence of the information we are unable to comment on the Saimie.

(iv) It has been observed that where the payments has’ been made by the CPC up

to 31" March 2017 and the ATD for the same has been raised by them to the divisions the

same has not been reconciled by the CPC department with the divisions on year to year basis. In the absence of the reconciliations we are unable to comment the amount of liabilities shown by the divisions.

1) Earnest Money Deposits from Suppliers and Contractors.

The above account code shows a sum of Rs, 2349.77 Lac (Previous Year Rs. 2,159.61 Lac) payable as earnest money deposits from suppliers and contractors. The subsidiary records

in respect of above are pending for reconciliations at division level.

Ale Current Previous Previous

Particulars Code: Year Year Year

Earnest money deposits — capital 46,103 | 1596.93 1753.10 1,409.65

Earnest money deposits -O&M 46.123 | 1024.30 596.67 749.95

2621.23 2349.77 2159.60

Page No. 18

In the absence of reconciliations/details /confirmation, we are unable to

comment on the authenticity of the amount payable.

j) Electricity Consumptions Tax levied payable to MCs/NACs- A/c Code 46.2

The above account cadé shows a sum of Rs. 1089.24 Lac (previous year Rs. 950.66 Lac)

payable to different Municipal corporations and NAC as at 31" March 20178 It has been

observed that certain amiounts are also recoverable from them on account of energy dues

and the above account has not been netted off with amount recoverable from them. Thus

other current liabilities are overstated to the extent of above. Please refer para 19(A) 5 of

the report of this report. -

k) Sundry Creditors for Expenses

The above account code shows a sum of Rs.1193.40 Lac (previous year Rs. 1450.50 Lac)

payable to different parties is subject 1o confirmation as at 31st March 2018. In the absence

of information’ we are unable to comment on old liabilities which are to be charged to the

revenue and may affect profit and loss account and the balance sheet.

b Liability on account cheques outstanding others/ stale Cheques (A/c code

46.910)

The company showed a sum of Rs. 969.43 Lac (previous year Rs.1 193.89 Lac) under the

Head stale cheques. No informiation in respect of the same has been provided by the

company. In our opinion the other current liabilities are overstated and income is

understated to sum of Rs. 969.43 Lac.

mi) Deposits for Electrification Services Connections Account

The above account code showed a sum of Rs. 56222.64 Lae (previous year

Rs. 39863.36 Lac) on account of deposit. amount received form consumer for

Electrification Services Connections and other charges as at 31" March 2018. ‘The

company has not provided the details of the amount received under different sub heads

under above head.

As per the practice of erstwhile beard the amount kept under this head is transferred to

grants and subsidies head when the work of the assets to be created from deposit work is

completed.

n) The subsidiary records at the divisions level is pending for reconciliation as

at 31" March 2018. We have not been provided with the following information's by the

Divisions.

1 The details of those works where the work has been completed and the

amount from deposit has not been transferred to the consumer contribution towards. the cost

of the capital assets.

> No ‘The details of the parties from whom full amount has not been received for

/...\_ the deposit work completed till 31° March 2018. Page No, 19

3 The details of parties from whom full amount has been received but no work

of deposit work has been done till 31" March 2018.

In the absence of information we are unable to comment on the amount kept under this

head of account.

It has been observed that in some divisions the consumers has deposited only

the departmental charges and deposit work has been done by the consumer by their own.

The charging of the departmental charges to revenue and charging of the value of fixed

assets created and creation of reserves is subject to confirmations and reconciliations.

o) Unelaimed Credit Balance A/c code 46.929

The Company is showed Rs, 268.72 Lac (previous year Rs. 101.57 Lac) as unclaimed

credit balance as at 31° March 2018. The company has not provided information in respect

of the same. In our opinion the time barred credit balance should be charged to revenue.

Deductions from Employees (A/e Head 44) & 46.9 ‘are subject to

reconciliation & adjustments at Division level,

p) Short Term Provisions (Note 2.10)

i Interest accrued on Cunsumer Security Deposit The company has provided interest on security deposits of consumers amounting to Rs. 1674.23 Lae (Previous Year Rs. 798.08 Lac) during the year under review. The provision made is subject to reconciliations and confirmations:

ii) 46.430 Provision for Liability of Expenses

The provision of Rs 25219.10 Lae made by the company on account of liability of

expenses is subject to confirmations and reconciliations details not available.

(iii) 48.1 Security Deposits fron: Consumers The Divisions of operation circles have not reconciled and balanced the customer-wise Security Deposit received and interest payable thereon, No sufficient records and

reconciliation of subsidiary records confirming the balance outstanding has been made available to us, therefore, we are unable to comment on the amount outstanding as Security

Deposits to customers and accordingly interest accrued thereon An amount of Rs 34006.01 Lakh appeared in this account code. The amount is subject tore conciliation and confirmation since subsidiary records maintained at division level is not reconciled with amount reflected in A/¢ code 48.1

y) Tangible Assets (Note 2.11)

e] Page No. 20

ij pl refer to Note No 2.35 1.2 & 1.3 note to accounts .

(ii) The Company has created assets valuing Rs. 966.45 Lac on the land the

ownership of which does not belong either to the erstwhile HPSEB or the company.

(iii) The accumulated depréciation as on 31" March 2018 is not adjusted on

account of assets washed away in floods, assets not in use, assets stolen and impaired

assets. In the absence of information we are unable to comment on the authenticity of the

accumulated balance of depreciation at the end of the year. As per management this has

been written off / adjusted .but voucher for the same not provided.

(iv) The Company had charged the cost of new energy meters installed in repair

and maintenance account in earlier years . without writing off the cost of old meters and

the. corresponding depreciation from the Fixed Assets Register which is contrary to the

AS10 — Accounting of Fixed Assets issued by the ICAI, In the absence of information we

are unable to comment on the cost of written down of meters which are in the Fixed assets

schedule which are of non-existent in nature,

(vy) It was-observed that in CWIP Note No 2.13 of Balance Sheet an amount of Rs

73033.48was Capitalized during the year however in Note no 2.11 of Balance Sheet

Related to Fixed Assets an amount of Rs 64212.58 was shown as additions during the year.

Proper Explanations for this was provided to us. Hence amount of Fixed Assets Capitalized

from CWIP is subject to reconciliation and confirmations.

r) Capital Work in Progress (Note 2.13)

(i) The above account head shows a sum of Rs. 106890.33 Lac (previous year Rs. 89650.77Lac) on account of work in progress of various capital works as on 31° March 2018 which is subject te reconciliation and confirmations. No Information / explanations in

respect of the same have been provided to us.

(ii) It has been observed that the works under capital work in progress has not been closed for want of completion certificates where as actually the work has been

completed and the assets has been put to use by the company. No sufficient information in

respect of completed capital work in progress has been provided to us. In the absence of

information we are unable to comment on the same,

(iii) It has also been observed that in some cases the expenditure on capital work in progress has-been incurred in excess of the sanctioned amounts and the work is still going on.

(v) It has also been observed that in some cases the work in progress has been partly transferred to the fixed assets on yearly basis: without verifying that whether the

work on the assets has been completely finished or not.

Page No, 21

(s) Interest during Construction Period (IDC)

a) It was observed that during the year company had paid Rs. 54941.47 Lac total interest! Finance Cost, out of which company has capitalized 9135.65 Lac out of total

interest: However the company did not provide us basis of such calculation: of capitalization of interest. Therefore we are unable to comment that whether it was calculate as per AS-16 Borrowing Cost, issued by ICAL, or not.

b) Contracts in Progress

The Company showed a sum of Rs. 183.26 lakh (previous year Rs: 44.37lakh) as on 31° March 2018 as contract in progress at various divisions which is subject to reconciliation

and confirmations.

t) Long Term Loans and Advances (Note 2.15)

i) Advances to Supplies/ Contractors ( Capital)

The Company is showing a sum of Rs, 1554.17 lakh (previous year Rs. 1317.98 lakh) as advances to supplier and contractors as on 31 March 2018.Contractor ledgers need be maintained and reconciled.

ul) Loans and Advances to staff (Interest Bearing)

(i) It has been observed that the individual divisions does not have the complete record of the loan sanctioned and amount recovered from the employees and it has been explained to us that the same is being reconciled and kept at head office level in the broad sheets of the employees. -

It was observed that in the following cases amount of Interest and principal is

for past many years. Efforts should be made to (ii) recoverable from the staff members

recover the amount along with interest.

TYPE NAME PLAC | OF MONT

ACCO | OF E OF | LOAN /) O/S H OF

UNT EMPLO | DESIGNA | POSTI | ADVA | AMOUN | LAST REMA NO YEE TION NG NCES | T(RS,) INSTT. | RKS

CE Retiring RAJIND (MM) | VEHIC ‘on ER SHIML | LE 1,48.578.0 | JULY,20 | 31/08/20

R-21 GUPTA | AEE A LOAN 0 05 20

RAJIND CE | Retiring ER. (MM) 5,14,103.0 | APRIL,2 | on

R-21 GUPTA | AEE SHIML | HBA 0 O07 | 31/08/20

Page No. 22

| | A 20

ELEC.

DIV,

HARI D/SHA __| FEB, HA-64 | SINGH | SR:ASTT. | LA HBA 22,097.00 | 2008

BOAR JASWA | D Retiring NT ] SECTT MARCH | on31/10/

JA-24 SINGH | DM ; HBA 43,833.00 | 2016 | 2022

ELEC. | EXPIRE pIv- 'D ON

LEKH FOREMA | BILAS OCT.200 | 19/10/20

LA-52: | RAM N PUR HBA 14,889.00 | 8 O8 _|

ELEC. RETIRE

DIV-~ D ON

LEKH BILAS MARCH | 31/05/20 |

LA-28 | RAM SR:ASTT. | FUR HBA 25.990:00 | .2008 16 |

MANO ‘HAR | RETIRE

LAL ELEC. | D ON SHARM DIv- | 31/12/20

MA-90 | A DM UNA | HBA 35,425.00 12

ELEC. RETIRE

DIV- D ON

MEHAR RAMP 31/02/20 | MA-74 | SINGH UR HBA 34,741.00 11

RAM RETIRE

CHAND D ON

THAKU 31/08/20

R-95 R AE HBA 58.685,00 13

TOTA 8,98,341.0 L )

(iil) It has further observed that when an emiployee is transferred from one Division to other division bis account is not transférred to the other division though ATD and as such partial accounts are being kept at different divisions on account of loan sanctioned and recovery made at different divisions.

(iv) It was observed that Company has Shown Rs.216.24 lakh in A/c Code 28.860 & 28.861 as commitment Advance. This advance was given in year 2009 and the same was not adjusted till the finalization of audit. Balance Confirmation of same was not provided to us for verification.

vy) ‘Other Non Current Assets (Note 2.16)

Assets not in use

Page No. 23

The company is showing Rs. 779.88 lakh (previous year Rs, 2857.81 lakh) as assets not in use-as al 31st March 2018. In our opinion the above assets has completed their use full life and will not help in generating any further revenue and should be charged to revenue: Thus other noncurrent assets and Income are overstated to the above extent. (Refer Note 2.33 (B)

(3).

ii) Expenditure on Survey/ Feasibility Studies Projects not yet sanctioned.

The above account code shows a sum ofRs. $055.24 lakh (previous year Rs. 8201.50 lakh)

incurred on account of Expenditure on Survey/ Feasibility Studies Projects not yet

sanctioned as at 31" March 2018. As informed to us these are recoverable from the parties

to whom the projects will be allotted & in case projects allotted te HPSEBL then the amount will be transferred to CWIP,

iii) Inventories- Scrap/ other material/ exeess/ shortages

There is no segrepation in obsolete inventory. usable /no usable inventory. Previous year there was such segregation amounting to Rs 513.41 lakh .

iv) Interest on Advance to Subsidiary It was observed that‘an amount of Rs 266 Lac Appeared as Loan to Subsidiary in A/c Code 20,330 The terms and condition for advance given to subsidiaries has not been finalized,

Interest acerued on the amount of advance was not booked in the-accounts. Refer Note

2,33(B)(1) As informed to us interest of Rs 87.56 Cr. was charged as interest on loan but

same was squared up with expenses as informed by the management ,however we did not check the same.

w) Inventories (Note 2.18)

As no details of inventories has been compiled at HO the balance shown in Balance sheet is as per Trial Balance .There is no system of comparing/reconciling

quantitative records’ with financial records nether at unit level not at circle / HO level. In

some units eg Bhata kufar, we found balances in some stock (Steel).as per stock ledger but no physical balance was there.

i) As reported by previous auditors ,the: Company has been transferred with stocks of the erstwhile Board which have been purchased in earlier years and the same has not been used till the close of the year and the same has resulted in over stocking of the stocks and pilling up of the stocks at Divisions level. The following is the details of stocks

as provided by the company for which no provisions has been made in the books of

Page No. 24

| Current Year Previous Year z =

23.65 22.6 Stocks in hand more than five years Critical 576.47 | 615,25 |

__ 22.6 Stocks in hand more than five years non Critical SA BZ 7545 Ba1.19| 71445

22.6 Opening Diffrence

In their opinion the inventories are overstated to the extent of Rs. 54.82 Lac for which no provisions has been made in the books of accounts. However .to verify these fig Management does not have records in favour or against the qualification.

ii) It hus been found that there is no systematic accounting of stocks in this account heads and some divisions has not made distinctions between the stocks of Stores and other materials and it has been observed that in some cases the office equipment stocks and other office equipment has also been included in the above head which should have been part of the fixed assets. In the absence of sufficient information we are unable to

comment on the overstatement of inventories,

iit) The Company has not provided details in respect of inventories which are of current and noncurrent nature, In the absence of information we are unable to comment on

the current and noncurrent portion of inventories,

iv) Physical verification reports of the inventories were not provided to us for verification at division/ subdivision level. In the absence of physical verification reports the

balance of inventories are subject to confirmation. There is no system prevalent in the company to identify the obsolete Stock; company has not shown any loss by theft or natural

calamity in stock. The System of reporting theft of Stock at the division level to H.O and its treatment in the accounts is not clearly specified. In the absence of complete information, its Impact on profit / Loss could not be ascertained.

x) Trade Receivables (Note 2.19)

The Company has shown trade receivables from consumers and others under this head amounting to Rs. 47148.45 Lac (PLY Rs, 93002.93 Lac) are subject to

confirmation & reconciliation.

i) Sundry Debtors for Energy Bill (Other than Interstate Consumers)

No list of consumer who has filed cases against the company was provided to us,

ii) Court Cases by Consumers As explained by the company the erstwhile Board/Company has billed Rs. 2615.42 Lac (previous year Rs. 3,137.42 Lac) and Rs. 1635.30 Lae (previous year Rs. 1570.29 Lac) to industrial consumers of Operation Circle, Solan and Nahan. The consumer had filed suits against the same and recovery had been stopped by the courts. Note No 2.33B 15

y) Short Term Loans and Advances (Note 2.21)

Page: Na. 25

Advances to Contractors and Suppliers: No sub ledger has been made

available to us

(i) The company showed Rs. 336.60 Lac (Previous year Rs. 5832.41 Lac) as loans and advances for supplies / works. The:above advances also include advances which are old and require adjustments as the works has been completed at the close of the year and expenditure has not been booked. The company has not provided us-any confirmations from the Parties for the amount due as such we are unable to comment on the above advances. The above advances have been shown as secured but no sufficient information in

respect of the same has been provided. No Information in respect of noncurrent portion of

advances has been shown for our verification.

ii) Amount recoverable Related Parties

1) BVPCL (Subsidiary Company) A/c Code 28.761

The Company has incurred expenditure to the tune of Rs. 4387.57 Lac (previous year Rs.

4053.64 Lac) as on 31" March 2018 for which shares has to be issued by the BVPCL. The above balance is subject to reconciliation and confirmation. Loan amount as per holding company is 266 crore while loan as per subsidiary is Rs 219 crore.

ii) Amount Recoverable Himachal Pradesh Power Transmission

Corporation Limited A/c code-28.773

The company. has transferred cost of transmission lines to the HPTCL (Himachal Pradesh Power Transmissiou Corporation Limited) as per the scheme of the transfer. A sum of Rs. 2918.84 Lac (previous Year Rs. 2918.84Lac) has been shown as recoverable as at 31" March 2018 which is subject to reconciliation and confirmation. In the absence of confirmations we are unable to comment on the same. The amount recoverable is of

noncurrent nature and should be shown under the head other noncurrent assets.

iii) Expenses recoverable from Suppliers /Contractors (A/C Code 28.810).

The above head shows a sum of Rs. 671.22 Lac (previous year Rs. 1,543.77 Lac) as on 31" March 2018 which is subject to reconciliation and confirmation. In the absence of confirmations we are unable to comment on the same. Sufficient information has net been provided to us for showing the same as current assets.

Inspection charges related to material / equipment third party inspection (A/C Code 28.811). The above head shows assum of Rs. 117.08 Lae (previous year Rs, 108.44 Lac) as on 31" March 2018 which is subject to reconciliation and confirmation. In the absence of confirmations we are unable to comment on the same,

Zz) Other Current Assets (Note 2.22)

Page No. 26

i) Inter Unit Transactions

The company is showing Rs. 12198.67 Lac (previous year Rs. 572.64 Lac)on account inter

unit transfers and the same has not been reconciled at the end of the year. It has been

observed that the above practice of non reconciliation in inter unit accounts is pending

since many years and same was not reconciled by the erstwhile Board and even by the

Company.

Za) Statement of Profit and Loss Account

Re-allocation costs of Employees and Repair and Maintenance to Capital

works

The method and basis of reallocation of employee costs and repair and maintenance costs

to capital works has not been informed to us.

Zb) Other Observations

(i) flood in Andhra Khad and Pabbar River on 11 and 12.8.1997 amounting to

Rs, 34,60 Lac vide resolution no 4.5.dated 16/12/2010 . We were explained that effect of

the same have been given in the accounts but no documentary evidence was produced

before us. In our opinion the Tangible assets are overstated Lo that extent.

ii) Transfer of various HPSEB Limited Roads to HPPWD.

(iii) Distribution Losses

Reference is invited to Note 2.35 (B) (35) regarding distribution losses. Some of the circles

have very high distribution losses as compared to acceptable norms for electricity

companies.

(iv) Contingent Liabilities in notes to accounts

The Company has made disclosure of contingent liabilities in notes to accounts, sufficient

information has not been provided in respect of the Contingent Liabilities provided in the

notes to‘accounts. (Refer Note no 2.35(B)12).we have noticed some cases which has not

been disclosed in calculating contingent liabilities.

(v) The Company has not provided any information of the suppliers / service

providers who are registered as Micro, Small and Medium undertakings under "The Micro,

Small and Medium Enterprises Development Act 2006" as on 31st March, 2018. In the

absence of the information we are unable t6 comment on the same.

(vi) The Company and its divisions has not provided to us Court cases details

which are contingent in nature and in which contingent liability of the company is

involved,

Page No. 27

#e) Non Compliance of Accuuntiug Standards

The Company has not complied with the following mandatory accounting

standards issued by the Institute of Chartered Accountants of India

3 -Looking at the above qualifications -. the Balance Sheet, the Statement of Profit and

Loss including Other Comprehensive Income, Statement of Changes in Equity and the

Statement of Cash Flow dealt with by this Report cannot be said to be in agreement with the

relevant books of account nor true & fair.

a) In our opinion, the aforesaid standalone financial statements neither comply with

the IndAS specified under Section 133 of the Act, read with Rule 7 of the Companies

(Accounts) Rules,2014, nor comply with AS ( GAAP)

b) Being a Govt. Company, the provision of Section 164 (2) of the Act are not applicable:

a) With respect to the adequacy of the intemal financial controls over financial

reporting of the Company and the operating effectiveness of such controls, we report that

Internal financial Control system is absent as far revenue is concerned and is very poor in other

fields as reported above as’ well in the annexure A to this report and matters which had to be

carried forward for next year, We have asked Mandate for Internal Financial Control System Audit which was neither provided nor refused still ,we did conduct this audit in some fields Like Revenue ,Financial Statement preparation & tendering. Records. for

tenders were not made available to us. in some cases and in other cases were shown

incomplete but were promised to be provided during our next visit /next year audit.

Tender records as to compilation were told to be provided at HO office by SDOs, DOs & circles but at HO we were told these are available at Hamirpur. Mandi & Sundernagar.

& also at Chief‘ office in Head office. Upon approaching Chief office Tenders records were not provided ,only supply/ works orders were provided. After that it was decided that all records will be provided during next year audit for which we had to agree in the

light of delay & accounts being in arrears.

b) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014as amended , in our opinion and to the best of our information «and according to the explanations given tous:

L The Company has not disclosed the impact of pending litigations on its fmancial position in its standalone financial statements ,as reported in annexure I to: this report.

il. The Company has not made provision, as required under the applicable law or accounting standards. for material foreseeable losses, if any, on long-term contracts including derivative contracts as reported by the management and not verified by us.

fe ‘Oh (=| Got js) \ Tin f =, 4 Page No. 28

iii. As there has been a loss in earlier years (accumulated) and stall profit shown during current year the provisions of the Investor Education and Protection Fund by the Company not applicable during the vear..

4. 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 “Annexure B” a

statement on the matters specified in paragraphs 3 and 4 of the Order.

For Soni Gulati & Co

Chartered Accountants

Firm Registration Number: sant) it

Partner

Membership No. 083106

Place: Shimla Date: 29/02/2020 UDIN:20083 106AAAAAI5924

Page No. 29

ANNEXURE “C” TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 1(f) under “Report on Other Legal and Regulatory Requirements’

section of our report to the Members of Himachal Pradesh State Electricity Board Limited

of even date)

Report on the Internal Financial Controls over Financial Reporting under Clause

(i) Of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

Although, we were not given mandate still we have audited the internal financial controls

ever financial reporting in some fields of HIMACHAL PRADESH STATE

ELECTRICITY BOARD LIMITED (“the Company”) as of March 31, 2018 in

conjunction with our audit of the standalone financial statements of the Company for the

year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaining

internal financial controls based on the internal control over financial reporting criteria

establishedbytheCompanyconsideringtheessentialcomponentsofinternalcontrolstated in the

Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by

the Institute of Chartered Accountants of India. These responsibilities include the design,

implementation and maintenance of adequate internal financial controls that were operating

effectively for ensuring the orderly and efficient conduct of its business ,including

adherénce to respective company’s policies, the safeguarding of its assets, the prevention

and detection of frauds and errors, the accuracy and completeness of the accounting

records, and the timely preparation of reliable financial information, as required under the

Companies Act,2013. ;

Auditor’s Responsibility

Our responsibility is to express an opinion on the internal financial controls over financial

reporting of the Company based on our audit. We conducted our audit in.aceordance with

the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the

“Guidanee: Note”) issued by the Institute of Chartered Accountants of India and the

Standards on Auditing prescribed underSection143(10) of the Companies Act,2013,to the

extent applicable to an audit of internal financial controls. Those Standards and the

Guidance Note require that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether adequate internal financial controls

over financial reporting was established and maintained and if such controls operated

effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of

the internal financial controls system over financial reporting and their operating

effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing

sthe risk that a material weakness exists, and testing and evaluating the design and

operating effectiveness of internal control’ based on the assessed risk. The procedures \ th | Go x bal Page No. 30

i

| Ni

selected depend on the auditor's judgment, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our audit opinion on the internal financial controls system over

financial reporting of the Company.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting Is a process designed to

provide redsonable assurance regarding the reliability of financial reporting and the

preparation of financial statements for external purposes in accordance with generally

accepted accounting principles. A company’s internal financial control over financial

reporting includes those policies and procedures that

(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly

reflect the transactions and dispositions of the assets of the company:

(2) Provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting

principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company, and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized

acquisition, use, or disposition of the company’s assets that could have a material effect

on the financial statements.

Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting,

including the possibility of collusion or improper management override of controls, material

misstatements due to error or fraud may occur and not be detected. Also, projections of

any evaluation of the internal financial control so financial reporting of future periods are

subject to the risk that the internal financial control over financial reporting may become

inadequate because of changes in conditions, or that the degree of compliance with the

policies or procedures may deteriorate.

a ETA

| CIN

Cu, ta) yy Page No. 32

Opinion

In our opinion, to the best of our information and according to the explanations given to

us, the Company does not have. in some material aspects specifically billing (Revenue) .

an adequate internal financial controls system over financial reporting and such internal

financial controls over financial reporting were not operating effectively or rather were

absent in key audit matter selected for our reporting as at March 31, 2018, based on the

internal control over financial reporting criteria established by the Company considering

the essential components of internal control stated in the Guidance Note on Audit of

Internal Financial Contrals Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Soni Gulati & Co

Chartered Accountants

Firm Registration No.008770N) —_—_

Place: Shimla Partner

Date: February 29, 2020 (Membership No 83106)

UDIN:20083 106AAAAAI5924

Page No. 32

ANNEXURE ‘B’ TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory

Requirements’ section of our report to the Members of Himachal Pradesh State

Electricity Board Limited of even date)

i. In respect of the Company's Fixed: Assets:

(a) The Company has maintained some records on electronic media but do not show full particulars, as to quantitative details and situation of fixed assets replaced/swapped are still shown as fixed assets in use. We could not find location of fixed assets in any unit.

(b) The Company does not have a program of verification to cover all the items of fixed assets in

a phased manner or otherwise.

(c) According to the information and explanations given to us, the records examined by us as no

conveyance deeds etc, were made available to us, we cannot comment that, the title deeds,

comprising all the immovable properties of land’and buildings which are freehold. are held in the name of the Company as at the balance sheet date. In respect of immovable properties of land and building that have been taken on lease and disclosed as fixed assets in the standalone financial

statements, the lease agreements are in the name of the Company cannot be commented upon in the absence of documents.

(i)(ajAs claimed, stores and spare, at all locations, has béen physically verified. But no

verification report was made available .Moreover, we have found stores which were in books.

but were not available physically. The valuation of stores is as per financial records, no physical stock details were made available to us. So claim of management is false. (b) The procedure for physical verification of inventories followed by the management cannot

be commented upon in the absence of verification report & procedure. (c) The Company is maintaining records of inventory, i.e., Stores and spares. However, no list of such inventories with /without value were shown to us we were not provided with any report of physical verification. hence we are unable to comment on the same.

(iii) According to the information and explanations given to us, the Company has granted unsecured

loans to BVPCL. a subsidiary of the Company (bodies corporate), to be covered in the register

maintained under section 189 of the Companies Act, 2013 but no such register was made available to us The terms and conditions of the grant of such loans were not made available to us & whether it is in the Company’s Interest cannot be commented upon.

As informed to us the schedule of repayment of principal and payment of interest has been stipulated and repayments or receipts of principal amounts and interest have been regular as per stipulations, but no such schedule was made available to us.

As informed to us there is no overdue amount remaining outstanding as at the year-end, However, no records to verify the same has been given to us, in the absence of any terms & conditions

overdue or otherwise cannot be commented upon.

In our opinion.and according to the information:and explanations given to us, the Company has not complied with the provisions of Sections 186(5) of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

“The Company has not accepted deposits during the year and does not have any unclaimed deposits “asal March 31, 201 8and therefore, the provisions of the clause 3 (v) of the Order are not applicable

Page No. 33

to the Company.

The maintenance of cost records has been specified by the Central Government. under section! 48(1) of the Companies Act, 2013 for the business activities carried out by the Company.

As informed such records has been kept but not shown to us.

ii According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Emplovees' State Insurance, Income Tax, Goods and Service Tax, Custonis Duty,

Cess and other material statutory dues applicable to it with the appropriate authorities. Company is keeping Provident fund of employees with it in the form of FDRs & there is a shortfall in that .On

the top of it the company has taken overdraft against the FDR of GPF.

(b) As informed to us there were no undisputed amounts payable in respect of Provident Fund,

Employees’ State Insurance, Income Tax, Goods and Service Tax, Customs Duty, Cess and other

material statutory dues inatrears as at March 31, 2018for a period of more than six months from

the date they became payable.

(c) Details of dues of Income Tax, Sales Tax, Service Tax, Excise Duty and GST which have not

been deposited as at March 31, 20180n account of dispute are given below:

HElectricity Duty 942.94 lakh Previous Year Rs}6204.30 Lac

ii) Municipal Tax: 910.04 Previous Year Rs.700.17 Lae

ii. The Company has taken loans or borrowings from financial institutions, banks and

Government and has issued debentures. Hence reporting under clause 3 (viii) of the Order :

iv, The Company has not raised moneys by way of initial public offer or further public

offer (including debt instruments) or term loans and hence reporting under clause 3 (ix) of the

Order is not applicable to the Company.

We: To the best of our knowledge and according to the information and explanations

given to us, no fraud by the Company but material fraud on the Company by its officers or

employees has been noticed or reported during the year to Audit committee,

vi. In our opinion and according to the information and explanations given to us’ the

Company has paid/provided managerial remuneration in accordance with the requisite approvals

mandated by the provisions of section 197 read with Schedule V to the Act.

vil. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of

the Order is not.applicable to the Company.

viii in our opinion and according to the information and explanations given to us, the

Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable,

for all transactions with the related parties and the details of related party transactions have not

been disclosed in the standalone financial statements as required by the applicable accounting

Page No. 34°

X. During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures and hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.

% In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its Directors or persons connected to its directors and hence provisions of section 192 of the Companies Act, 2013 are net applicable to the Company.

Xi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

xii Based upon our audit procedure, information & explanation given to us and as reported in details in our main report we report that the Frauds have been committed by the officers of the company against the company to the tune of Rs 3082 crore {being the difference between income as per technical records (returns CMTR3) & Income as per Finance & Accounts }, although this amount is not final and subject to verification during next year audit , due to i) information not provided ii) reversal of income due to Court orders Jit) transmission losses ete,

For Soni Gulati & Co

Chartered Accountants

Firm Registration No.008770N)

walle

Suresh Chand Soni >< Place: Shimla ane

Date: February 79, 2020 (Membership No 83106)

UDIN:20083 106AAAAAIS924

Page No. 35

7;

Sees ane

Other Currant Assats Total Current Asaats

EQUITY AND

Flnanctal-L.

Previsiony

Letbllitheog

Algnificant. Accounting Palicias The secommarying Potes from 2,2 to 226 fe-ma an integral part of the firatielal

eid Seheif of Company

(Er. dP Fr

Managing Olrector

CON S25000

whe Oectai{ op)

ea Chief decmunas Ofc

Place: Cwml4 Shimla " 24-02-399))

PRADESH STATE EGARD Consolidated Gatance Shoat asat 31st March,2078 As

ota! Aa at et

4 5

Stabecnes tn.

t ae Sharma} Company Secretary FOS No rare

TaTeayi9

Chartarted Accouneds i; FRA a7 7ON | +

(Suresh Chand sont) Partner MMe O83ing

HIMACHAL PRADESH STATE ELECTRICITY BOARD LTM. ‘ Consolidated Statement of Profit and Loss for the year ended 31st March, 2018

Amotint In Lacs) i Refer | Year ended 3st | Year ended Bist aN; reales NoteNo.| March,z010 | March, 2017 Income

L [Revenue from Operations 224 65207613 629153,79 IL [Other income 22g 1929420 19721.13 T |Total Revenue +t)

671370.33 G45074.02 VW. /Expenses:

Purchase of Power 22a) 379026,75 388376,78 Employee Benefits fupense 224 188156.70 170383.70 Finance Costs x 45705,82 50334,65 Depreciation and Amortization expense 3876051 33900.98: Other expenses : ri 1935.39 1702329 Total Expenses

671005.17 660019.41 Profit / (Loss) before exceptional and me extraordinary Items anc tay (TLI-1¥) 365,16 (1114449)

VL | Exceptional Items : . 0.00 0.00 Profit / (Loss)-before extraordinary Items

; Vi. and tax (V- VI} ia

365.16 (1114449) VIL. Extraardinary (reams ’ 23ie. 0.00, 0.00

IX. | Profit / (Loss) before tax (WH VIIT} 365,16 (ll144.49) X | Tax-expense:

(1) Gurrent Tax 2.00) oop (2) Deferred Tax eh 0.00 0.00 Profit / (Loss) for the period from XI ans (VI-VItt)

365.16 (11144.49) XH / Other Comprehensive Income

A (i) item that will noe be reclarsified ‘i 4 subseonencly te arafittor Ina ane ee (li) Remeasurement of the net daflend 0.00 o00 benefits labiltw/ assets

: Income tax on above item

Total 0.00 0.00 Total other comprehensive tneome for the perlod(X1-xi1) 0.00 0.00

Earning (Loss) per equity share: Basle fin): aad) a2 (12.28) Diluted fin ® }

0.02 (22.28) Significant Accounting Policles The accompanying notes formran Integral part of these financig) Statements For aid on behalf of Company) if

(Er .P. Raya) i Auditors Report Managing Director As per our report Gfewan dats DIN OS299040 i

mine For Son! Gulati & Co, Director{ : ‘Charte Accountants ‘ DINNAIS45 : at FRN NA \ : - ifAriviid Sharma) fi \ shan Aggarwal) Company Secreary | SHIMLA |) Chief Accounts Officer , FOSNo 7279 (SuresH Chand Sani) \ fei] Place: Shirl Perinar Hy mts

fae 2O-p2-2p2p .: BLNo 083106

HIMACHAL PRADESH STATE ELECTRICITY BOARD LIMITED Consolidated Cash Flow Statement for the Year ended 31st March, 2018

Sr. No. Description i 4 For the year ended 31 March 2018 For the year ended 41 March 2017 A Cash Flow from Operating Activities

Profit before tax ‘ 365.94

(4.42109) Adjustments far: ; Artortization of Capital Grants \ 600,00 (6,139.94) Oeoriclation and Amortization Ww 38,760.54 33900.98 Interest Income

135.19 {45.14}

Provision for Goubtful Debts 1,473.95

1.20) Finance Cost i 50,334.65 91,304.40 5033465 78,069.45 Operating Profit before Working Capital = Charges

: 91,670.24

73,628.35 Chenges in Working Capital:

Adjustments for (increase)/ Decrease in Operating Assets; Inventories \ 190.86 i 3541.95 Trade recelvebale ‘ 19,863.83 21,430.30 Short Term Laans and Advances 1 $8,462.41

10,405.60 Long term Loans-& Advances

37.73 128.25 Other Current Assets ; : (128,700.80) 42,730.69

Other Non-Current Assets : | 5,153.98 (44,992.59) 2,929.52 81,165.31 Adjustments for Increase/ (Decreases) in Operating Liabilitias: Short term Borrowings

11,923.66 (191,106.28) Trade payable | (64,220.38) 1,411.02 ‘Other Current tabilitias ' 10,382.36

(61,253.64) Short Term Provisions ‘ 17,453.74

6,600,097 Other Long Term Liabilities

9,227.35 (15,033.26) (24,193.63) (185,841.77) Cash Generated from Operations,

31,643.99 (31,048.41) Tax paid (Net) ita

0.00 0.00

ir.

st

5

fet Conn terareee he ee. ——

= Activities (A) |

31,643.99 (31,048.14) 5. Cash Flow From Inwasting Activities. Purchase of Fixed Assets | 22,532.77 (43,473.69)

Decréase In Capital advances 550,65

166.86, Proceeds from Sale of Current Investments 710.30 631.20 Proceeds from GEF Investments ' (2,693.34)

B,931.22 Purchase of Investment in-Joint Ventures 0.00 (25,00) Interest received on Investments | . (76.61) 45.14 Loan given to Subsidiaries | (45,796.76) (14,249.04) Net Cash Used in Investing Activities (B

(24,772.98) (43,973.31) C. Net Cash Used In Financing ectivities Proceed from issue of Share Capital | (1,728.40) 4,998.60

Proceed from Share Application Money 0.00 * Lio Payment ogainst Balance of GeneraliResarye 0.00 (631.20) Other Reserve Fund : 0.00 0.00 Proceeds from Capital-Grants / Consumer Ca 25,070.05 4,823.27 Payment of Long Tarm Borrowings:

0.00 0.00 Proceeds fram Long Term Borrowings 27,112.10 131,481.08 Payment of Finance Cast (57,385.05) (63,559.02)

Net Cash Generated from Financing

Activities (C } (6,813.93) 77,114.13

Net Fesrones(Oecrannn) In-Cash and Cash Equivelants ( A+B+C) 57.08 2,273.42 Cash and Cash Equivalents as at Ist April (Opening Balance)

18,278.47 L6581.88 Cash and Cach Equivalents as at am March (Closing Balance)

18,335.55 18,855.31 £

Auditors Report AS per our report of even date (Er. J.PAaita)

Managing Director Auditors Report ADper our report of ever date cM ehiy ! Director( Op

For Sonl Gulati & Co. : Charterted compat | I remerraal FRN-£98770N, Chief Accounts Officer

4 iL Ae

(Suresh Chand Sent) (Arvind Kumar Sharma) Partner WSS oH ~ [ Company Secretary M.No 083106 = Place; Swrml4 ‘ M. No Oaeggs Date 29/92 )202p

to 209

Lite 219

5 O77 enzal

SL241 mw e50 R379 6 2sP

269 B1.271 to

Lid

£1350 376

Year ended Dist March, 2017

Note 2.2@ Other Income

cad Yearended 31st) Year ended 31st : March, 2018 | March, 2018 (Rs)

62.210 to 219 40.40 to 267.27 190

6 BELO1e Asia

62.251 37.05

62,260 96,74 $674165.00 4 47036294.00

750 200 2516.92 251691 764,00

and substiciles * D0

» 0 anid comsuimers e44ed0420000

‘o.oo

0.00

0.00

0.00

Yearended 31st

March, 2017 (Rts)

46.01

45.14

G208.98

8.98

106.55 272.67

a.

Bat

oie” br ee Year nnded 310t

Acgount | Yearended dim Coda March2o1g | Yearended 3istMarch,

> =

Note 2.2) Employee Benefits Expenses

(% Lakh)

Year ended [ Ly ou Employee Benefits Expenses — a? 3ist March, gerilonges 2018

Dearness Pay 75.0 0.00 0.00 Grade Pay (Regular)

75.008 4069.48 6621.53 Grade Pay (work charged) 75.009 63,36 70,19 Salary

75.1 42554,.09 39150.36 Overtime.

faz 601,23 601.10 Dearness Allowance, 75.3 42366,05 44060.06 Other Allowances:

75.4 3413.70 3499.66 Bonus.

75.5 27.99 98.44 Sub-Total 93095.89 9410135 Fee & Honorarium.

75,610 39.88 40.29 Medical Expenses reimbursement. 75.611 825.55 880.62 Leave Travel Assistenance. 75.612 15.90 14.02 Salary/ wages of outsourced /contractor 75,613 3110.60 2551.33 Earned Leave Encashment.. 75.617 8487.35 8395.12 Payment under Workmen's Compensation Act. 75.629 255.07 120.38 Leave Salary contributions.{Employees on Deputation) 75.633 19.55 0.00 Leave encashment Fund 75.635 0.00 0.00 Sub-Total

12753.89 12001,77 Staff welfare expenses, 737 30,39 25.42 Terminal Benefits. 75.8 87245.41 67932.45 Sub-Total

87275.79 67957.88 Total

193125.58 174060.99 Less: Expenses Capitalised 75.9 4968.87 3677.29 Net Employees Cost 188156.70 170383.70

Note 237 Finance Cost

(& Lakh)

Year ended 31st | Year ended 31st Particulars Account Code March, 2018 March, 2017

Interest on State Government Loans, 78.1 22778.08 1898.18 Interest on Bonds 70.2. 0.00 0.00 Sub-Total 2277808 1898.18 Interest on loans from LIG 78.501 359.45 557.26 Interest on loans from REC 78.502 6799.35 10551,98 and other loans etc. = 78.504 to 509 0,00 0.00 Interest on stock other loan 78.510 0.00 3534.98 Interest on PFC Loan 78.511 4632.01 4626.22 Interest on stock Punjab & Sind Bank Loan 2 78.514 0.00 2432.08

Interest on Private Bonds: 78.516 7580.96 5728.99 Interest on loans from State Bank of India. 78.524 0.00 2809.42 Interest on loans from ADB against clean energy. 78,525 114.82 107.10 Interst on loan from ee Bank of India 78.529 0.00 457.72 Sub-Total 78.5 19486,59 39805.65 Penal interest

0.00 0.00 Interest to consumers (Securities) 78,601 2027.42 1272.79 £ub-Total

2027.42 1272.79 Total interest on capital liabilities 44292.09 33976.62 Interest on borrowing For working capital. 78.7 2368.02 11067,61 Sub-Total a 2368.02 11067.61

Rebate allowed for timely'payment to Inter-state Soe el Sustrcn ee alain 78.821 & 831 1019.04 1300.14

Sub-Total 78.821 & 78.831 1019.04 1300.14 Other interest and finance charges 78.841 0.00 82.28 Interest on GPF i 78.852 2220.61 504,85 Cost of raising finance, F 78.861 to 869 0.00 109.61 Surcharge on delayed payjient of POP 78.880 4897.09 7943.90 Bank charges between Board offices 7E.B81 L1z 0.58 Bank commission for colléction from consumers 7EAB2 14.11 6.71 Other Bank charges : 78.883 29.39 20,15 On line bank tranction.charges 78.889. 0.00 4.09 Sub-Total

7162.32 8672.19 Total

5484147 5501654 Less: Interest capitalised 78.9 9135.65 4681.89 Fotal

45705,.82 | 50334.65

Note 232 Depreciation and Amisetization oxperies

Account Code | Year ended 31st

77. ee

72510

FUT

TA

TREAT

Frat

mao

F567

o

Da

G86 E o.00

212,70

wa

Year ended 31st

7

S31

00

5.04

of cervice reicered by camtral bamrd keeping scheme

Note nat)

Earning Per Share (EPS) (2 Lakh)

Year ended 3ist | Yearended 3ist eaeyease March,2018 | March, 2017

| Net Profit as per Profit and Loss A/cavallable for equity * Shareholder ( in Riipees) 365.16 (4,421.10)

|U Weighted average number of equity shares for Earnlng Per Share Computation:

(A) For Basic Earning Per Share of Rs. 100/- each (in Nos} 16,476.42 607.46

(B) For Diluted Earning Per Share of Rs. 100/- each No of Shares of Basic EPS as per 11 (A) ( in Nos) eee Bata

Add: Weighted Average outstanding Shares related to Share 0.00 oon Application Money { in Nos) : E ag Shares for Diluted Earning Per Share of Rs. 100- each (in 1647642 607.47

IIL. Earning Per Share (Face Value of Rs. 100/- Each) BASIC (In Rupees) o.02 (12.28)

DILUTED (In Rupees} O.02 (22.28)

HIMACHAL PRADESH

STATE ELECTRICITY

BOARD LTD.

Note No,

2.1

FIXED ASSETS AND PROVISION

FOR DEPRECIATION

FOR FY 2027-18

[ |

(Amount in Lacs!

GROSS BLOCK

PROVISON FOR

DEPRECIATION| NET BLOCK

Deductio :

hia Depreciztlon

; Additions:

«Adjustments during

| Gorss Block At [Opening

fund |farthe period

[Adjustments Account

(OB as.on during F¥

during

FY 2017- FY 2017- [the

end of as

on GL.04,2007

to for déductions|Atthe

endof |Attheendof

[LAr the ed of SLNo.

Asset Group

Code =

faz017

= aha

7-18 18

18 March,

2018 {01.04.2017

[31.09.2018 |2017-18

March 2018.

[March 2018, | March

2027. 1

2 a

il 5

6 7

a 9

16 ii

12 13

14

land & Land

Rights 10.103)

8740.56 383.39)

o.00) 0.00

o0g4.35 6.00

0:00) 0.00)

0.00 8084.35

8740.95 2]

Land held unter Inase

[20.207 203 1133.16

0.00) o.0o|

0.00 1133.16

292,54 31.84

8.00) 324.48

508.68 $4051

3/ Buildings

10:2 2379812

1366.72 G00]

0.00: 2514.84

12889.43 620.48)

0.00 13489.92

11674.92 10928.69)

4|Hydraulic Works 10.3}

-117509.74 BB99.24

g.00] 0.00)

136408.58 §9101.61

6161.18 0.00

6526.75 61146,19

5908.13 § Other

Civil Works 10.4

SRME56 4040.27

6.00} 9.00]

62545.49 15662.48

2268.83| 0.00

1793132 4461811

AB46.07 6/Plant &

Machinery 10.5]

_-276273.05 25574.24)

O06} t.00

301787.30) $2331,44

1445671 6.00

56 788.15 204099.15

19388161 7

{Lines & Cable Net 10.6)

29480014) 29761.79

G00} a0

418161:54 6963259

11259.90 0.00]

Be92.49) 237269-44|

22476755 alVehieles:

10.7| 1771.05]

431 O00;

o.oo 1775.40

1371.99) 38.33

0.00) 141032

«365.08 399.10

9|Furniture & Foctures-

10.3 1102.94

19,49] 6.00)

oo

1122.44 845.91

139.58) 0.00)

989.45) 192.95

253.04 10/

Office Equipments

10.8 6695.20

202.54) aco]

00

6897.84 4734.09

956.27, 004

5190.36 1707.48

26121 11)

Date Processing Euipments

10.95 317.64

90.00 O00)

6.00 4312.64

0.00 o.c0

000 0.00)

4312.64 4312-54

i0is) 0.00

4.00) o.oo]

6.00 0.60)

6.00 €.00)

0.00 0.00)

00 0.00

Sub-Total 794185,71]

6417.58 0.00]

aco ASE398.25]

2748346.18) 35933,13

0.00) 28237933

576118.598 547595,53

0.00) 0.00

0.00] —a.00

0.00 0.00

0.00 6.00)

0.00 0.00

o.00 Capital

expenditure resulting

in. an assets

not belonging

to

10|the Board, 11.103

a.00 0.00)

0.00] _o100

o.oo 0.00)

0.00 0.00)

0:00} 0.09

0.00 1

14.103]: 0.00)

O.p0} 0.00]

0.00 0.00

00] o.oo

0.00 0.00

6.00 0.00

Assets Transfer \/Ward

13.4 ‘00

0.00 0.00)

0.00 0.00)

0.00 6.00)

0.00 (00

6.00: op

Total 0.00)

6.00) o.oo]

0:00 0,00)

oo 0.00

0,00) o.00

2.00} O00

0,00 0.00)

‘C.0o} .G.ce

0.00 o.00

G.00 0.00

6:00) a

o.00] Grand

Total 794185.71|

6421258 o.0o]

0.00 SSE39R.29|

24534518} 3599313

O00) 282279.32

S36118.98) 54783953,

Grass Hock

dees not inchude

value

of smalland low yalue

assets each

costing below

Rs: 500)-tharged to revenue

sccdunits in the year in which

(hey are first

put to ute,

Value

of such assets

charges to

revenue accounts

during the

year 2017-18

Rs. Nil/-

HIMACHAL PRADESH

STATE ELECTRICITY

BOARD LTD,

[Note No.

2.2

Accounts Additions

during the

|Transfars/ Capitalised

during Sr.No.

[Particulars Code

As at

lst April, 2017

year 2017-18

Adjustment [Total

the year

2017-18 [As

at Sist March,2018

ijland &

Land Rights

14.1 5735.47

“816.57 0.00)

6552.05 356.37

6195.68 2[Building&

civil structure

14.2) 7878.37

5126.53) 6.00)

13004.69 1234.85

11769.84 3)

Hydraulic Works

14.3 96.91

361,71 G00

264.79 328.75

63.96 4|Other

Civil Works

14.4 6244.04

711.27 0.00

6955.31 1521.77

5433.54 5/Plant

& Machinery-T&D

14.5) 2344213

68957.91

a.00 97400.04

36830. 76. §5569.29

Gilines &

Cable Network

etc, 14.6

4559672) 14011.14

0.00 59607:86

31809,28) 2779858

7| Vehicles

14.7 566.30

“18.54 0.00

S47.76 525.38

22:38 8)

Furniture &

Fixtures 14.8

50.82 15.48

0.00 66.19

1279 53.40

‘9/ Office Equipments

14.9 189.45

335.64) 0.00

525.10 413.54

111.56 145

0.00 0.00

0.00 0.00

‘0.00 0.00

Sub-Total 89606.39

90317.41 6.00

179923.80 73033.48

106390.32 [Other

Assets at construction

stage 0.00)

0.00 0.00

6.00 0.00

7 0.00

1/Contratt- in Progress

15.1) 44.37

22.17 6.00)

66.55 6.00

66.55 15s

0.00 0.00

0.00 0.00

0.00 0.00

2]Révenue Expense

Reclassified 15,2

6.00) 0.00

0.00 0.00

0.00 0.00.

Sub Total

44,37 22.17

0.00) 66,55.

0,00 66.55

Tatal:- 89650.77

90339.58 0.00

179990.35 73033.48

106956.87) 0.00

0.00) oo

0.00) 0/00)

0.00 Previous

Year 37194.39

$1537.79 0.0

17873217

#9081.41] 2965.76

[ HIMACHAL PRADESH

STATE ELECTRICITY BOAAD

LTD.

Note No.

2.3 INTANGIBLE

ASSETS AND

PROVISION FOR

DEPRECIATION FOR

FY 2017-48,

fete No

Lag} GROSS

BLOCK PROVISION FOR DEPRECIATION

INET BLOCK -

Depredation: |Adjustme

Additions Adjustment

|Deduttions | Gorss Black

At {Opening

for the period ints or LAL the end

O@asdn =

fduringFY = fs

during FY |duringFY

[the ond of

fund ason. (02042017

te Ideduction

fof March [At the end of March

At the end of Si:No,

[Asset Group Acotumt Code

[o104.2027) |zor7-ag

20118 (2087-18

March, 2018

eto4.2017 [31.03.2018

|s2n.7-18-|2018, [2018,

March 2017, 2

3 4

§ &

7 8

§ a0

i 12

13] ”

i4|

intangible Assets 18.301

2243.70 7378

0.00) 0.00)

3027.49 1557.96

Btw)

O00) 2243-70)

778

705,75 |

[Total 2243.70

783.78] 0.00

0.00 3077.49,

1537.96, 705.75

0.00) 2243.70)

7e3.78 705.75

SO

et ate

i a

24 Financial

Assots

Invi tieniti’

aren

Amounil in Ra.)

eee |

As at 4st

March,2078 As-at

21st March,2077 As

at ist April, 2018

i =

| Innrentmniay

i In 5

=

Non Trado-

U :

Others (HPPCL)

St.

|

investment in HPPCL

1077-81 AS07751

FaOrT.5i investment

in Joint Venture c

Jnwestpent in JV Himachal Renewable

Energy 25:00

25,00 00

130.5 402.5%

Go7F sy |

(Amount i

As at 1st March. 2018

Ag ab Mt March207

Achat 1st April, 2016

‘ -

= .

er

Sear

ee pel ot

= =

380.45) 353.04

304,03 21934

“208, 258.

og rs)

Rie 776,19]

-B56.51/ O95 .75

a .

(Amount in

Laka) As

al Stat

March2008 Ag at

Stat March,2017

As at 4st April, 2076

/ |

0) 2525.57

2390 87

| ft]

2625.97 2000.07

nt in

Lakh! Ast

1st March,2b18 As at

tat April, 2016 ]

778.68] S053,

S05, 11808,

BaF 3088.87

4

4318 44]

s iE

13521.36] 2209756

: ]

28 __ Inventories (Ageount int Lakh)

Ace AsatiistMarch2018

Ag at 33at March, 2007 ‘As at tat April, 2016,

Curt

#2i| Material Stock Account tee

2 e387-St

1351.27] Tutal

__ Fags

e307.34 =

wai Current Assets

29 Financial

Aasets - Investments

_ {Amount in Lakh)

Ace As-at-ist March, 2048

As at 31st March 2047 Aa at-tet April. 2016

our GPS

Leave Eneashment inmemnen

__0

ae ie

Go 831.20

Total 0)

B3t.21 Current

Assets 210

Financial Assets - Trade

Recelvables ace

en i

Aw at Dist March,2013- Avatiist

Marcin

| As at

tat April, 2048 ts

‘

Debtors ATS

AS Tai48.67

S3805,04

Total AT 14B 45

Ta146.87 SIRS 64

inthe opinion of

Company, trade

recelvable

are tho value a3 siaied in

ihe aiccounts,

¥ feaisad i the

ordinary course

cf Business,

Currerit'Assats ;

211 Financial Assets

~ Cash and Bank Balances

{Amount in

Lakh) fee

Ag al Hat March 2078 As ai 31H March,2017

As af Tat April, 2016 Gurl:

a

Cash and Cash equivaienta teat

11.40) a

Posiage stamps

in Hand 4.46)

abe 5.05

|___Jimbrest with Statt

____ a0

144 Balahets with Banks

1802051 1033628

15714.07| |__|

Other invasiment | FDR's

24a 502.29)

1295.72 Tatal

18355,55) 188565.71

16043.30) Current

Assets Biz

Financial Assets -Loans & Advances

(Amount in Lak}

own i

As al J4st March,2076 As at Jat March 2017

Ags atist April, 2018 |

ts i

-

& to Siait

263 0

0 ingore

A ‘and

due on

3 0a)

00 Laane

&. ceslo

Staff E

46457 325,62|

3155 Loans &

a Others: 0

738.15 5302.91

| Total

457.53 _-460.77|,

15234.47 ATT

20

zi

Financial Assets

+ Others:

(Amount in

Lith) AS

at Tat April, 2076

be! “

Ad at 3st March aati

‘As ot tt March,20%7 |

Linbited Revenue: 2raa7 ti)

= 19762.68!

22380,42 Amount

Recoverable- Subsidy

{Grant 2877833]

2a4e 261

4099.74 LAmourrt

Racoversthe- Rent Property

zane!

00} po]

Advance | Tax | Tax délutied at

source 87038}

o7ast 2043.26.

Amount recoverable trom Lok Mitra (Lata depos

ee _ 2204.52

537.37. unt

recoverable from Others

for Leave | Fa

2445 fa] 1978.43]

2325.56 Deposits wilh H

on'ble

High court others _ sibe2 os

S002.04] 8065.71

: Recoverable- Em

7 ‘S886

108, 130.21

Amounts Fiecoverabie, Settlement BVPCL HPI

4680.51 667.59)

TH

Amounts Recoverable-

Suppiars! contrartors. 76456

FEA

4758.85 Amounts Resoverable. Other Electricity Boards|

53 0)

7.63), Deposits - Others —

i ee]

#45 124.47

Total 7206.59

$0982.42) 6038443,

ire Ranch.

= 4

c Other

Corrent Assets

(Armour in Liakh)

Ag af 31st March,2048

As at Jtst March,2017

Ag at 1st March,2016

WsaE sa 73184.

5168512) 76843

"S315.85 5731.72)

1320 63

BAT 26.35

Pe) 4073.28]

418 23].

384 Mag

17.68 E.05

E 411.24

531 66

Total asvirzs]

3559.56 e2876.93|

\

—

Sate eres

aa -

in _

Az at jist March, 2048

| Aa

at Jat March 2047

re Novof Shares

Amount

No. of Shares. Amount

: Authorised

2 Pa

Equity Starnes at par value

00% each

A10000sa0 fiegod.od

To000p80 Ti9000.00

_Tresao0po| 1ip0o8.o0

[EQUITY SUBSCRIBED AND

FULLY Paro

UF j

- -—

ele Shares

at Sar valve" 100/- ach

fuly ped 87056500)

G7056.58 GSS28160

G5328,18 60029580)

60529.46 Total

| B7058.58)

5328.18 |

BS]

The reeonsliiation of the number

af shared auistanding

is set iat

baler; .

oe

ot in

Lakin} Name of Shareholeer

Ag at 34st March, 2018 As

st 34a

March,2017 Ags at

Ist April, 201 ]

' No.of Sharos

| Amount

‘No. of Shares Amount |

No.of Shares

| 65326

180.00) §5328.18)

0S 79580) ‘60328.68)

apa 728400 o0

1728.40) #098600)

490-60 6

r §,70, 55 580.00

G7066.58 ee328180

Eee

i pace

rc

* 4

7 .

‘As at 349

March 2018 Aa.at 4st

March2047 Asvat

4st April, 2078

i ”

No.

of Equity [ot

No. oF Equity

| No. of Equity Shares

Mol Shareholding

—_| Shares

[Sharchetding Shares

6 Gf Shareholding |

1. Governor

of Himachal Pradesh

By OS8580 00.”

85328180 100-55

60329580) Too.o00

[The remaining shines ane

in the narneof

rewrites Orectors ‘of HP Gavi Total

ree

( ( miviey

A |

e3 re

\ oe

f s

‘ =a

216 Share

Application Money

I] :

Se allotment

= 3

= E

Equity share af

As. 1,40 Lae pending for afoément W

ES Tecoverable arctan

From GeHP which hes

bean receiwed and share has been

keued in favour

of State Gavi vide agenda Tem

32.09 on

dated: 7.302018

247 Other Equity

A Grants,

Assistance &

Contributions ‘i

B [Capital Reserva

2246.69 c

Eamings /

Balarice :

~2OS56 97

ETERE Fal

-1988tz 47 Ante

for carry forward losses af erstwhile

H 5052.53

Ada: Profii/(ioss)

for the year 355.54

14143 7eF 5509.

Closing Salance =TS357. 50)

-204456.07 | =$83385.21

Tota! Other Equity (Av B+C) 162079.82|

~AB2402.54) 441229.43)

Non Current Financial Liabilities |

24S =:

Bermwiags a

—_tAmncunt in Lake

ee

at 34 i

| _As at 3431 March 2077

As . 2016

7

[Thea a

ans - LIGRECIPFG 5612.00)

83538.36 114g

Term Loans

(Third Parties)

85340.00 65340.00

6202 6) Total A

‘ Sasa

Gane 78.36 Tesa7.83

Unsecured | _

[Bariks. “HO

00 2483.58

[Financial inetutions

Some. of an558.15

iat0a334) Gthars.

(VOAY Schemes)

252250,55 250289:.8

1463.15 Loan

Restucturid under FRP

: a

00 Haar? 7S

Total B 372238.56

37287724 213568,82

r Total

& (ASB)

~S65252.76| -

2160420 385905,85

: y

* Logea

from Financial institutions PEC) REC) LIC were

obtained under diferent schemes for

creation of fived alaees.

The assets Granted

wilh Ua loans are hypathecated wih the RECPFCULIC

* There hea been no defaults in repayments of any of the loary or interest thenean at thé end of the year,

"The HESESL had b

orrowing

timit a. 5000 Cr

which has now fen

increated upto Ra 5500 Crore during FY

2038-19

, Won

Current Financial

Liabilities

2.49 Other Financial

Liabilities: (amount at

Laken) J

at Mars!

Deposits. Retentan Monoy from

Contractors ar

a 52]

840: 45] GPE

12820427 —_

127 5418.78) 1a

14e4t Thess

IGPFACPSbvestments ~108

-T02433.5i] | 12884 72)

Less ; ineome Accrued on

GPF investment

217.24 2519.52

3164.44)

Total How.sf

1603.84 25020.66)

ae: e

oo

3

-Be 2:21

Non Current Liabilities

Other Non

Current Liabilities

12240,28 any

eee

ae at

limit G9a51.47

w e r e n t ? Liability

-leng tetm debt

8254 1 5 ) he

inSocured Loarw

Losns from Banks-CC tmit 18032,95

tet $3995.28).

LGurent Linkiity-

Ibng tarm: debt

2805.12) 17869.50

40168, 95

Total 3a367-22)

29840.20 165507.84

Current Financial Liabilities

22) Trade

Payables fAmouht in Lai)

Ace As at

Sst March,2018 As at 31st March,2017

Agat tet Apeil, 2046

Cota

Sundry Creditors

=I |

Purchase of P 10850027)

173720,64] 172609.63|

RG

he as

_1a4e8.31 57

“B4g70.41| —

se

Tata 1273878

~_ 485430.67

Hivas0.o4)

phe 9

Aebeeniiepati meted LAID

. .

2.04 Other Fingnelal

Lighilities f

(Amount i Latch

Ace As at 3ist March, 2008

As al 31st March,20%7 "Ag at fat Apel, 2046

Ou

hn __interest

Accrued on Loans

from Bankel aller 7

1576216] 14685.07)

1277.24 Seary Payable

: :

‘BUTS 66 4375.36

3755.90] Linglaimed

Repayment of Bones 6,00

KOO) 61.00

Sac 13.58

00: 00

Advance received. scrap

sale energy bal

3882.99 1484-70

188,30 Ami.

Payable -Flactricity Tax { MC}

‘ 2414647

____2SB44 65) 8185.10

Payable for expences 1231.39

“1552.88 9909.68)

Statutory Taxea

Payatie-i Tax, EP

ete. 3ehsa,

4g7-14 357,22]

| _/Eamest

Depass ;

2773.26 Bat

1347.18 interest Accrued on

1798.39) 1754-84

2083.75 interest

Accrued.cn Loan Uday S

cheme

1896. 10

1a 418)

00 Security:

its tron Consumers B4i77.46

27535. 65) 25480.

st Payable

on Secutity deposits 1674.23)

820.81 8134.7 |

[Contributory Pension Scheme

0842 ae

oot Farad

sas :

Total“ :

“5846.34 wa

a6S75416 Th

fe 07E14.58) -

Current Liabilities

228 Other

Corrent Liaiilitios

_Awmonant ary Lark) est

As at 34st March,2018

As at Bist March,2017 ‘As at Tst April,2076

[cat

| Other

Current

| iahilities. Purchases;

22.07 19:60]

180.64 ;

| Total

za

19.50) 150.54

Gurremt Liabilities 228

Short Term Pitvisions.

L _ [Amount

in Lakin} ace

As at Stet March 2018

Ag at 31st

March,2017 As

at 1st Apel, 2016

spl 526,89]

S700.48 Weg2 65

12.6 i]

0G) s

42851 8640.62

5665.66 0

05; 207181

a a

6.03) 37489

371.85 501.08

28-455 16 18257.05

S118

aa.

sigsas2 aus]

=]

= At

thmend

if

|i the end of

the end of

iy 7.

HIMACHAL

PRADESH STATE ELECTRICITY BOAHD

LID, Note

No. 2.11

FINED ASSETS AND PROVISION

FOR DEPRECIATION FOR FY 2016.17

[ |

[Atrigunt in kas} GROSS BLOCK

PROWISION FOR

DEPRECIATION

NET GLO

Dedurtio /

/ Aa

Ditpreciation castor

Additions. Adustments

during | Gorss

Boek At

(Opening fund

|forthe period

| a

‘ Account

|O8 as of turing FY

during

PR 200 | |FY

S01 the end

of aor

OLH2016 to:

[deduction |Atihe

cada! |Attheendof

[At the end of

(SL.NO. [Asset Group

Code JOLoe2916.

[2oie-17 uv

17 March,

2017 [01.08.2016

[3a.0n2017 _

[s2006-27|March 2007,

[March 2017, {March

2026, zl

z 3

4 5|

6 a

. a

5 10

i 13

3 i4

LLand & Land

Rights . 10.101

05.88 43.08

Opa]. 0.09]

a740.965 5

00 0.00

O00 8740, 55)

308.58) 2}land held under

lease a.aba acs

1096.33 46.53

6.03] =. oon

1733.16) 146.04]

56.60 6.00

T9264 B51

890.29) __3]Buiigings

- 102

Perey 50655...

- 100}

0.00 aa7ga.12)_1e254.n0

a15.43 oof

aageeaa} apezmea]

11087.87) +

allivdraulic Werks «=

_atea| 18719556]

fia] <=

ono] aD

1750978 S2S35.5H

S26. 73 G00}

1 SOL

5B 6435655]

SOther Civ Works

104) S7H8.23)

790,33 G00]

2,00 S8508,56

1376463 1397.85

G.00| 1866248

A2B46.07 3953.60)

6 Plant & Machinery

10S] 248973.03|

_27240,03) Boo}

OG] 276273,05

T0055 \32 1227612,

Goo) Reaay.aa

WMaiel) es

7|Unes & Cable

Net 106]

— 2727ang0|

216 L5a Goo]

io 29440014]

SRS95.60) _

Litay.00) 0,00]

60632.59 776755)

214143.01 alVehicies

107 1744.47

26.92 i

ae! 1772.09

1295.52) 7646

o.00 1379

399,10) 44855

Sf Furniture &

Factores: toa

1096.74 6.20

“0.00 0.00)

1107.94) 802.94

45,97 fon

849.91 224

2o720 18| Office Equipments

19.9 G70D8G)

«4.50

O00) ood

6685.30 “Siene1]-

1153.28) 0.60

4234.09 246.21

369,99) Li

jDate Processing Eulpments 10.05

4303.98 66

L0G) 0.00)

A312.64) 0.00

oo

ROU 0.09

431264] PETE]

10}s}- =__t.o9

0.00) ooo)

ooo “O00

0.60 o.90

0.00 0.00

2.00]: o.oo

Sub-Total FASISII0]

—-SU0z641 6.00]

0.00] vaatas.71]

21 smaa aa 3346035

00) 248396 18

SA7BS9.53] _'Sa0774,26

0.90 0.00

o.oo} o.00

1.00 0.00

0.00 aol

0.00 ~_ bo)

G00 Caphtal

expenditure resulting

lin.an assets not belonging to

Iithe Board

1108,

2.00) 00

0,00) 0.00;

o.00) 00)

0.00) O00)

o.00 O20}

a00

i 11.102

0.00 o.00

too] aun

0.00 an

0.00 o.00)

00 9.30]

0.00) _ [Assets Transtes

|/Ward 13.4

a0

o.00 ooo]

oo £00

[ite aoa]

o.0| 00

0.90 ies

[Total /

0.50 0.00)

feo] 00

6.00] 0.00

aoa! 0,00)

6.00 0.00]

Oca 0.00

0.00 0.00!

oo

<.00) o.00

‘L00) 0.00

0.00) 2.00

60) nél Total

aise 30] Sa0gh.aa

foo] 00]

Faaien.7a]ar2neaea)aaaeias| oto]

2agslads| Saraigsal

Sa0gvaan

Grass Bock does

not include

value of small ane low

value assets each costing

‘Valine

OF SLCN assits

Charges te

rivenue SICounis during the year

Mb

L as

below Re: S00 changed to

vevenue accountsin she year imwhieh they

are first put to use,

SupeOny

| | HIMACHAL

PRADESH STATE ELECTRICITY BOARD

ITD, [Hote No. 2.02

INTANGIBLE ASSETS AND PROWSION FOR DEPRECIATION

Fon TY 20TE37 |fAmaunt in Lae)

GROSS BLOX PROVISION

POR DEPRECIATRON

NET BLOCK

Depreciation. (Adjustment

/ :

/Adhusiment Deductions

| Gers tock Ar |Gpening

for the period |ts or Attheend

| ;

Dh aban durig Pe

ty hiring

FY’ |ducing FY the

dol fund

aon OLE

200K tn Ideduction fo March

— |Arthe

end of Aarch AL the

end ol SING.

[Agtet Group

Actount Code foLMaowy

Jao?

OUI?

OLE?

iMiarch, 2017

M2016

poten? fs 2016-17

|2017. ana 7,

March 2076

i 2

4 4

5 6

7 ft

9 10

11) Ey

13 i4

Lintangible Agtets ign)

2249770462 i

0 a

2iaa7oss2/ 1oaseiea2]

— aaazage?

assrasgi4 OSTA

3B 11544a620

[ Tettal Ba 7ose2

a ol

=Ma70462) toasziea2|

“aampang2 OG]

1ss7eresa sh20

= 3

aan

ie tbe

HIMACHAL PRADESH

STATE ELECTRICITY BOARD

LTD INTANGIBLE ASSETS

AND i

FOR DEPRECIATION

FOR Fy 7016-17.

PROVISION POW

DEPRECIATION:

Deductiars: uring Fe

tee engl ol

Opening — far

the period Jas on

Bepeciation |Adjustinen|

fr 23.07

(OH.OW 2016 to |dedvetio

A the

ered nor March,

[AG the endiof

Marci

Mts17

[March 2037

_|os.o4.2016 007

|s 2006-49 Janz,

4 q

7 a

4 30

ii uM

0,08 22a ra[

1089-20 943,74

5.00) =

Ad) ~~

d [sp

. 9.00

2242.70; 10s 37

4s9,741 bo}

Saas

1154.49]

RIMACHAL PRADESH

STATE ELECTRICITY

BOARD LTD.

Note No,

223 [=

ACCOUNTS Additions

during the

|Transfers/ Capitalised

during St

No. | Particulars Code

As at ist

April, 2016

year 2016-17

Adjustment [Total

the year

2016-17 |As

at Stat March, 2017

1 Land & Land Rights

14,1) “136126848

1589592036 a

1453471189 879923704

573547484 2)|Bullding&

civil structure 14.3)

690991676) 154780635

0 845772305

57934960 FETES7345

a} Hydraulic Works 43

145447789 BOSS5E0017

0 951007301

960698521 9891320

4/Other Civil Works

a4 1737780588

429345405) Q

2167125093 1542721849

624604144 5[Plant

& Machinery-T&.0

14.5 2041213146

3661233900 o

SPO24A 7046 3358233632)

2344213414) S/Lines

& Cable Network

etc. 14.6

5138491235) 1509310754

0 Gb47ENI9E9

2088130272 4559671768

#[Wehides 2 eth

Sos Male

s4 55544729)...

~ B24.

22 o

ss7eitep 2251450

om SS529659

&|Furniture

& Fixtures *

14.8 4759025

342776 0

8103801 20200!

5081601 9

Office Equipments

“4a 18574387

370812 6

18945199 ao

1g945199 145

0 6

0 Oo

Qj Q

Sub-Total 695675237

S1537728725 0

17250453962! BaR9g14677

8960639255 Other

Assets at construction

stase

i/Contract- in Progress _ 15.1

147477 a

a 4437477

a 4a37477|

155 18325549

o D

1na25549 18325949)

0 2)Revenue

Expense Reclassified

15.2 a

o fe)

oO of

a Sub

Total 22763425

0 0

22763426 1832594

MAI74T7 Total:

S719938663 8153778725

0 178732173388

8908140626) S965076762

Previous Year

O37 7788693 7S4B884837

0 17226673530

7507234867 9719438653

| HIMACHAL PRADESH

STATE ELECTRICITY BOARD

LID. Nate

fla, 2.13 Accounts

Additions during

the Transfersy

Capitaliged during

St. No.

|Particulars Code

Awat ist

April, 2016

year 2016-17

Adjustment [Total

the year2016-17

fis at 31st

March.2017

ijland &

Land Rights

wa -1361.27;

15895,98 0.00

14534.71 8799, 24

573547 2/Eullding®

civil structure re!

6909.99) 1547.81

a0 B4s7.72

579.35 7878.37

3) Hydraulic

Works 14.3.

1454.47 BOS5.60

0.09) 9510.07

$606.59 96.91

4|Other Civil Warks

14.4 17377.81|

4293.45 o

21671.25 15427379

6244.04

5/Plant & Machinér-TaD

14.5 208127.13

36612.34 0.00)

5702447 33582,34

23443.13 Silines

& Cable Network

etc. 14.6]

51384,91 15093:11

0.00 6647802

20881.30 45595,72]

|

7 Vehicles

; 147

555.45 32.36

o.0a 587.81

21.51 566.40

_2/Furniture &

Eieturas. -

148 AF59)

EAS] Eee

ten 51.02

eae

OS 80.82

S| Office Equipments

149) 185.74

372 a.o0}

189.45, 0.09

189.45

145 0.00

0.00 0.00

0.00 0.09

0.00) Sub-Total

§8955,75 81527.79

0.00) 17850454

#8998.15 8560639)

Other Assets at construction stage 0.00

o.00 0.00)

0.00) 0.00]

0.00] i

Contrect- in Progress

iil 44.37

0.00) 0.00

44.37 0.00

4437 ie

183.26 6.00)

0,00 183.26

183,26 0.00

-2/ Revenue Expense

Reclasaified 15.2

0.00) O.00)

000 0:00

0.00) 0.00}

Sub Total

227.63 0.00

0.00 227.63)

183.26 44.37

Totals 971594,39

81537,79 0.00

178732.17 89081,41)

$9650.77; 0.00]

0,00 0.00]

00 0.09

0.00 i

Previous Year S3777.85|

784885 0.00]

172266.74 75072.35

57184.39

CHARTERED ACCOUNTANTS

Om SONI GULATI & CO.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF HIMACHAL PRADESH STATE ELECTRICITYBOARD LIMITED

Report on the Audit of the Consolidated Financial Statements Opinion

We have audited the accompanying consolidated financial statements of Himachal Pradesh State Electricity Board Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date; and a summary of the significant accounting policies and other explanatory information (hereinafter referred to-as* the consolidated financial statements”).

In our opinion and to the best of our information and according to the explanations given to us; the aforesaid consolidated financial statements do not give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and do not give a true-and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind-AS") and other accounting principles generally accepted in India; of the state of affairs of the Company as at March 31. 2018, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that dale.

Basis for Adverse Opinion

We conducted our audit of the consolidated financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAS). Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. Weare independent of the Company in accordance with the Code of Ethies issued by the Institute of Chartered Accountants of India (ICAT) together with the independence requirements that are relevant to our audit of the consolidated financial statements under the provisions of the Actand the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide.a basis for our audit opinion on the corisolidated financial statements. Letters SA 600 were sent to Auditors of Subsidiary & Joint venture Companies bul no reply has been received .Balances in Financial statements of holding company do not tally with the balances of subsidiary company Similarly inter unit balances in holding company do not tally. As we did not conduct the audit of subsidiary & joint venture company .The Auditors of subsidiary company has given a qualified opinion as to non compliance of IND AS non provisioning fo: demand by forest department for encroachment of Rs 377 lakh, nen settlement of land &- building,

JONI GULATI & CO. CHARTERED ACCOUNTANTS “HOSHANLEELA”, 1749/2, Near Govt. School,

Mehii, Shimls-17 1013 Fel: (0177) 2626189, 2626799 Fax - (0177) 2626269 Mobile , 9478072169, 9868005169 E-mail: goniguresh’i@igmail.com

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report, as these pose a tentative Risk of Material Misstatements.

|. Accuracy of recognition, measurement, Presentation and disclosures of revenues and other related balances in view of adoption of IND AS

The Company claimed to have adopted IND AS but we found that only regrouping of amounts in financial statement has been done. We found that the financial statements are not even GAAP complaint accurate not to talk about AS or IND AS compliant . The Companies Act, 2013 gives great importance to the compliance of the-accounting standards by the Companies as evident from Section 129(1) wherein it has been stated that financial statements shall comply with the accounting standards., the first proviso to said section also states that the items contained in financial statements shall be in accordance with the accounting standards, We noticed that the Company has not complied with following accounting standards /IND AS: IND: AS 101 First time adoption only reclassification (not verified by us) of balance sheet & P&I, account has been done otherwise there is no compliance .IND-AS 18 Revenue .IND-AS 19 Employee benefits . IND-AS 16 - Property Plant and Equipment , IND-AS 17 Leases ,IND -AS 36 Impairment of Assets IND-AS 37 contingent Liabilities and contingent Assets, IND AS 7 cash management .

After getting report from units that neither access to billing software nor to tenders records was given, we conducted some logistic tests at Head office &notieed significantly material understatement of revenue. To strengthen the same we performed substantive test through 23 sample bills & found that there was under billing to the tune of Rs.432 Cr. in these samples. Replies of management (dated 25 September 2019) Were found to be non sequitur & evasive, as replies has nothing to do with our obsetvations. Based upon these samples c& logistic test, we are of the opinion that revenue (income) of the Company is understated by Rs.3082 Cr. This difference is in sales within the state. In reply to other question on revenue understatement the management reply (verbal) was the CMTR sale is only for calculating transmission losses & if we assume the statement of management to be right, the transmission losses declared at 15% will become 45 % However this Is not the case these are not transmission losses but combination of i) under billing ii) reversal of bills due to Court order & iii) accounting of units sold but reversal of amount for open access but non reversal of units sold.

Different sales amount (Assessment fig) are provided by different sources ¢.gi) Revenue report from SAP Rs,7830 Cr, Similarly Realization fig are i) Revenue CMTR 3 Rs 4684 Cr, ii) Notes to Account no 24 Rs 4622 Cr.. iii) Go Live Consolidation Rs.5124 Cr.

We were told at HO that opening balances in SAP were taken wrong at Unit level but how os _ —\ the sale fig could be wrong as it was not opening balance. To strengthen our observation 5 | ,We noticed that all sales and revenue teceipts are booked through K numbers .All

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statements including CMTR are prepared from K numbers show could be there any difference .Of course some differences could be there due to reversal upon Court order etc., but here the difference is more than 30%.

We understand that in case of all meters with20 KVA sanction load reading is taken through MRI machine but to our surprise in all case we noticed under billing, the reading was manual .In our opinion all this was a well planned and deliberate act. Replies of the management on revenue during September & December are different from those during February 2020 given after Audit Committee Meeting e.g.in case of Anumita Overseas during September & Dec 2019 the Management claimed that the difference in billing Rs37.96 Cr. has been recovered however during February 2020 it claimed the amount has been billed during January 2020.Thus all bills of major customers will have to be checked during current year i.e. next year audit. The replies of management & Audit committee are itself contrary .on one side the Audit committee chairman claimed that such fraud is impossible and he again insisted upon number of units which we never disputed and is separate topic latter in reply to our letter under section 143(12) .on the other side the Management in its letter & meeting held on 19/02/2019 claimed that under billed amount has been billed during January 2020.[t is worth mentioning that during Dee.2019 the same Management has claimed that amount of Rs 37.96 Cr. short billed to Anumita was billed & recovered during the same month of billing ;now on what basis the Management has issued new bill for differential amount. Only this one bill was discussed during the meeting held on 15/02/29 as well 19/02/2020, no other bills and the main amount Rs 3082 Cr.was not discussed at all except that such big fraud is not possible thus all replies are sequitur & evasive. We also understand that there are small cases where amount of bill was reduced by Court but these were also due to continuous frauds committed by the officers of the Company. In addition in case of Ambuja open access was included in the HPSEBL bills, amount of open access was reduced by not the no of units, There may also be some more reasons for under billing but still these amounts to frauds as per Companies Act 2013,0ur question on our observations were dodged .

As the company has not disclosed jts revenue fully which is substantially understated and as per Management it will be-reconciled & provided during next year audit (verbally) .we will assess the Company's process to identify the impact of such billing /under billing & report accordingly in next year audit report . In the light of our observations on revenue ,tenders ,Fixed Assets sundry debtors & creditors .inter unit balances ,other assets and liabilities , claim of management to adopt IND AS is false ,as the Financial statements are not even AS (GAAP) compliant even there is no arithmetic-accuracy..

We noticed that bills of Ambuja contains large amounts of adjustment revised on the claim of ‘open Access” consumption included in consumption of HPSEBL but in our opinion this type of mistakes are impossible in SAP environment & will be reported during next year audit report.

After analyzing all aspects of billing. in our opinion, the management has manipulated some aspects/parameters of software e.g. demand / energy charges of billing software just to give benefit to some large customersé& also billing of large customers through manual reading instead of MRI .In terms of SE in charge of IT all this is due to faulty software by HCL(verbal Claim) & that Balance Sheet cannot be revised .But in our opinion this is the , outcome of manipulation of software -as appears from our substantive tests because when ysame sofiware is giving accurate outcome in other cases how could it provided wrong

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Sigs,

results in some large consumers. We concluded this under billing and manipulating software after printing some bills and analyzing the same.

To counter- check such difference we visited Solan Circle again and got 4 sales fig as under:

Revenue billed as per CE (commercial) Rs 3629 .17Cr Revenue as per OP circle Solan Rs 2512.73 Cr Revenue billed as per manual from divisions Rs 1759.82 er Revenue as per CMTR III Rs 1984.44 er Revenue as per Go Live statement Rs 2237.06 er

Same was the position in some other circles also to be reported next year.

Other Major Observations:

Balances in Trial Balances given by the circle do not tally with the balances taken in consolidation at Head Office .We were told that these has been adjusted at Head office but no details of such adjustments has been provided to us ‘We cannot comment upon the accuracy or otherwise of the data in financial statements,

Debtors /Trade receivable figures do not tally through analytical method& are subject to reconciliation and adjustments,

Cash flow statement does not tally in itself, even some previous year fig remained in the cash flow still it was made to tally .We did not prefer to waste time upon its reconciliation being a futile exercise in the light of our other heavy qualifications..

Opening balances in SAP at Circle offices do not tally with Closing balances at HO Balance sheet means opening balances at circle offices are different from closing balances of previous year. At the end of the year adjustment under Settlement account were made to tally the same ,however no details of such adjustment were provided to us. For every such difference & adjustment .the teply of management for details is “ we have provided you soft copy of consolidation however ,the same could not be explained from such excel sheets. On the fag day of finalizing audit report one such new adjustment came to notice viz difference in Lon to subsidiary as per Balance sheets of HPSEBL & BBPCL which s per HPSEBL is Rs 266 Cr.& as per BBPCL it is 219 Cr.The difference was explained due to interest however no such interest did appear in account or P&L account At this it was told that same has been adjusted against expenses, still same could not be quantified. Adjustments are made through TEO but details of same &counter confirmations not available-at units or at HO.At one stage one of our assistant told “ Financial statements have been prepared off the records “ now we realize the same not to be totally wrong,

No physical verification reports of fixed assets and inventories were made available to us. Looking at the status of book keeping. we are of opinion that the Fixed Assets verification is of utmost importance next to revenue accounting, but the same has not been done. Fixed Assets are swapped and also replaced but no accounting for such swapping or replacement is done. Assets which were swapped / replaced are shown as it is and new assets also capitalized, We could not find entries for decommissioned assets or assets swapped. Thus

_\, hot to talk of safeguarding the assets, there is no proper accounting to be called as such. In -\\ addition, no improvement has been noticed regarding previous auditors reports on fixed “| o) assets, inventories& other assets & liabilities,

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Differences in Fixed Assets where no details are available Rs 163.01 Cr. Negative balances in fixed assets Rs.15.30 Cr. were noticed. Fixed Asset register prepared on electronic media/ physically are incomplete as to its location date of purchase / installation! .depreciation etc. Instances has been noticed where only amount is written in fixed assets register but details like Plant Machinery .cables .building etc are not mentioned nor the management has any answer for the omission of nomenclature .not to talk about location etc. Fixed assets which are replaced by new advanced ‘large capacity are continued in fixed assets register and neither impaired in books of accounts nor in financial statements this is clear violation of IND AS 36,

Upon test checking at some stores .signifieant differences were noticed but remained unexplained ,in reply to our observation the management has replied that specific case not given ,in every store such differences were noticed specifically during audit of store at Bhatta kufar management was informed .that some items like steel cic were there in stores ledger but physically missing , being Statutory auditors we cannot afford to conduct physical verification which is a separate assignment for such a large organization .The control records are missing financial statements are prepared from the financial records which cannot be compared with physical balances records .For most of our questions the replies of management are’ this is as per past & nobody has asked for the same neither Statutory auditors nor internal auditor or CAG auditors’.

Company claimed to have adopted IND AS but actually none has not been adopted, rather financial statements do not comply even with AS (GAAP)

Tenders :Tenders. documents were not provided to us because either the Chief engineer /SE was not available or these were avoided as we were sent to JE whose records start from works /supply order only .At Dharamshala Ist day CE was on leave ,we conducted audit at division ,next day initially CE was not theteDy CE informed that he does not have authority to provide the documents and we were asked to wait when CE came at around 2PM ,his reply was “his draftsman is on leave this way the records were avoided. At Head office CE MM we were sent to JE whose records start form works order or supply order no tender records available with him. After discussions with management it was decided to check the tender records during next year audit.

Purchase of Power: Note 2.25 —only purchase of power amount is given but quantity of purchase not given, quantity is given only in table -3. There are negative amounts in purchase of power and also some purchases shown without name of the seller. This way and also negative attitude of management checking the purchase of power could not be concluded. We have decided to check purchase of power during next year for both the years & reportaccordingly,

Thus there could be a risk of material misstatement in Revenue, Tendering& Purchase of Power some of the same explained above.

Security Deposits: No sub ledger for security deposits has been maintained /provided to us | “ay aes

Nf \ @ Page No. 5-

for our verification. No sub ledger maintained/provided for deposits for electrification, service connection ete. made for acquiring fixed assets.

Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon

The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board’s Report including Annexures to Board's Report, Business Responsibility Report, Corporate Governance and Sharéholder’s Information, but does not include the consolidated financial statements and our auditor's report thereon,

The consolidated financial statements provided to us do not cover the other information and we do not express any form of assurance conelusion thereon,

In connection with our audit of the consolidated financial statements, our responsibility is to tead the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated,

However, no such other information has been made available to us.

If, based on the work we have performed, we concluded that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard, as the statements like Board Report, business Responsibility Report, Corporate Governance Report & shareholder's information has not been verified by us.

Management's Responsibility for the Consolidated Financial Statements

The Holding Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these consolidated financial Statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Group & jointly controlled entities in accordance with the IND-AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities: selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were fe operating effectively for ensuring the accuracy and completeness of the accounting records, f | relevant to the preparation and presentation of the consolidated financial statements that give

| a true and fair view and are free from material misstatement, whether due to fraud or error. Page No.6

In preparing the consolidated financial statements, management is responsible for assessing the Group Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the ‘going: concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic aliernative but to do sa:

The Board of Directors of Holding Company are responsible for overseeing the Group Company's financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is nota guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

* Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control,

. Obtain an understanding of internal financial controls relevant to the audit in-order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(1) of the Act, we are also responsiblé for expressing our opinion on whether the Group Companies has adequate internal financial controls system in place and the operating effectiveness of such controls,

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

* Conclude on the appropriateness of management's use of the poing concern basis of accounting and. based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern, If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated 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's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

. Evaluate the overall presentation. structure and content of the consolidated financial statements, including the disclosures. and whether the consolidated financial statements Tepresent the underlying transactions and events in a: manner that achieves fair presentation.

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Materiality is the magnitude of misstatements in the consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in ithe audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when. in extremely rare circumstances, we determine that a matter should not he communicated in our repert because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. From the behavior of the Management we concluded that the two key audit matters we selected, one is of very serious nature and must be reported viz understatement of revenue on a large scale, as the sales fig disclosed in financial statements is only Rs.6503 Cr. Instead of Rs9585Cr. Balance Rs.3082 Cr. is embezzlement /fraud against the Company committed by the management. Second Key matter was Tendering .but records of tenders were not provided to us .the JEs start the tenders from Works / supply order only , the process before this is foreign to them However the management has assured (verbally) to provide complete records during next year audit including for this year.

Report on Other Legal and Regulatory Requirements

|. As required by Section 143(3) of the Act, based on our audit we report that:

a) We have scught and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except the following information was partially /not provided to us: i) Tender documents were either not provided or if provided they start from purchase order or works order.

ii) Minutes Books of Board Meetings & General Meeting, accounts being in arrear & going through all these records in single year is just impracticable when these are allowed t6 access at the figure end,

iii) Register of Charges not provided iv) Kegister of Investments & Loans/Advances to subsidiaries, joint ventures &

other entities. . v) The Company has not complied with the provisions of section 186(5) of the Companies Act, 2013. Company has advanced loan to its subsidiary company (BYPCL) form time to

42> time and during this year also outstanding on 31.3 2018was Rs 266 crore while outstanding y nt on 31.3.2018 was Rs 219 crore. Difference reported to be due to interest but no interest fig

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could be seen in books of accounts. One voucher was shown but not entered in books of account and was claimed to be squared up with expenses no such squaring could be seen in books of accounts. This is all bogus clams of management ,management is not prepared to put in writing any such claiitis .this violation of Companies Act 2013 ,violation of Accounting standards & Income tax Act.

vi) AS reported by previous auditors, Yearend provisions for liabilities / expenses booked at the close of the year are reversed in the subsequent accounting year by the Company. me vii) The Company has not complied with the provisions of section 188 of the Companies Act2013 in making advances to its subsidiary

We further report, that during the year under review Company has made provision for expenses on the basis of budgets approved for particular works irrespective of the fact that actual expense accrued/ incurred and same-is reversed in the subsequent period on recéipt of actual bill / invoice of the vendor / contractor. The same results in overstatement of other current liabilities and revenue expenses / capital work in progress. The sufficient information with regard to quantum of such liabilities provided in financial statements has not been made available to us.

2.As required by Companies (Auditors Report) order 2016 (“the order”) issued by the Govt of India in terms of sub-section (1 1) of the section 143 of the Act we give in the annexure “B” a statement on the matters specified in paragraph 3 & 4 of the order to the extent applicable.

3.We are enclosing our report in terms of section 143(5) of the Act .on the basis of such checks of the books’& records of the Company as we considered appropriate & according to the information and explanations given to us in the annexure” A “ on the directions issued by Comptroller & Auditor General of India,

4. we also attach annexure “C” report on the internal controls over financial reporting under clause (i) of subsection 3 of section 143 of the Companies Act 2013,

5. In view of following, in our opinion, proper books of accounts as required by Law have not been kept by the corapany so far as it appears from our examinations of those statement, registers and related records produced for our verification.

i. The sub divisions prepare CMTR &expenses statement and forward the same to Division & Divisions of the Company has maintained cash & bank book and no corresponding transactions-are recorded in ledger accounts. The adjustment entries were passed in the memorandum statement maintained to compile these financial statements, which is in contrary to the double entry system of recording of transactions as required by the Companies Act 2013.

The Divisions extracts monthly Trial Balance (known as “CS-1") for the purpose of consolidation of financials by Circle and Wings, The Head Office on the basis of memorandum statements submitted by Circles and Wings compile these financial

Page No. 9

statements. The adequacy and correctness of memorandum statements and transmission of financial data do not ensure the correctness and suificiency of accounting and recording of transactions and compilation of Balance Sheet and Profit & Loss account of the Company,

ii. The Divisions do not compile the trial balance with balances of the previous accounting month. The Circles consolidates the Trial Balance provided by the Divisions on monthly basis and Head Office merges the monthly Trial Balance and at the end of year consolidated balances aré drawn on the basis of memorandum record for the purpose of preparation of financial statements. The Company does not record balances provided by Divisions at Circle or at Head Office in proper financial books of accounts. These financial statements have been compiled on the basis of statements prepared on the basis of merged Trail Balances provided by Circles and not on the basis of books of accounts.

iii. The consolidated statements / record compiled at Head Office and Circle do not provide complete details of Main Accounting Code and or Sub-Account Code’. The memorandum consolidated record does not provide Circle or Division wise detail of transactions disclosed in these financial statements.

iv. The cash book maintained at Division is not balanced on daily basis, therefore, the cash book do not reflect the cash in hand on daily basis.

(a) The Balance Sheet and Statement of Profit and Loss dealt with by this report are in agreement with the books of statements except our observations in Para,23)(ii) wi

(iii), (iv),and (W);

(b) Except for the effects of the matter described in the Basis for Adverse Opinion paragraph and non compliance of IND AS , in our opinion, the Balance Sheet, Statement of Profit and Loss docs not comply with the accounting standards referred to in section 133 of Companies Act, 2013 .read with Rule’ 7 of the Companies(Accounts) Rules 2014.As reported in earlier years audit reports the Company has not complied with most of the AS (GAAP) but claimed to be IND AS Compliant.

(c) We were informed In terms of Exemption Notification Government of India, Ministry of Corporate Affairs Notification No 372 dated 05 June2018 Government companies are exempted from the applicability of section 164 of Companies Act 2013, therefore, no written representation from Board of Directors have been obtained. (d) The Company has taken some steps to remove the qualifications reported in earlier year reports while adopting the accounts for the current year, therefore old qualifications has been deleted & non complied has been considered in the current year report alse.

6. Other Matters

iy) Bank accounts are not reconciled although reconciliation statements are prepared but are in the nature of formality only as, very old transaction of even cash are appearing in reconciliation statements .In-some divisions negative balances shown in CS-1 ii) Capital Work in progress registers-are not updated in divisions& on the top of it

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adjustments in Capital W-I-P are made at Head office .This is not practicable te verify or comment upon the CWIP in any unit. iti) Odd balances noticed in sundry debtors accounts in many units. iv) Details of head44,11,44.120, 44,310, 44,330 not provided northere is no system of reconciliation of various interconnected heads of account. Actuarial Valuation not available & amount of provisions created is as per Management estimates. v) Details of amounts in CS-1 not provided for many accounting heads, on checking it was noticed that many balances are carried forward from earlier years. vi) We have noliced cases for which neither any provision has been created nor has any contingent liability been shown in notes. vil) No entries has been passed for Land/ properties acquired by NHAI at unit or Head office. We were told this will be done next year, villi) CWIP remained unverified duc to non availability of work/scheme wise details and work register. ix) Large amounts under head 22.810 & 22.830 being stock excess/ short pending Investigation but units do not haye any details. x) Debtors/ creditors have adverse balances which remained unexplained, xt) Unexplained staff related provisions appearing in units viz 44.110, 44.120, 44.130 Xil) Balance of O & M material stock account shown in CS-1 does not match with balance in critical & non critical. xili) Stock shortage pending investigation shown in CS-] remained unexplained amount are large & sipnificant. xiv) Receivables as per CS-1 differs {from Balances as per manual accounts'in many units. xv) __ It was noticed that balance as per books was significant but.as per Bank it was NIL. Differences remained unexplained. Negative bank balances are very common in units, xvi) Interest payable on consumer deposit shown in CS-1 is odd compared to interest accrued during the year as interest accrued during the year are adjusted in next year. xvil) In seme units where stock statements were made available to us stock as per CS-] do not tally with stock statement, xviii) Differences were noticed in Provision for unbilled Revenue (23.401 to 3.413)

xix) Many balances are carried over froin year to year in many units but details are not available. Some of such balances may be due to wrong entries, xx) Pending ATDs odd balances are shown inCS-1. xxi) Provision for sundry creditors (46.410) details not available in unit. xxi) The Company has not disclosed the impact of pending litigation on its financial position in financial statements. xxili) The Company has not made provision, ‘as required under applicable law or accounting standards. for material foreseeable losses, if any, on long term contract including derivative contracts xiv) No amount has been transferred to investor Education and Protection Fund by the Company during the year ended March 31, 2018

a) Loan agreements with various lenders were made available to us at Head office but the compliance of terms & conditions are to be checked at unit level this thing we realized only at Head office .The same will be cheeked during next year audit,

b) In our opinion, proper books of account as required by law have beer kept by the Company so far as it appears from our examination of those books except the following: i) Fixed Assets records are incomplete

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ii) No statements not even Trial balance is prepared at sub-division or division level, although all primary transactions are entered at subdivision/division level. Trial Balance is prepared at circle level & Financial Statements are prepared at Head office. Due to this reason the financial statements prepared at Head do not tally with the trial balances we got from circle offices. We were informed that differences have been rectified at Head Office but our question like “when the CWIP at subdivisions is X how could HO change it to Y, No explanation for this has been provided. ili) Fixed Assets records are incomplete, neither correct physical verification nor providing accurate depréciation is possible, under such circumstances how to salepuard the fixed assets is also.a question mark. iv) Inventories at stores does not tally with the quantitative records kept at stores. The balance sheet figs are from books of accounts and never tallied with physical/stores records -As required by Law no valuation of inventories has been done .

v) Negative balances in most type of assets and liabilities are noticed -Explanation given is only eye wash under such circumstances’ .balance confirmation from parties are not possible Means third party confirmation is not practicable.

vi) No ledgers are prepared by the company, only excel sheets of transactions are there of course now in online circles it is possibly from HO.

7 Observations of Previous years Auditors to the extent not rectified by the Management :

i) Share Capital: Special Way & Means Advance nonrefundable from HP. Govt. amounting to Rs.49807,75 Lae as per balance sheet dt 13.06.2010 financial year 2010-11 along with other reserves Rs704.78 lakh has been adjusted with carried forward losses of erstwhile Board totaling Rs.50512.53, in response to the audit qualification from year to year,

ii) Reserves and Surplus (Note 2,2) a) Capital Reserves/Capital Grants from GOHP & GOI

ai) During the year under review the Company has Amortized Rs.6446.40 Lakh on the assets created from Government Grants and Consumer Contribution. The Amount of Amortization has been arrived at after applying the Depreciation Rates on the cost of such assets on yearly basis as per the accounting policy on depreciation refer Note

2,33 (A) 8 .The Company has no system in Place where the assets can be identified as if these were created from Government Grants / Consumer Contribution. There is no Fixed Assets Register from where the cost of these assets along with date of it being put to use can be verified. The company has arrived at the cost of these assets on Adhoc basis where it has capitalized the Grant received to particular year in which it was received without verifying the actual creation of the assets and without having sufficient records to verify the actual cost of bringing the asset to use along with the date of it being put to use. It was also observed that in many Divisions the amount of Consumer Deposits was not transferred from Account Code 47 to Account Code 55 in the absence of Completion certificates therefore assets created from goverament grants etc are subject to reconciliation é&confirmation.

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(aii) Assets created frem loans under Government Schemes. Refer Note 2.33(A) 14 The Company and erstwhile Board have created assets under various Central Government and State Government schemes financed by government agencies. The assets created from such schemes are subject to reconciliations and confirmations. The Company has. not disclosed the nature and extent of government grants recognized in the financial statements including grants of hon monetary assets given at a concessional rate or free of cost. Asset corresponding to this reserve is un-identified:and also depreciation on such asset is subject to reconciliation.

b) Long Ternr Borrowings (Note 2.18)

bi) Loans under APDRP Schemes Part A and B

(i) The company has taken loans from APDRP (Part A) scheme amounting to Rs.2219.87 (previous year Rs.3149,82) towards 100% financing of its approved projects which is subject to a condition requiring that projects to be completed within five years (extended up to 30" September 2017) of the awards with 100% conversion of loan along with interest into grant else otherwise the same will be treated as loans and interest will be paid on them.

(ii) The company has taken loans from APDRP

(iii) (Part B) scheme amounting to Rs. 20728.81 Lac (previous year Rs. 21608.95 Lac) towards 100% financing of its approved projects which is subject to a condition requiring that projects to be completed within five years (extended up 31.03 2018) of the awards with 100% conversion of loan along with interest into grant else otherwise the same will be treated as loans and interest will be paid on them.

(iv) The sanction letter stipulates the moratorium of principal and interest during moratorium period, The Company has made provision for the interest on loan amounting to Rs,103.69 Lac (P.Y Rs.9600.40) Lae in the books of account on provisional basis up to 31* March 2018 and the same is subject to confirmation. Refer Note 2.33 (B)9.

c) Loans under ADB though GOHP Scheme The Company has taken loan under the scheme from the state Government under ADB Loan amounting to Rs. 1219.80 Lac (previous year Rs.1163.15 Lac). The government has not yet provided the terms and conditions of the loan and the payment of interest thereon.

} d) Other Long Term Liabilities (Note 2.19)

i) Deposits, Retention Money from Contractors and Others We report that, an amount of Rs.11021,53 appeared as Deposit in Shape of Deposits, Retention Money from Contractors and others, Accompanying schedules and details in Sub ledgers for the same was not provided to us. These Balances are subject to confirmation and reconciliation at Divisions and Unit level. In the absence of complete information we

\\ are unable to comment on the Current and Non Current Portion of these deposits and

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Retention Money. Internal Controls in respect of such deposits seems weak and Subsidiary records to verify the same were inadequate, at unit levels,

li) Amount payable for Employees Provident Fund (GPF)

We report that, contribution towards Provident Fund collected from employees have been retained and invested in Fixed Deposits with Banks by the Company. The Company has neither obtained registration with ‘Employer’s Provident Fund Authorities’ nor éxemption for creation of Trust as specified in Employer’s Provident Fund Act, 1952 and scheme framed there under. The Company has shown the same under other long term liabilities after netting off the investment made in the banks on account of GPF investments,

The amounts payable/ recoverable to employees GPF are subject to reconciliation and confirmations.

During the year under review, the Company has neither made own contribution-nor has made provision for same in these financial statements. The amount of contribution of employer's share is subject to confirmation by Company.

The following is the position of Assets arid Liabilities of the employees GPF at the close of the year.and should be transferred to a trust and separate accounts of the same should be prepared as the same is not part of the accounts of the Company.

“Amount in lacs

Current Year Previous Year

jInvasiments in Fixed deposits of Banks if 105,126.85 | 102,433.51 Interest Accured on iivestments [ Se | 2,519 92 | Recoverable fram HPSEB Limited °° __ Boot 24 | 22,460.48

wast: 128,261.33 | 127,413.97

Liabilities lam: ii eee aS . Members Account i 128,261.27 _ 127.916 75 | Excess of Expenditure over Income i i ea ee 2 Payable to HPSEB Limited = =_ | 504.85 = apt ie 128,261.27 127,413.90

We further report that liabilities and corresponding assets transferred from Board to Company have not been deposited with EPF or Trust. In terms of information and explanations given to us, the Company has accumulated total contribution of Rsl28261.27 lac (previous year Rs.127413.90 Lac) and has deposits there against a sum of Rs:108244.09 lac (previous year Rs.115529.12 lac) which has resulted in amount recoverable form company amounting to Rs. 20017.18 Lae. In our opinion, the said assets and liabilities do not relate to Company and sum of Rs.. 20017.18Lac is payable to General Provident Fund (GPF), We further report that the Company has obtained Overdraft facility of Rs.24163.94 lac. (Previous year Rs.12240,28 lac) against GPF Fixed Deposits which has been utilized for operations .Refer Note 2.33(B\(28)

iii) Non refundable adyances from industrial consumers for infrastructure development charges Note No 2.21

The erstwhile HPSEB and the company have received Non refundable advances from industrial consumers for infrastructure development charges from

Page No. 14

consumers. The company has received Rs.22625.67 Lac (previous year Rs.16242.68 Lac) under the above head up to 31" march 2018. In our opinion the other long term liabilities are overstated to the extent of above as they are not payable to the consumers and is part of the revenue of the company and income of the company is understated to that extent.

e) Long Term Provisions

(i) Leave Salary Payable The Company has not made provision of Leave salary payable to present

employees as per the requirements of IND- AS 19- Accounting for Employces Benefits issued by The Institute of Chartered Accountants of India. As explained by the Company the éstimated liability on account of leave salary at end of the year is Rs. 50413.15 Lae (P.Y Rs.51429-39) against which the company has created reserve fund of Rs6993.80 lac. (PY Rs.55965.04 Lac) .Thus in our opinion the long term provisions are understated and Income is overstated to the extent of Rs: 4341935 Lac (P.Y Rs. 45834.35Lac).No certificate from actuarial taken, amount is as per management Estimate

(ii) Gratuity Payable to Employees The Company has not made provision of gratuity payable to present

employees-as per the requirements of IND- AS$19- Accounting for Employees Benefits issued by The Institute of Chartered Accountants of India. As explained by the Company the estimated liability on account of leave salary at end of the year is Rs.61432.02 Lac (previous year Rs.69938.15Lac) against which the company has created provision of Rs; 5657.81 (previous year Rs.4114.36Lac), Thus in our opinion the long term provisions are understated to the extent of Rs,55774.21 Lac(previous year Rs.65823.79 Lac.) No certificate from actuarial taken, amount is as per management Estimate

(iii) Pension Payable to Employees The Company has not made provision of pension payable to present

employees as per the requirements of IND- AS19- Accounting for Employees Benefits issued by The Institute of Chartered Accountants of India, As explained by the Company The estiniated liability én account of Pension at end of the year is Rs.123553.14 Lae (Previous Year —Rs..166659.91 Lac) against which the company has créated provision of Rs 5142.95 (Previous Year —Rs.4526.25 Lac). Thus in our opinion the long term provisions are understated to the extent of Rs.118410.19 Lac. No certificate from actuarial taken, amount is as per management Estimate

f) Short Term Borrowings(Note 2.7)

Overdraft and Cash Credit from Banks

fi) References invited to note no 2.35(B)(28) where the Company has obtained Overdraft facility/ Loans of Rs. 24163.94 Lac (previous year Rs, 6130.99 Lac) against GPF Fixed Deposits which has been utilized for Operations refer Note 2.33B (28). Which in our opinion should not have been taken and a trust for GPF must be created,

#) Trade Payables (Note 2.8)

Page No.15

Liability for Purchase of Power

i) It was observed that SL&D Section did not prepare reconciliation of Late Payment Surcharge (LPS) in respect of all parties. Therefore amount of LPS included under the head “Liability for purchase of Power” is subject to reconciliation & confirmation, Party wise reconciliation regarding purchase of power was not produced before us. In the absence of party reconciliation statement. the balances of parties for purchase of power and purchase of power is subject to reconciliation.

h) Other Current Liabilities (Note 2.18)

a) Liability for Purchases Capital and Others

(i) The above account code shows a sum of Rs.18486.91 Lac Note 2.23 payable as liability on account of capital materials O & M Supplies/ Works. The Subsidiary record in respect of the below mentioned accounts codes at division level is not reconciled. The above liabilities are subject to confirmations from the Parties.

(i) It has been observed that divisions charge full liability of the bills of the suppliers when the materials are received. However in some case the bills are not fully passed by the Head Office and certain deductions on account of liquidity damages and price differences etc, from the final bills is being made. All such deductions which are done by the Head Office and not accounted for by the divisions may affect the other current liabilities and income of the company. In the absence of information we are unable to comment on the same,

(iii) In certain cases the payment of bills of the suppliers are to be madé in phases on some percentage basis and will not be due at the end of the financial year. The Divisions has booked the bills with the full amount and no bifurcation has been made for current and noncurrent liability. In the absence of the information we are unable to comment on the same.

(iv) It has been observed that where the payments has been made by the CPC up to 31" March 2017 and the ATD for the same has been raised by them to the divisions the same has not been reconciled by the CPC department with the divisions on year to year basis. In the absence of the reconciliations we are unable to comment the amount of liabilities shown by the divisions.

I) Earnest Money Deposits from Suppliers and Contractors.

The above account code shows a sum of Rs. 2349.77 Lac (Previous Year Rs. 2,159.61 Lac) payable as earnest money deposits from suppliers and contractors. The subsidiary records in respect of above are pending for reconciliations at division level,

Ale | Current | Previous Previous Particulars Code Year Year Year

Earnest money deposits — capital 46.103 | 1596.93 1753.10 1,409.65

Page No. 16

a

==

\ of the capital assets.

Earnest money deposits—O&M _| 46.123 | 1024.30 | 596.67 749.95 | 2621.23 | 2349.77 2159.60 |

In the absence of reconciliations/details /eonfirmation, we are unable to comment on the authenticity of the amount payable.

Dp Electricity Consumptions Tax levied payable to MCs/NACs- A/e Code 46.2

The above account code shows'a sum of Rs, 1089.24 Lac (previous year Rs. 950-66 Lac) payable to different Municipal corporations and NAC as at 31" March 20178 It has been observed that certain amounts are also recoverable from them on account of energy dues and the above acceunt has not been netted off with amount recoverable from them. Thus other current liabilities are overstated to the extent of above. Please refer para 19(A) 5 of the report of this report. -

k) Sundry Creditors for Expenses

The above account code shows a sum of Rs.1193.40 Lac ( previous year Rs. 1450.50 Lae) payable to different parties is subject to confirmation as at 31st March 2018. In the absence of information we are unable to comment on old liabilities which are to be charged to the revenue and may affect profit and loss account and the balance sheet.

1) Liability on account cheques outstanding others/ state Cheques (A/c code 46.910)

The company showed a sum of Rs. 969.43 Lac (previous year Rs.1193.89 Lac) under the Head stale cheques. No information in respect of the same has been provided by the company. In our opinion the other current liabilities are overstated and income is understated to sum of Rs. 969.43 Lac.

mi) Deposits for Electrification Services Connections Account

The above account code showed a sum of Rs. 56222.64 Lac (previous year Rs, 39863.36 Lac) on account of deposit amount received from consumer for Electrification Services Connections and other charges asat 31° March 2018. The company has not provided the details of the amount received under different sub heads under above head,

As per the practice of erstwhile board the amount kept under this. head is transferred to grants and subsidies head when the work of the assets to be created from deposit work is completed.

n) The subsidiary records at the divisions level is pending for reconciliation as at 31" March 2018, We have not been provided with the following information’s by the Divisions.

I The details of those works where tle work has been completed and the amount from deposit has not been transferred to the consumer contribution towards the cost

Page No, 17

2 The details of the parties from whom full amount has not been received for the deposit work completed till 31 March 2018.

3 The details of parties from whom full amount has been received but no work of deposit work has been done till 31°" March 2018.

In the absence of information we are unable to comment on the amount Kept under this head of account.

It has been observed that in some divisions the consumers has deposited only the departmental charges and deposit work has been done by the consumer by their own. The charging of the departmental charges to revenue and charging of the value of fixed assets created and creation of reserves is subject to confirmations.and reconciliations.

0) Unelaimed Credit Balance A/c code 46.929 The Company is showed Rs, 268.72 Lac (previous year Rs. 101.57 Lac) as unclaimed credit balance as at 31" March 2018. The company has not provided information in respect of the same. In our opinion the time barred credit balance should be charged to revenue.

Deductions from Employees (A/e Head 44) & 46.9 are subject to reconciliation & adjustments at Division level,

p) Short Term Provisions (Note 2.10)

i Interest acerued on Consumer Security Deposit The company has provided interest on security deposits of consumers amounting to Rs, 1674.23 Lac (Previous Year Rs. 798.08 Lac) during the year under review, The provision made is subject to reconciliations and confirmations.

li) 46.430 Provision for Liability of Expenses The provision of Rs 25219.10 Lae made by the company on account. of liability of expenses is subject to confirmations and reconciliations details not available.

(iii) 48.1 Security Deposits from Consumers The Divisions of operation circles have not reconciled and balanced the customer-wise Security Deposit received and interest payable thereon, No sufficient records and reconciliation of subsidiary records confirming the balance outstanding has been made available to us, therefore, we are unable to comment on the amount outstanding as Security Deposits to customers and accordingly interest accrued thereon An amount of Rs 34006.01 Lakh appeared in this.-account code. The amount. is subject to reconciliation and confirmation since subsidiary records maintained at division level is not reconciled with amount reflected in A/c code 48.1

Page-No. 18

4q) Tangible Assets (Note 2.11)

i) pl refer to Note No 2.35 1.2 & 1.3 note to accounts .

(ii) The Company has created assets valuing Rs. 966.45 Lac on the land the ownership of which does not belong either to the erstwhile HPSEB of the company.

(iii) The accumulated depreciation as.on 31° March 2018 is not adjusted on account of assets washed away in floods, assets not in use, assets stolen and impaired assets, In the absence of information we are unable to comment on the authenticity of the accumulated balance of depreciation at the end of the year. As per management this has been written off / adjusted .but voucher for the same not provided.

(iv) The Company had charged the cost of new energy meters installed in repair and maintenance account in earlier years , without writing off the cost of old meters’ and the corresponding depreciation from the Fixed Assets Register ‘which is contrary to the AS10— Accounting of Fixed Assets issued by the ICAI. In the absence of information we are unable to comment on the cost of written down of meters which are in the Fixed assets schedule which are of non-existent in nature.

(¥) It was observed that in CWIP Note No 2.13 of Balance Sheet’an amount of Rs 73033.48was Capitalized during the year however in Note tio 2.1] of Balance Sheet Related to Fixed Assets an amount of Rs 64212.58 was shown as additions during the year. Proper Explanations for this was provided to us. Hence amount of Fixed Assets Capitalized from CWIP is subject to reconciliation and confirmations,

r) Capital Work in Progress (Note 2.13)

(i) The above account head shows’a sum of Rs. 106890.33 Lac (previous year Rs. 89650.77Lac) on account of work in progress of various capital works as on 31" March 2018 which is subject to reconciliation and confirmations, No Information / explanations in respect of the same have been provided to us,

(ii) It has been observed that the works under capital work in progress has not been closed for want of completion certificates where as actually the work has been completed and the assets has been put ta use by the company, No sufficient information in respect of completed capital work in progress has been provided to us. In the absence of information we are unable to comment on the same.

(iii) It has also been observed that in some cases the expenditure on capital work in progress has been incurred in excess of the sanctioned amounts and the work is still Boing on,

Page No. 19

(v) It has also been observed that in some ¢ases the work in progress has been partly transferred to the fixed assets on yearly basis without verifying that whether the work on the assets has been completely finished or not.

(s) Interest during Construction Period (IDC)

a) It was observed that during the year company had paid Rs. $4941.47 Lac total interest/ Finance Cost, out of which company has capitalized 9135.65 Lac out of total interest, However the company did not provide us basis of such calculation of capitalization of interest. Therefore we: are uriable to comment that whether it was calculate as per AS-16 Borrowing Cost, issued by ICAI, or not.

b) Contracts in Progress The Company showed a sum of Rs, 183.26 lakh (previous year Rs. 44.37lakh)-as on 31” March 2018 as contract in progress at various divisions which is subject to reconciliation and confirmations.

t) Long Term Loans and Advances (Note 2.15)

i) Advances to Supplies/ Contractors ( Capital)

The Company is showing a sum of Rs. 1554.17 lakh (previous year Rs, 1317.98 lakh) as advances to supplier and contractors as on 31" March 2018.Contractor ledgers need be maintained and reconciled.

u) Loans and Advances to staff (Interest Bearing)

(i) it has been observed that the individual divisions does not have the complete record of the loan sanctioned and amount recovered from the employees and it has been explained to us that the same is being reconciled and kept at head office level in the broad sheets of the employces.

(ii) It was observed that in the following cases amount of Interest and principal is recoverable from the staff'members for past many years. Efforts should be made to recover the amount along with interest.

TYPE NAME PLAC | OF MONT

ACCO | OF E OF | LOAN /| OS H OF UNT | EMPLO | DESIGNA | POSTI | ADVA |AMOUN | LAST REMA NO YEE TION NG NCES | T(RS.) INSTT. | RKS

RAJIND CE VEHIC Retiring ER (MM) | LE 1,48,578.0 | JULY,20 | on

\| R-21 GUPTA | AEE SHIML | LOAN [0 05 31/08/20

Page No. 20

A | 20

CE Retiring RAJIND (MM) on ER SHIML 5,14,103.0. | APRIL.2 | 31/08/20

R-21 GUPTA | AEE A HBA 0 007 20) ELEC. DIV,

HARI D/SHA FEB, HA-64 | SINGH SR:ASTT, | LA HBA 22,097.00 | 2008

BOAR JASWA D Retiring NT SECTT MARCH | on31/10/

JA-24 | SINGH | DM ace HBA 43.833.00 | 2016 2022 : ELEC. EXPIRE |

DIV- D ON! LEKH FOREMA | BILAS OCT,200 | 19/10/20

LA-52) | RAM N PUR HBA 14,889.00 | 8 08 ELEC. | RETIRE

| DIV- |D ON LEKH BILAS MARCH | 31/05/20

LA-28 | RAM SR.ASTT. | PUR HBA 25,990.00 | 2008 16 MANO HAR RETIRE LAL ELEC. D ON SHARM DIv- 31/12/20 /MA-90 | A DM UNA | HBA _| 35,425.00 12

ELEC, RETIRE DIv- D ON

MEHAR RAMP 31/02/20 | MA-74 | SINGH UR HBA 34,741.00 j 11

RAM RETIRE CHAND D ON THAKU | _ 31/08/20

R-95 R AE HBA 58,685.00 13

TOTA 8,98,341.0 LL Es 0

(iii) It has further observed that when an employee is transferred from one Division to other division his account is not transferred to the other division though ATD and as such partial accounts are being kept at different divisions on account of loan sanctioned and recovery made at different divisions.

(iv) It was observed that Company has Shown Rs.216.24 lakh in A/e Code 28.860 & 28.861 as commitment Advance. This advance was given in year 2009 and the same was not adjusted till the finalization of audit, Balance Confirmation of same was not provided tours for verification,

Page Nov 21

v) Other Non Current Assets (Note 2.16)

i) Assets not in use The company is showing Rs. 779.88 lakh (previous year Rs, 2857.81 lakh) as assets not in use as at 31st March 2018. In our opinion the above assets has completed their use full life and will not help in generating any further revenue and should be charged to revenue, Thus other noncurrent assets. and Income are overstated to the above extent. (Refer Note 2.33 (B) (3).

ii) Expenditure on Survey/ Feasibility Studies Projects not yet sanctioned.

The above account code shows a sum offs. 5055.24 lakh (previous year Rs. 8201.50 lakh) incurred on account of Expenditure on Survey/ Feasibility Studies Projects not yet sanctioned as at 31" March 2018. As informed to us these are recoverable from the parties to whom the projects will be allotted & in case projects allotted to HPSEBL. then the amount will be transferred to CWIP,

ili) Inventories- Scrap/ other material/ excess/ shortages

There is no segregation in obsolete inventory, usable /no usable inventory, Previous year there was such segregation amounting to Rs $13.41 lakh .

iv) Interest on Advance to Subsidiary [t was observed that an amount of Rs 266 Lac Appeared as Loan to Subsidiary in Ave Code 20.330 The terms and condition for advance given to subsidiaries has not been finalized. Interest accrued on the amount of advance was not booked in the accounts. Refer Note 2.33(B)(1) As informed to us interest of Rs 87.56 Cr. was, charged as interest on loan but same was squared up with expenses as informed by the management ,£however we did not check the same.

w) Inventories (Note 2.18)

As no details of inventories has been compiled at HO the balance shown in Balance sheet is as per Trial Balance .There is no system of comparing/reconciling quantitative records with financial records nether at unit level not at circle / HO level. In some units eg Bhata kufar, we found balances in. some stock (Steel) as per stock ledger but no physical balance was there.

i) As reported by previous auditors ,jthe Company has been transferred with “AP, Stocks of the erstwhile Board which have been purchased in earlier years and the same has

~-S< not been used till the close of the year and the same has resulted in over stocking of the \|| Stocks and pilling up of the stocks at Divisions level. The following is the details of stocks

Page No, 22

as provided by the company for which no provisions has been made in the books of accounts on account of obsolescence, shortages and reduction in the value.

| Current Year Previous Year z z

22.6 Opening Diftrence fatie : 23,65 __ 22.6 Stocks in hand more than five years Critical 576.37 | 675.25 | 22.6 Stocks in hand more than five years non Critical 64.82) 75.46) a Tt = ess =e | ___ 83818| Fine]

In their opinion the inventories are overstated to the extent of Rs. 34,82 Lac for which no provisions has been made in the books of accounts. However to verify these fig Management does not have records in favour or against the qualification.

ii} It has been found that there is no systematic accounting of stocks in this account heads and some divisions has not made distinctions between the stocks of stores and other materials and it has been observed that in some’ cases the office equipment stocks and other office equipment has also been included in the above head which should have been part of the fixed assets. In the absence of sufficient information we are unable to comment on the overstatement of inventories:

iii) The Company has not provided details in respect of inventories which aré of current and noncurrent nature. In the absence of information we are unable to comment on the current and noncurrent portion of inventories.

iv) Physical verification reports of thé inventories were not provided to. us for verification at division’ subdivision level. In the absence of physical verification reports the balance of inventories are subject to confirmation, There is no system prevalent in the company to identify the obsolete Stock; company has not shown any loss by theft or natural calamity in stock, The System of reporting theft of Stock at the division level to H.O and its treatment in the accounts is not clearly specified. In the absence of complete information, its impact on profit / Loss could not be ascertained.

x) Trade Receivables (Note 2.19)

The Company has shown trade receivables from consumers and others under this head amounting to Rs. 47148.45 Lac (P.Y Rs. 93002.93 Lac) are subject to confirmation & reconciliation.

i) Sundry Debtors for Energy Bill (Other than Interstate Consumers)

No list of consumer who has filed cases against the company was provided to tis,

ii) Court Cases by Consumers As explained by the company the erstwhile Board/Company has billed Rs. 2615.42 Lac (previous year Rs. 3,137.42 Lac) and Rs. 1635.30 Lac (previous year Rs. 1570.29 Lac) to ‘industrial consumers of Operation Circle, Solan and Nahan. The consumer had filed suits

i Page No. 23

against the same and recovery had been stopped by the courts, Note No 2.33B 15

y) Short Term Loans and Advances (Note 2.21)

Advances to Contractors and Suppliers: Nosub ledger has been made available to us

Gi) The company showed Rs. 336.60 Lac (Previous year Rs. 5832.41 Lac) as loans and advances for supplies / works. The above advances also include advances which are old and require adjustments as the works has. been completed at the close of the year and expenditure has not been booked. The company has not provided us any confirmations from the Parties for the amount due as such we ate unable to comment on the above advances, The above advances have been shown as secured but no sufficient information in respect of the same has been provided. No Information in respect of noncurrent portion of advances has been shown for our verification.

ii) Amount recoverable Related Parties

i) BVPCL (Subsidiary Company) A/c Code 28.761

The Company has incurred expenditure to the tune of Rs, 4387.57 Lac (previous year Rs. 4053.64 Lac) ason 31" March 2018 for which shares has to be issued by the BVPCL. The above balance is subject to reconciliation and confirmation. Loan amount as per holding company is 266 crore while loan as per subsidiary is Rs 219 crore.

ii) Amount Recoverable Himachal Pradesh Power Transmission Corporation Limited A/c code-28.773

The company has transferred cost of transmission lines to the HPTCL (Himachal Pradesh Power Transmission Corporation Limited) as per the scheme of the transfer. A sum of Rs. 2918.84 Lac (previous Year Rs, 2918.84Lac) has been shown as recoverable as at 31” March 2018 which is subject to reconciliation and confirmation, In the absence of confirmations we are unable to comment on the same. The amount recoverable is of honcurrent nature and should he shown under the head other noncurrent assets.

iii) Expenses recoverable from Suppliers /Contractors (A/C Code 28.810).

The above head shows a sum of Rs. 671.22 Lac (previous year Rs. 1,543.77 Lac) as on 31“ March 2018 which is subject to reconciliation and confirmation. In the absence of confirmations wé are unable to comment on the same, Sufficient information has not been provided to us for showing the same as current assets.

Inspection charges related to material / equipment third party inspection (A/C Code 28.811). The above head shows a sum of Rs. 117.08 Lac (previous year

—— Rs. 108.44 Lac) as on 31" March 2018 which is subject to reconciliation and confirmation. ~» Inthe absence of confirmations we are unable to comment on the same.

Page No. 24

z) Other Current Assets (Note 2.22)

i} Inter Unit Transactions

The company is showing Rs. 12198.67 Lac (previous year Rs. 572.64 Lac)on account inter unit transfers.and the same has not been. reconciled at the end of the year. It has been observed that the above practice of non reconciliation in inter unit accounts is pending since many years and same was not reconciled by the erstwhile Board and even by the Company.

Za) Statement of Profit and Loss Account

Re-allocation costs of Employees and Repair and Maintenance to Capital works The method and basis of reallocation of employee costs and repair and maintenance costs to capital works has not been informed to us.

Zb) Other Observations

(i) flood in Andhra Khad and Pabbar River on 11 and 12.8.1997 amounting to Rs. 34.60 Lac vide resolution no 4,5 dated 16/12/2010 . We were explained that effect of the same have been given in the accounts but no documentary evidence was produced before us. In our opinion the Tangible assets are overstated to that extent.

(ii) Distribution Losses

Reference is invited to Note 2.35 (B) (35) regarding distribution losses. Some of the circles have very high distribution losses as compared to acceptable norms for electricity companies,

(ili) Contingent Liabilities in notes to accounts

The Company has made disclosure of contingent liabilities in notes to accounts, sufficient information has not been provided in respect of the Contingent Liabilities provided in the notes to accounts. (Refer Note no 2.35(B)12).we have noticed some cases which has not been disclosed in calculating contingent liabilities.

(iv) The Company has not provided any information of the suppliers / service providers who are registered as Micro, Small and Medium undertakings under "The Micro, Small and Medium Enterprises Development Act 2006" as on 31st March, 2018. In the absence of the information we are unable to comment on the same. {v) The Company and its divisions has not provided to us Court cases details which are contingent in nature and in which contingent liability of the company is involved.

Page No. 25.

Ze) Non Compliance of Accounting Standards The Company has not complied with the following mandatory accounting

standards issued by the Institute of Chartered Accountants of India

8 -Looking at the above qualifications , the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report cannot be said to be in agreement with the relevant books of account nor true & fair.

a) In our opinion, the aforesaid consolidated financial statements neither comply with the Ind AS specified undér Section 133 of the Act. read with Rule 7 of the Companies (Accounts) Rules,2014, nor comply with AS ( GAAP)

b) Being a Govt. Company, the provision of Section 164 (2) of the Act-are not applicable.

¢) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we report that Internal financial Control system is absent as far revenue is concerned and is very poor in other fields as reported above as well in the annexure A to this report and matters which had to be cared forward for next year. We have asked Mandate for Internal Financia! Coritrol System Audit which was neither provided nor refused <still ,we did conduct this audit in some fields Like Revenue .Financial Statement preparation & tendering. Records for tenders were not made available to us in some cases and in other cases were shown incomplete but were promised to be provided during our next visit next year audit. Tender records as to compilation were told to be provided at HO office by SDOs, DOs & circles but at HO we were told these are available at Hamirpur , Mandi & Sundernagar, & also at Chief‘ office in Head office. Upon approaching Chief office Tenders records were not provided ,only supply/ works orders were provided. After that it was decided that ail records will be provided during next year audit for which we had to agree in the light of delay & accounts being in arrears.

d) 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, 2014as amended . in our opinion and to the best of our information and according to the explanations given to us:

i The Company has not disclosed the impact of pending litigations on its financial position in its consolidated financial statements as reported in annexure I to this report.

ii. The Company has not made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts as reported by the management and not verified by us.

She As there has been a loss in earlier years (accumulated) and small profit _. shown during current year the provisions of the Investor Education and Protection Fund by |. the Company not applicable during the year.

Page No. 26

iv, Effect on Profit & loss account:& Balance Sheet of our qualification will be reported during the next year Audit Report after checking management replies at unit level.

For Soni Gulati & Co

Chartered Accountants Firm Registration Numberj—

oe

hy fee ES

CA Suresh Chand Soni” a sf Partner

Membership No. 083106

Place: Shimla

Date: 29/02/2020 UDIN:20083 LlO6AAAAAIS9I4

Page No. 27

ANNEXURE “C" TO THE INDEPENDENT AUDITOR’S REPORT (Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report to the Members of Himachal Pradesh State Electricity Board Limited of even date)

Report on the Internal Financial Controls over Financial Reporting under Clause (i) Of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

Although, we were not given mandate still we have audited the internal financial controls over financial reporting in some fields of HIMACHAL PRADESH STATE ELECTRICITY BOARD LIMITED (“the Company’) as of March 31, 2018 in conjunction with our audit of the consolidated financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria establishedbytheCompanyconsideringtheessentialoomponentsofinternalcontrolstated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business: including adherence to respective company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness. of the accounting records, and the timely preparation of reliable financial information .as required under the Companies Act,2013.

Auditor's Responsibility

Our responsibility is to express an opinion oh the internal financial controls over financial reporting of the Company based on our atidit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act,2013.to the extent applicable to an audit of internal financial controls, Thosé Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial contrels system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the, risk that a material weakness’ exists, and testing and evaluating the design and

Page No, 28

operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial control system over financial reporting of the Company.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that

(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) Provide reasonable assurance that transactions are recorded as necessary to pennit preparation of financia] statements in accordance with generally accepted accounting principles. and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company. and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial contro! so financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions. or that the degree of compliance with the policies or procedures may deteriorate.

Page No. 29.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company does not have, in some material aspects specifically billing (Revenue) . an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were not operating effectively or rather were absent in key audit matter selected for our reporting as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India,

For Soni Gulati & Co

Chartered Accountants

Firm Registration No.008770N)

GULAT;

is/- (*| SHIMLA

— Ve ie

Suresh Chand Soni “\ >~ a Place: Shimla Partner a Date: February 29, 2020 (Membership No 83106)

UDIN:20083 106A AAAAI5924

Page No, 30

SONI GULATI & CO. CX CHARTERED ACCOUNTANTS

H.P. State Electricity Board Limited

Sub-direction u/s 143(5) of the Companies Act 2013 issued by the CAG of India, Whether the Company has system in Place to process all the accounting transaction 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 implication, if any, may be stated. Yes but in 6 circles & Head Office only.

Whether there is any restructuring of an existing loan or cases of Waiver/ write off of debts/loans/interest etc, made by a lender te the company due to the company’s inability to repay the loan? If yes, the financial impact may be stated,

Yes , UDAU scheme notified by Govt. of India. The Company has restructured loan under UDAY Scheme in bond Mong term loan Rs 123 41 Cr, against Rs.1462.50 Cr, appraved bv the Slate Govt. under FRE.

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, NA

Report on the efficacy of the system billing and collection of revenue in the Company, Billing is faulty in our opinion pl refer to our report para | Accuracy Recognition, Measurement.

Whether sale booked in the accounts are in agreement with the billing ledger of various category of consumers,

No, Pl refer to our audit report, Attached

How much tariff roll back subsidies have been allowed and booked in the accounts during the year? Whether the same is being reimbursed regularly by the State Government shortfall if any may be commented? Subsidy booked Rs 40740,83 Lae

Subsidy received Rs 360000.00 Lae

1| JON! GUIATI & GO. CHARTERED ACCOUNTANTS “HOSHANLEELA”, 174/2, Near Govt. School, Mahl, Shimla-1 71019

Tel: (0177) 2626189, 2626799 Fax | (0177) 2a26160 Mobile ; 9478072169, 9886005769 E-mail: sonsureshS@gmail,com

Government of India ate fart

Indian Audit and Accounts Department (G y) svete eet eee Principal Accountant General (Audit) qeranereararare (rare eeAT )

Himachal Pradesh, Shimla-171003 Er 171003

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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF ANTES UNDER SECTION 143 (6) (b) READ WITH SECTION 129(4) OF THE COMP ray,

ACT, 2013 ON THE CONSOLIDATED FINANCIAL STATEMENTSOF HIMAC PRADESH STATE ELECTRICITY BOARD LIMITED FOR THE YEAR ENDED 31

MARCH 2018.

The preparation of consolidated financial statements of Himachal Pradesh State Electricity Board

Limited for the year ended 31 March, 2018 in accordance with financial reporting frame work

prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the

company. The statutory auditors appointed by the Comptroller and Auditor General of India

under section 139 (5) of the Act are responsible for expressing opinion on financial statements

under section 143 read with section 129 (4) of the Act based on independent audit in accordance

with the standards on auditing prescribed under section 143 (10) of the Act. This is stated to

have been done by them vide their Audit Report dated 29.02.2020.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary

audit of the consolidated financial statements of Himachal Pradesh State Electricity Board

Limited for the year ended 31st March, 201 8under section 143(6) (a) read with section 129 (4) of

the Act. We conducted a supplementary audit of the financial statements of Himachal Pradesh

State Electricity Board Limited but did not conduct supplementary audit of financial statement of

Himachal Renewables Limited. Further, section 139(5) and 143(6)(b) of the Act are not

applicable to Himachal RenewablesLimited being private entity. Accordingly, Comptroller and

Auditor General of India has neither appointed the statutory auditors nor conducted the

supplementary audit of this company. This supplementary audit has been carried out

independently without access to the working papers of the statutory auditors and limited

primarilyto inquiries of the statutory auditors and company personnel and a selective

examination of some of the accounting records.

Based on my supplementary audit, | would like to highlight the following significant matters

under section 143(6)(b) read with section 129(4) of the Act which have come to my attention and

which in my view are necessary for enabling a better understanding of the financial statements

and the related audit report.

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Statement of Profit and Loss

1. Other Expenses (Note 2.33) 193.55 crore

(a) The above include internal audit fees of = 23.94 lakh paid in 2017-1 8pertaining to

financial year 2014-15, the provision for which had not been created during FY 2014-15.

This expenditure, a prior period item has been incorrectly treated as current. Year

expense.This incorrect treatment has resulted in overstatement of Otherexpenses, Other

Equity and understatement of Profit by Z 23.94 lakh.

(b) The above does not include provision for Statutory Auditor fees amounting to < 15 Lakh

for the audit of account of the financial year 2017-18. This had resulted in understatement

of other expenses and overstatement of profit by = #5 Lakh.

2. Finance Costs (Note — 2.31) = 457.06 crore

(a) The above include an amount of 22220.61 lakh as expenses of difference between interest

accrued on the General Provident Fund (GPF) deposit of employees and interest earned

on the GPF fund maintained by the Company. It was however ¢ 8225.35 lakh had been

earned as interest on GPF whereas in the financial statements it has been taken as

27116.06 lakh. Thus,21111.32 lakh (%9336.67 — %8225.35) should be charged as

expenses in the Statement of profit and loss account instead of %2220.61 lakh. This has

resulted in overstatement of Finance Cost and understatement of Profit and Other Equity

by £1109.29 lakh.

(b) The above does not include 710.60 lakh as commitment charges payable to M/s. KF W ull

31" March 2018. This has resulted in overstatement of profit and understatement of

Finance cost by 10.60 Lakh.

3. Revenue from Operation Z 652076.13 Lakh (Note - 2.27)

Consumer Deviation of Malana® 1423.53 Lakh (Account Code 61.123).

Above include amount recoverableas Unscheduled Interchange (UL) charges for the

period from April 2008 to June 2012. Bills for the same were also raised by Company

during June 2008 to September 2012, However income was recognized in the books of

accounts during 2017-18.

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As per Indian Accounting Standard (Ind AS) 8 (Accounting Policies, Changes in

Accounting Estimates and Errors) " An entity shall correct material prior period errors

retrospectively in the first set of financial statements approved for issue after their

discovery byrestating the comparative amounts for the prior period(s)”.

However, Company did not restate the opening balances of financial statement for the

year 2017-18. This has resulted in overstatement of profit for the year by €1277.57 Lakh

and opening balance of Other equity (Schedule 2.17) has been understated to the same

extent.

Balance Sheet

4. Trade Payable- (Note 2,23) Rs 127987.18 Lakh

Purchase of Power — € 109500.27 Lakh

(i) Above does not include liability of ¥ 1215.44 Lakh payable to Govt. of Himachal

Pradesh (GoHP).Thus, Trade payable (Note 2.23) has been understated by 1215.44

Lakh and Other Equity (Note 2.17) has been overstated to the same extent. Further profit

for the year has also been overstated by = 1215.44 Lakh.

5. Trade Payable- ¥ 12797,18 Lakh

Purchase of Power — F 109500.27 Lakh

Above does not includes amount of %121.15 lakh, the provision for Local Area

Development fund (LADF) contribution payable to Government of HP, being one per

cent of total generation from its 19 hydel projects. This has resulted in Understatement of

Trade payable by % 121.15 Lakh and over statement of profit to the same extent.

6. Current Assets

Financial Assets-Sundry Trade Receivables (Note to account 2.10) % 47148.45 Lakh

Above includes % 4274.96 Lakh shown as recoverable from Govt. of Himachal Pradesh

on account of handling charges. Company had the information before approval of

financial statements (19 July 2019) regarding impairment in value of above recoverable

due to non-existence of provisions in relevant regulation for levy of such charges and

rejection of claims thereof also by Government of Himachal Pradesh,

This has resulted in overstatement of Sundry Debtor and Profit by 3 4274.96 Lakh.

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10.

Financial Assets — Others (Note — 2.13) 772386.53lakh

Amount Recoverable from LMKs/ Sugam Centre

The above does not include an amount of 22204.51 Lakh recoverable from Lok Mitra

Kendras (LMKs)/Sugam Centre on account of sale of power amounting to 711.89 crore

and liquidated damages amounting to 210.15 crore. The above error had been committed

due to crediting the above head by 222.16 crore and debiting Inter-unit transaction by the

same amount. This had resulted in understatement of Amount Recoverable from LMKs

Sugam Centre and overstatement of Inter-unit Transaction.

Financial Assets — Others (Note — 2.13) $72386.53Lakh

Deposit with Hon’ ble High court/others 9082.04 crore

An amount of % 10.26 crore had been paid by the Company to a contractor in an

arbitration award by the Court. The liability materialized through arbitration award dated

18.10.2016 instructing Company to pay the above award amount to the party. This

liability therefore should be recognised by providing for the amount and charging the

same to statement of profit and loss account for the period 2016-17. However, provision

for this liability has not been created and is still being shown as deposit with court. This

has resulted in overstatement of Deposit with Hon’ble High Court and other equity by

710.26 crore.

Currents Assets

Others- Current Assets (Note 2.14) % 19717.85 lakh.

The above does not include® 19.06 lakh receivable from two contractors in pursuance of

decisions of the District Court, Mandi dated 29.3.2018 and 31.3.2018. This resulted in

understatement of ‘Other Current Assets- and overstatement of Workin Progress (Note

2.2) by % 19.06 Lakh

Note forming part of the Accounts — Disclosure

(a) An amount of %22.05 crore had been shown (Financial Assets Other-Note-2.13) as

recoverable from Lok Mitra Kendrs (LMKs)/ sugam centres, It has not been disclosed

that the matter is sub-j udice and any recovery will depend upon the ruling of the court.

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(b) As per Ind AS 16 - Para 73(e)(v), ‘The financial Statement shall disclose, for each class of property, plant and equipment impairment losses recognised in profit and loss in accordance with Ind AS 36’. During the financial year, Company has charged %18.44 crore on account of write-off of the losses of power house material damaged due to fire incident in Bhaba Power House on 22.01.2015, The same being a non-recurring and material in value should have been disclosed in the Notes forming part of the accounts in compliance of the Ind AS, but has not done.

¢) Note 2.28 (Other income) includes %2.21 crore being the funds / amount receivable from Government of Himachal Pradesh(GoHP) towards five per cent of losses of€1051.11 lakh for FY 2017-18 under UDAY scheme as per GoHP Orders (December, 2017). As the funding of losses by the GoHP is not expected to recur, these funding of losses should have been disclosed separately in the statement of profit and loss for the period 2017=18 in a manner that its impact on current profit or loss can be perceived distinctly. However, disclosure in respect of same has not been made in the Notes forming part of Account. Thus, non-disclosure of GoHP funding of losses for FY 2016- 17 amounting to 2.21 crore results in the same being deficient to that extent.

d) The Comptroller and Auditor General of India had commented the following, on Notes forming part of Account for non-disclosures, of financial statements for the year 2016- 17:-

i) 'HPSEBL had deposited commitment advance of €45 lakh for development of 2" Ultra Mega Power Project (UMPP) in the State of Andhra Pradesh in M/s Tatiya Andhra Mega Power Project Limited (TAMPPL). The TAMPPL on 12.07.2018 informed HPSEBL that

they are in process of closure of 4000 MW UMPP and the advance deposited will be

refunded after adjusting the expenditure made towards the project. This has not been

disclosed in Notes to Account.'

ii) 'The notes to accounts do not disclose that Beas Valley Power Corporation limited

filed (December 2015) appeal against the arbitrator orders in Hon'ble High Court along-

with depositing the awarded amount %44,23 lakh. However, the Hon'ble High Court

remanded back (December 2016) the case to arbitrator for consideration afresh by

releasing (June 2017) the total amount of 48.10 lakh including interest of 23.87 lakh."

© = . LS AAT

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Inspite of the above comments of CAG of India and above matter not resolved till date,

the same have not been disclosed in the Notes forming part of account for the year 2017-

18.

(ec) Note 10 to Accounts states that " In absence of terms and conditions of the loans taken

under RGGVY scheme from GoHP (% 500.00 Lakh and ADB through GoHP%840.45

Lakh) no provision for interest has been made."The above note is deficient to the extent

that the provision in respect of interest on ADB loan through GoHP amounting to

114.82 lakh had been provided in the Finance cost for the year 2017-18. Further as on

date 31"March 2018 amount due under ADB loan through GoHP was %1289.77 lakh and

not %840.45 Lakh as shown in the note.

11. Impact of comments

The impact of above comments is that the current year profit of £365.96 lakh has been

overstated by % 4522.09 lakh. In case these adjustments are carried out, current year

reported profit will turn into loss of $4159.13 lakh.

For and on behalf of the

Comptroller & Auditor General of India

Place: Shimla

Date:2?,08.2020 Pr. Accountant General (Audit)

Himachal Pradesh

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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143 (6) (b) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTSOF HIMACHAL PRADESH STATE ELECTRICITY BOARD LIMITED FOR THE YEAR ENDED 31 MARCH, 2018.

The preparation of financial statements of Himachal Pradesh State Electricity Board Limited for

the year ended 31 March, 2018 in accordance with financial reporting frame work prescribed

under the Companies Act, 2013 (Act) is the responsibility of the management of the Company.

The statutory auditors appointed by the Comptroller and Auditor General of India under section

139 (5) of the Act are responsible for expressing opinion on financial statements under section

143 of the Act based on independent audit in accordance with the standards on auditing

prescribed under section 143 (10) of the Act. This is stated to have been done by them vide their

Audit Report dated 29.02.2020.

1, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary

audit of the financial statements of Himachal Pradesh State Electricity Board Limited for the

year ended 31 March 2018 under section 143(6) (a) of the Act. This supplementary audit has

been carried out independently without access to the working papers of the statutory auditors and

is limited primarily to inquiries of the statutory auditors and company personnel and a selective

examination of some of the accounting records.

Based on my supplementary audit, I would like to highlight the following significant matters

under section 143(6)(b) read with section 129(4) of the Act which have come to my attention and

which in my view are necessary for enabling a better understanding of the financial statements

and the related audit report.

Statement of Profit and Loss

1, Other Expenses (Note 2.33) & 193.54 crore

(a) The above include internal audit fees of % 23.94 lakh paid in 2017-18 pertaining to

financial year 2014-15, the provision for which had not been created during FY 2014-15, This

expenditure, a prior period item has been incorrectly treated as current year expense.

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Fa Ce ————x&x

This incorrect treatment has resulted in overstatement of Other expenses, Other Equity and

understatement of Profit for the current year by = 23.94 lakh.

(b) The above does not include provision for Statutory Auditor fees amounting to 7

15 Lakh for the audit of account of the financial year 2017-18. This had resulted in

understatement of other expenses and overstatement of profit by @ 1.5 Lakh. Also, Note

no. 15 to the stand alone financial statements incorrectly states that statutory auditors

have been paid Rs.15 lakh for the current year.

2 Finance Costs (Note — 2.31) % 45705.82 lakh

(a) The above include €2220.61 lakh as expenses of difference between interest accrued

on the General Provident Fund (GPF) deposit of employees and interest earned on the

GPF maintained by the Company. It was however observed that® 8225.35 lakh had been

earned as interest on GPF whereas in the financial statements it has been taken as

27116.06 lakh. Thus,%1111.32 lakh (€9336.67 — %8225.35) should be charged as

expenses in the Statement of profit and loss account instead of %2220.61 lakh. This has

resulted in overstatement of Finance cost and understatement of Profit and Other Equity

by 71109.29 lakh.

(b) The above does not include 210.60 lakh as commitment charges payable to M/s.

KEW till 3° March 2018. This has resulted in overstatement of profit and

understatement of Finance cost by 710.60 Lakh.

3. Revenue from Operation - % 652076.13 Lakh (Note - 2.27)

Consumer Deviation of Malana- % 1423.53 Lakh (Account Code 61.123).

Above include amount recoverable as unscheduled interchange (Ul) charges for the

period from April 2008 to June 2012. Bills for the same were also raised by company

during June 2008 to September 2012, However income was recognized in the books of

accounts during 2017-18.

As per Indian Accounting Standard (Ind AS) 8 (Accounting Policies, Changes in

Accounting Estimates and Errors) " an entity shall correct material prior period errors

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a

retrospectively in the first set of financial statements approved for issue after their

discovery by restating the comparative amounts for the prior period(s)”.

However, Company has not restated the opening balances of financial statement for the

year 2017-18. This has resulted in overstatement of profit for the year by %1277.57 Lakh

and opening balance of Other equity (Schedule 2.17) has been understated to the same

extent.

Balance Sheet

Trade Payable- (Note 2.23) Rs 127987.18 Lakh

Purchase of Power —% 109500.27 Lakh

(i) Above does not include liability of % 1215.44 lakh payable to Govt. of Himachal

Pradesh (GoHP).Thus, Trade payable (Note 2.23) has been understated by = 1215.44

Lakh and Other Equity (Note 2.17) has been overstated to the same extent. Further profit

for the year has also been overstated by % 1215.44 Lakh.

Trade Payable-% 12797.18 Lakh

Purchase of Power —% 109500.27 Lakh

Above does not include@121.15 lakh, the provision for Local Area Development fund

(LADF) contribution payable to GoHP, being one per cent of total generation from its 19

hydel projects. This has resulted in understatement of Trade payable by @ 121.15 Lakh

and over statement of profit to the same extent.

Current Assets

Financial Assets- Trade Receivables (Note 2.10) % 47148.45 Lakh

Above includes < 4274.96 Lakh shown as recoverable from Govt. of Himachal Pradesh

on account of handling charges. Company had the information before approval of

financial statements (19 July 2019) regarding impairment in value of above recoverable

due to non-existence of provisions in relevant regulation for levy of such charges and

rejection of claims thereof also by Government of Himachal Pradesh.

This has resulted in overstatement of Sundry Debtor and Profit by % 4274.96 Lakh.

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Financial Assets — Others (Note — 2.13) = 76774.11lakh

Amount Recoverable from LMKs/Sugam centre

The above does not include an amount of 2204.51 Lakh recoverable from Lok Mitra

Kendras (LMKs)/Sugam Centre on account of sale of power amounting to 711.89 crore

and liquidated damages amounting to £10.15 crore. The error had occurred due to

crediting the above head by 222.16 crore and debiting Inter-unit transaction by the same

amount. This had resulted in understatement of Amount Recoverable from LMKs Sugam

Centre and overstatement of Inter-unit Transaction.

Financial Assets — Others (Note — 2.13) $76774.11Lakh

Deposit with H’ ble High court/others = 9082.04 crore

An amount of % 10.26 crore had been paid by the company to a contractor in an

arbitration award by the Court. The liability materialized through arbitration award dated

18.10.2016 instructing Company to pay the above award amount to the party. This

liability therefore should be recognized by providing for the amount and charging the

same to profit and loss account for the period 2016-17. However, provision for this

liability has not been created and is still being shown as deposit with Court. This has

resulted in overstatement of Deposit with Hon’ble High Court and Other Equity by 10.26

crore.

Note forming part of the Accounts — Disclosure

An amount of 222.05 crore had been shown (Financial Assets Other-Note-2.13) (a)

as recoverable from LMKs/ sugam. It has not been disclosed that the matter is sub-judice

and any recovery will depend upon the ruling of the Court.

(b) As per Ind AS 16 - Para 73(e)(v), ‘The financial Statement shall disclose, for each

class of property, plant and equipment impairment losses recognised in profit and loss in

accordance with Ind AS 36’. During the current financial year, Company has charged

218.44 crore on account of write-off of the losses of power house material damaged in

fire incident at Bhaba Power House on 22.01.2015. The same being a non-recurring item

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and material in value should have been disclosed in the Notes to account in compliance

of the ind AS, but has not been done.

c) Note 2.28 (Other income) includes 22.21 crore being the funds / amount receivable

from Government of Himachal Pradesh towards five per cent of losses of 71051.11 lakh

for FY 2017-18, under UDAY scheme as per the GoHP Orders (December 2017). As the

funding of losses by the GoHP is not expected to recur, these funding of losses should

have been disclosed separately in the statement of profit and loss for the period 2017-18

in a manner that its impact on current profit or loss can be perceived distinctly. However,

disclosure in respect of same has not been made in the Notes forming part of Account.

d) The Comptroller and Auditor General of India had commented the following, on Notes

forming part of Account for non-disclosures, of financial statements for the year 2016-

17:-

i)HPSEBL had deposited commitment advance of 45 lakh for development of 2 Ultra

Mega Power Project (UMPP) in the State of Andhra Pradesh in M/s Tatiya Andhra Mega

Power Project Limited (TAMPPL). The TAMPPL on 12.07.2018 informed HPSEBL that

they are in process of closure of 4000 MW UMPP and the advance deposited will be

refunded after adjusting the expenditure made towards the project. This has not been

disclosed in Notes to Account.'

ii) ‘The notes to accounts do not disclose that Beas Valley Power Corporation Limited

filed (December 2015) appeal against the arbitrator orders in Hon’ble High Court along-

with depositing the awarded amount 244.23 lakh. However, the Hon’ble High Court

remanded back (December 2016) the case to arbitrator for consideration afresh by

releasing (June 2017) the total amount of 748.10 lakh including interest of $3.87 lakh.’

In spite of the above comments of CAG of India and above matters not resolved till date,

the same have not been disclosed in the Notes forming part of account for the year 2017-

18.

(e) Note 10 to Accounts states that "In absence

(% $00.00 Lakh and ADB through GoHP %840.45

of terms and conditions of the loans taken

under RGGVY scheme from GolIP

Lakh) no provision for interest has been made."

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‘The above note is deficient to the extent

aa

that the provision in respect of interest on ADB loan through GoHP amounting to

%114.82 lakh had been provided in the Finance cost for the year 2017-18. Further as on

date 31*March 2018 amount due under ADB loan through GoHP was 1289.77 lakh and

not %840.45 Lakh as shown in the Note.

10. Impact of comments

The impact of comments is that the current yeas profit of %365.96 lakh has been

overstated by % 4522.09 lakh. In case these adjustments are carried out, current year

reported profit will turn into loss of 4159.13 lakh.

For and on behalf of the

Comptroller & Auditor General of India

a

Place: Shimla

Date#4708.2020 Pr. Accountant General (Audit)

Himachal Pradesh

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HIMACHAL PRADESH STATE ELECTRICITY BOARD LIMITED

(A State Govt. Undertaking)

Regd. Officer: Vidyut Bhawan, Shimla-171004.

BOARDS’ REPORT

Dear Members,

Your Directors are pleased to present the 9't Annual Report of the Company for the year ended

March 31, 2018 along with the Financial Statements (Annual Accounts), Report of Statutory Auditors

and Comments of the Comptroller and Auditor General of India and replies thereto.

1. GENESIS

Himachal Pradesh State Electricity Board Limited (HPSEBL), an undertaking of Government of

Himachal Pradesh, was incorporated on 03-12-2009 with the objective to maintain and operate

generation, distribution and trading of electricity, electricity used in the State of Himachal Pradesh

and to purchase of electrical energy and sale of energy to the other agencies and to co-ordinate,

maintain and operate an integrated power distribution system in all aspects including; to acquire,

establish, construct erect, lay, operate, run, manage, maintain, enlarge, alter, renovate, modernize,

work in the State of Himachal Pradesh. The Financial highlights for the year ending 31 March, 2018

briefly encapsulate the performance of your company.

FINANCIAL RESULTS:

Yours Directors have immense pleasure in placing of record the financials of the Company having

registered a good annual growth in revenue to the tune of Rs. 6713.69 crore in 2017-18 as against

an amount of Rs. 6621.92 crore in previous year showing an increase of 1.39%. This was achieved

due to tariff hike, sale of power through trader on market rate, low cost power procurement from

power exchange and short-term market. The profit after taxes (PAT) of the Company during the

year is 3.66 crore due to decrease of Rs. 90 crore power purchase cost and previous year loss was

Rs. 44.21 crore. The Company earned the profit in first time from the date of its incorporation during

this year. The subsidiary and joint venture Companies are under construction’ survey and

investigation stage The comparative statement showing revenue from operation, Net Profit/ Loss of

the Company for the year 2015-16 to 2017-18 is furnished here below:

(As. in crores)

PARTICULARS 2015-16 2016-17 2017-18

Income:-

Sale of Power 5980.02 6291.54 6520.76

Revenue subsidies & Grants 0.00 0.00 0.00

Other Incomes 209.69 330.38 192.93

Total Income 6189.71 6621.92 6713.69

Expenses:-

Purchase of Power 3733.69 3883.77 3790.26

Employee cost 1503.29 1703.84 1881.57

Other Expenses 963.24 1078.52 1038.20

Total Expenses 6200.22 6666.13 6710.03

Profit/Loss (10.51) (44.21) 3.66

Adjustment of carry forwarded losses of erstwhile Board 505.13

Loss transferred from Previous Years (1989.12) (1999.63) (2043.84)

Accumulated Loss (1999.63) (2043.84) (1535.79) FINANCIAL REVIEW:

Capital Structure: The Authorized Share Capital of the Company as on 31.3.2017 stood at

Rs.1100.00 Crore and the paid up Capital was Rs. 670.57 Crore (Previous year Rs. 653.28 Crore)

BORROWINGS: The Company mobilized a loan of Rs. 482.36 Crore from various Fls i.e. REC,

PFC and ADB and made repayment Rs. 212.22 Crore during the year 2017-18. The total borrowing

(including OD) of the Company as on 31.3.2018 was Rs. 5187.82 Crore (Previous year Rs. 4859.74).

NETWORTH: The net worth of the Company as on 31st March, 2018 was Rs. (848.91) crore

against Rs. (870.02) Crore as on 31.3.2017 representing decrees of 2.43% due to increase in profit.

GROSS OPERATING MARGIN: The Gross operating Margin of the Company as on 31s March,

2018 was Rs. 267.79 crore against Rs. 215.02 Crore as on 31st March, 2017.

Transfer to Reserves: During the year no amount was transferred to reserves of the Company.

VISION, MISSION, AIMS AND TARGETS

Vision:- Availability of reliable and quality power at competitive rates on a sustainable basis to all.

Mission: To provide environment friendly, qualitative and reliable power to all sections of the society by creating a value based, customer centric, employee oriented organization, with an aim to enhance the standard of life of the society in which the organization operates.

Targets: During the year under review, the targets for achieving the goals set out under Power Sector Reforms, implementation of IT initiatives under R-APDRP, computerized billing and accounting, asset based valuation, ERP etc.

Objectives

The objectives of Himachal Pradesh State Electricity Board Limited are:-

a) To plan, promote, organize, maintain and operate an integrated power distribution system

in all aspects including; to acquire, establish, construct erect, lay, operate, run, manage,

maintain, enlarge, alter, renovate, modernize, work and use in the State of Himachal

Pradesh and elsewhere, extra high voltage (EHV), high voltage (HV), medium voltage

(MV) and low voltage (LV) lines and associated sub-stations, including distribution centers,

cables, wires, accumulators, plants motors, meters, apparatus, computers and materials

connected with transmission, distribution, supply of electrical energy, communication and

telemetering equipments.

To plan, promote, organize, maintain and execute Power Project within and outside the

State of Himachal Pradesh including execution of new projects.

To undertake, for and on behalf of others the erection, operation, maintenance,

management of extra high voltage, high voltage, medium voltage and low voltage lines and

associated sub-stations, equipment apparatus, cables and wires.

To carry on the business of purchasing, selling, trading electrical energy and co-importing,

exporting, wheeling, trading of electrical energy, including formulation of tariff, billing and

collection thereof.

Universal power access through various electrification schemes/ processes/ Programs.

To improves quality and reliability of power by system strengthening.

To avoid cost and time overruns on the schemes under execution through effective TMR

System.

Reduction of T&D and AT&C losses.

3. FUNCTIONS

(i) Distribution of Electricity in the State of H.P.

Sale, Purchase and Trading of Electricity.

Operation and Maintenance of all existing Power Generation Plants & Electrical System infrastructure associated with evacuation & distribution of electricity.

Completion of ongoing HEPs and execution of HEPs so allotted by GoHP along with associated electrical networks. R&M of existing EHV, HV & LV Electrical System networks in the State of H.P. for distribution of electricity.

Creation of New and Augmentation of EHV, HV & LV Electrical System Network commensurate with load growth, rural electrification system extension, distribution loss reduction and quality improvement of power in the State of Himachal Pradesh.

WORKS

The Company has 487.450 MW installed capacity of Hydel Generating Stations and the Beas Valley Power

Corporation Ltd subsidiary Company of HPSEB Ltd. is executing the Uhl -IIl projects continue to progress

satisfactorily during the period under review.-

Sr.No. | Name of Project Installed capacity [Revised Estimated | Date of start | Target date of

(MW) cost (Rs. in crores) commissioning

1 Uhi-Ill = in ~— Distt. 100 1281.52 (Based on | Oct,2002 December, 2020

Mandi price level of

December 2012)

The following EHV lines/Sub-Stations and HV distribution lines/ Sub-Stations were

completed/ commissioned during the year 2017-18.

Sr. No. Name of Scheme

EHV Sub-Stations

1. Upgration of existing 33/11 KV, 2x3.16 MVA S/Stn. Fatehpur to 132/33 KV, 2X16 MVA at

Fatehpur S/Stn.

2. C/O 66 /22 KV, 1x6.3 MVA S/Stn. at Akpa.

3. Augmentation of 33/11 KV, 2x4 MVA Transformer to 2x6.3 MVA CAPACITY AT 132/33 KV

S/Stn. Dehan.

4. Addition of 33/11 KV, 1x10 MVA Transformer at 132/33 KV S/Stn. at Tahliwala.

5. Augmentation of 132/33 KV, 3x16 MVA to 3x25/31.5 MVA alongwith associated

Equipment at 132/33 KV S/Stn. Kandrori.

HV Distribution lines & Sub-Stations

1. 33/11 KV, 2x3.15 MVA Sub-Station Gandhigram

2. 33/11 KV, 2x6.3 MVA Sub-Station Summerhill

3. 33/11 KV, 1x6.3 MVA Sub-Station Sanjauli

4. 33/11 KV,, 2x3.15 MVA Sub-Station Burma Papri

5. 33/11 KV, 2x3.15 MVA Sub-Station Sainj Nallah, Dargi

6. 33/22 KV, 2x1.6 MVA Sub-Station Karsog

Sr. No. Name of Scheme

7. 33/11 KV, 2x10 MVA Sub-Station at Bathu

8. 33/11 KV, 2x3.15 MVA Sub-Station at Santokhgarh

9. 33/11 KV, 2x1.6 MVA Sub-Station at Jadrangal

10. Augmentation of 33/11 KV Sub-Station at Daulatpur from 1x3.15 MVA+1x6.3 MVA to 2x6.3

MIVA capacity

5. HUMAN RESOURCES

A) Manpower Position:- HPSEBL has an overall sanctioned posts of 24930 as on 31-3-2018 and 5 (five) Whole Time Directors are on the rolls. The class wise position of sanctioned posts as on 31.3.2018 is as

under: -

Class Sanctioned Existing Vacant

| 1087 927 161

Il 635 619 15

lll 15660 9706 5954

IV 7548 3196 4352

G. Total 24930 15371 10482

Personal Post:

i Personal Post (Regular) 2/6

il Employee on Contract basis 2588

ill Work Charged 163

iv Daily wages/ Part-time 56

In order to meet the immediate requirement of technical professional personnel for O&M/projects your

Company has also skilled/ semi-skilled outsourced manpower from services providers.

B) Training :

In the present day competitive World when numerous technological and other changes are taking place in

every sphere of activity, it has become increasingly challenging to the Power Utilities to vie with other stake-

holders that are now coming into play in the Power Sector and provide quality Power Supply to Electricity

Consumers with efficiency and promptness. Your Company gives utmost importance for the enrichment of

skills and towards this in-house and external training programme are proposed to be organized in all

disciplines and at all levels. Training to field Technical Staff of the HPSEBL are imparted at the HPSEBL

Lineman Training Centre at Solan. During the year FY 2017-18, the figures tabulated here below show at a

10.

11.

glance the numbers of personnel sponsored by the HPSEBL to undergo training and participate in various

Conference/ Workshops and Seminars:

(i) Technical Staff = 2135

(i) Non Technical Staff = 512

Dividend

Since the Company has accumulated losses of Rs. 1535.06 crore , the information, therefore, is Nil.

Reserves

The information may kindly be treated as Nil.

Change in the nature of business, if any

No such changes occurred during the year. However, Company has entered into joint venture with State owned newly created Company namely “Himachal Renewable Limited” for the construction of 2.5 MW hybrid (Solar+Wind) Power Plant with large battery storage at Kaza in Lahual and Spite District and other Renewable Power Projects in HP.

Material changes and commitments, if any, affecting the financial position of the Company which

have occurred between the end of the financial year of the Company to which the financial statements

relate and the date of the report.

No such changes occurred during the year.

Significant and material orders passed by the Regulators or Courts or Tribunals impacting the Going

Concern status and Company’s operations

There were no such orders passed by the regulators or courts or tribunals impacting the going concern status

and Company’s operations during the financial year ending 31 March, 2018.

Subsidiary/Joint Ventures/Associate Companies

The Himachal Pradesh State Electricity Board Limited has a subsidiary Company named Beas Valley Power

Corporation Limited, which was earlier incorporated by the erstwhile Himachal Pradesh State Electricity Board.

Beas Valley Power Corporation Limited is having its registered office at Shimla. Presently, the Authorized

Share Capital of the Company is Rs.300 crore and paid up capital is Rs.300 crore. The Nominees of the State

Govt. and Himachal Pradesh State Electricity Board Limited are on the Board of Directors of the Beas Valley

Power Corporation Limited. The Beas Valley Power Corporation Limited has adopted its Annual Accounts for

FY 2017-18 in its 16% Annual General Meetings (AGM) held on 20.03.2020 at Committee Room, Ellersie

Building , H.P. Secretariat , Shimla -9. Further, in order to meet the statutory requirements of Section 129 (3)

of the Companies Act, 2013 and Rules (6) of the Companies (Accounts) Rules, 2014, its annual accounts for

FY 2017-18 have been consolidated with annual accounts of HPSEB Ltd. (Holding Company) and the

Consolidated Financial Statement (CFSs) have been prepared as per the statutory requirements.. HPSEBL

has been invested an amount of Rs. 25.00 Lac as share application money pending allotment of shares as on

31.3.2018 and same amount has been invested by the Solar Energy Corporation of India (CPSUs), New Delhi

and Chief Engineer (Comm) HPSEBL, Shimla is holding additional charges of Managing Director of joint

12.

13.

14.

14.1

15.

ventures. Himachal Renewable Limited” was incorporated on 14.9.2016 and its accounts for FY 2017-18 has

been adopted by the share holder 18 September, 2018 .

Performance and Financial Position of each of the Subsidiaries, Associates and Joint Venture

Companies included in the Consolidated Financial Statement

In order to meet the statutory requirements of Section 129 (3) of the Companies Act, 2013 and Rules (6) of the

Companies (Accounts) Rules, 2014, annual accounts for FY 2017-18 of Beas Valley Power Corporation

Limited (BVPCL) a subsidiary Company of HPSEB Ltd., Himachal Renewable Limited” (JVs) have been

consolidated with annual accounts of HPSEB Ltd. (Holding Company) and the Consolidated Financial

Statement (CFSs) have been prepared as per the statutory requirements of Schedule- Ill and annexed with

this annual report for the purpose of approval and e-filing the same with ROC/MOC.

Deposits

The Company has not accepted deposits (except consumer’s contribution for capital works). Hence the

information is Nil.

Auditors’ Report

M/s Soni Gulati & Co., Chartered Accountants, Roshanleela, 174/2 Near Govt School, Mehli, Shimla-1710013

were appointed as the Statutory Auditors of the Company for the financial year ended 31% March, 2018 by the

Comptroller & Auditor General of India. The Auditors have audited the accounts and submitted their report on

29th February, 2020, which is annexed.

Cost Audit

Pursuant to the Central Government directions to audit Cost Accounting Records as maintained by the

Company, your Company has appointed M/s SDM Associates, , Cost Accountants, 2122 Sector 71 Mohali ,

Chandigarh as Cost Auditors for the year 2017-18 . The Auditors have audited the Cost accounting Record

for FY 2017-18 and submitted their report on 5 June, 2020 which is annexed as per Annexure-V.

Share Capital

The Authorized Share Capital of the Company as on dater is Rs.1100, 00, 00,000/- (Rs. Eleven Hundred crore only).

The issued, subscribed & paid up capital of the Company on 31.3.2018 was Rs.670, 56, 18,000/-.

A) _ Issue of equity shares with differential rights

The information is Nil.

B) Issue of sweat equity shares

The information is Nil.

C) Issue of employee stock options

The information is Nil.

16.

17.

D) Provision of money by Company for purchase of its own shares by employees or by

trustees for the benefit of employees

The information is Nil.

Extract of the Annual Return:

The Information pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Companies

(Management and Administration) Rules, 2014 is appended hereunder in annexure MGT-9 as Annexure I.

The Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo as per

Rule 8 of the Companies (Accounts) Rules, 2014

(a) Conservation of Energy

The Company does not consume renewable energy in its projects or offices except for energy

generated from small Hydro Electric Projects having capacity upto SMW.

(b) Foreign Exchange Earning and Out-Go

There is no import and export of foreign exchange during this year and as such this information

is treated as Nil.

(c) Technology Absorption

This information can be treated as Nil.

18. Directors:

(A) The Board of Directors

1.1 Size of the Board

Being a State owned Company, the power to appoint Directors of HPSEB Ltd. vests with the Government of

H.P. During the Financial Year, the approved strength of Board of Directors was minimum 3 and maximum 10

& as on date the minimum approved strength is 3 and maximum 15.

1.2 Composition & Tenure of the Board

As on 31.03.2017, the Board is comprised of 9 (Nine) Directors, consisting of 5 (five) Whole Time (Functional

Directors) including Managing Director, 04 (Four) part time Directors.

1.3 Board Meetings

The meetings of Board of Directors are held at Shimla to facilitate full participation by the Directors during the

FY 2017-18, (4) Board Meetings were held and almost all the Directors have attended these meetings.

PARTICULARS OF THE PERSONS WHO ARE/WERE DIRECTORS/SECRETARY OF THE COMPANY AS ON

THE CLOSURE OF FINANCIAL YEAR (2017-18).

Kelston Near 33 kv sub station,

Sr. Name Usual Address Date of Birth Date of Date of Cessation

No. Appointment (If Any)

1. |Sh. R .D. Dhiman, |} HOUSE NO.-3, TYPE-6 05.12.1962 | 01.01.2018 | In position as

IAS OFFICERS COLONY, Chairperson KASUMPTI

SHIMLA

Himachal Pradesh

India

171009

2. Sh. Shrikant Baldi, Old Brock Hourst No. 1, 12.12.1959 25.07.2011 In position as

IAS Chotta Shimla, Shimla, Chairperson

171002, Himachal Pradesh,

3. |Dr. Ajay Sharma, VPO.- Kharanal, Via Paprola, 21.01.1963 27.11.2014 In position as IAS Tehsil- Baijnath, | Kangra, Nominee Director

176115, Himachal Pradesh,

INDIA

4. |Sh. Hans = Raj | BURJ HOUSE 15.09.1962 In position as Chauhan, IAS GROUND FLOOR TYPE 5 Nominee Director

CHAURA MAIDAN

SHIMLA URBAN SHIMLA

Himachal Pradesh

India

171004

5. |Sh. J. P. Kalta KALTA VILLA, BELOW BCS |10.05.1960 08.04.2016 In position as

PLASE Ill NEW SHIMLA Managing Director

SHIMLA 171009 HP IN

6. |Sh. Rajeev Sharma, House No.-24, = Type-V, [15.10.1963 05.11.2014 In position as IAS Officers Colony, Kasumpti,, Whole- time-

Shimla, 171009, H.-P. Director

7. Sh. Pavan Kumar [House No.-62, Housing Board |12.03.60 16.12.2013 In position as KohliO Colony, Saproon, Solan, Whole- time-

173211, Himachal Pradesh, Director

INDIA

8. Sh. Brij Mohan Sud |SWASTIK, DUDHLI, P.O. [13.05.1959 27.04.2016 In position as BHARARI, SHIMLA 171003 HP Whole- time-

IN Director

9. | Sh. V.P.Singh Type-5, HPSEB Colony, 03.05.1961 | 18.01.2018 | In position as Whole

Time Director

Sr.

No.

Name Usual Address Date of Birth Date of Appointment

Date of Cessation

(If Any)

Shimla Urban (T)

Shimla

Himachal Pradesh

India

171001

PARTICULARS OF CHANGE IN THE PERSONS WHO ARE/MWERE DIRECTORS/SECRETARY OF THE

COMPANY DURING THE FINANCIAL YEAR (2017-18).

1. | Sh. Tarun Shridhar, 1.4.2017 to Appointed as

IAS 2.1.2018 Chairperson

2. |Sh. Pratap Chand Negi \V.P.O- Jeori, Tehsil- 21.04.1957 12.10.2011 In position as Rampur Distt.-Shimla, Managing Director Himachal Pradesh,India 172101

3. |Sh. Ravinder Kumar |Type-lV, HPSEB (06.03.61 07.02.2014 In position as Whole- Sharma Colony, Kelston, time- Director

Shimla, 171001,

3. |Smt. Anita Tegta B-IV/14 ,NEW BROCK [16.10.1954 In position as Women HURST, SHIMLA Director Himachal Pradesh India 171002

Sh. S.C. Negi Set No 4 Willy Park (03.08.1955 In position as Chaura Maidan, Independent- Director

Shimla Himachal Pradesh,

India 171004

PARTICULARS OF DIRECTOR! SECREATRY AS ON DATE

Sh. Ram Subhag Singh, IAS, Govt. HP - Chairman

Sh. Prabodh Saxena, IAS, Govt.. of HP-Nominee Director

Sh. Rajesh Sharma, IAS Govt.. of HP-Nominee Director

Er. R. K. Sharma, Managing Director

Smt. Manasi Sahay Thakur, [AS -Nominee Director

Sh. K. R. Bharti, Retired IAS -Independent Director

Smt. Priyanta Sharma- Independent / Woman Director

Sh.S.K. Mokhta, IAS, Director (F&A)/ Persl.

Sh. Hem Raj Bairwa, |AS- Nominee Director

Dr. Sushil Sagar Sharma, Director(Civil)

Er. R. S. Jalta- Director (Tech.)

10

19.

20.

21.

22.

23.

24.

Er. Pankaj Dadwal, Director (Operation)

Sh. Gulshan Aggarwal-CFO/CAO

Sh. Arvind Sharma — Company Secretary

(B) Declaration by Independent Director(s) and re-appointment, if any

The Company has been appointed Independent & Woman Directors and Independent Directors have

devised proper system to ensure compliance with the provision of all applicable laws and that such

system are adequate and operating effectively.

(C) Formal annual evaluation of the Board of its performance

No such formal evaluation has been done. However, all intricate issues are discussed and settled after

consultation among the directors.

Audit Committee

In accordance with the provisions of Section 177 (2) of the Companies Act, 2013, Audit Committee of the

Company has now been constituted 0n19.07.2019 with the following Directors of the Company:-

(i) Addl. Chief Secretary/ Pr. Secretary (Finance) to the Govt. H.P. -Chairman (ii) Addl. Chief Secretary/Pr. Secretary (MPP & Power) to the Govt. H.P. -Member (iii) Director (Finance & Accounts), HPSEBL-Member

(iv) Sh. K.R. Bharti, IAS (Retd.) - Independent Director

(v) Smt. Priyanta Sharma- Independent Woman Director

The Company Secretary is designated as Secretary to the Audit Committee. The two meetings of the Audit

Committee are being held from time to time during the financial year 2017-18.

Details of establishment of vigil mechanism for Directors and employees

HPSEBL is following conduct, discipline and appeal rules of the Govt. of Himachal Pradesh/Himachal Pradesh

State Electricity Board Ltd. covering all the employees below the Board level and at the Board level in whole-

time employment. Grievance Redressal Mechanism applicable to all employees is also in place. To meet the

requirement of Section 177 (9) of the Companies Act, Vigil Mechanism Committee has approved Vigil

Mechanism policy 2016 on 06.05.2016.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee has been constituted as per the provisions of section 178 of

the Companies Act, 2013.

Particulars of loans, guarantees or investments under section 186

The Company has availed Secured Loans of Rs.99612.80 Lac as on 31.03.2018.

Particulars of contracts or arrangements with related parties

The information in this respect is nil as the Company is owned by the State Govt.

Secretarial Audit Report

11

25.

26.

27.

28.

Sh. P.S.R. Murthy, Practicing Company Secretary has been appointed by the Company as Secretarial Auditor

for the FY 2017-18 with the approval of the Board and he has conducted the Secretarial Audit during first week

of October, 2019 and submitted his Report Form No MR 3 Annexure Ill.

Explanations or comments by the Board on every qualification, reservation or adverse remark or

disclaimer made.

(l) By the Auditor in his report: The comments on the annual accounts have been received from

CAG of India on 28.8.2020 and reply prepared by the Company is annexed.

(I) By the Secretarial Auditor in his report: --- The observations of the Secretarial Auditor shall

be replied in the Boards’ Report for FY 2017-18 Annexure -IV.

(Ill) By the Statutory Auditors in his report: -- Replies of the audit reports of Statutory Auditors

are furnished & annexed with the Annual Accounts.

Risk Management Policy

The Company monitors risk-prone areas in its projects and offices. However, in the current financial year, the

Company may form a Risk Management Policy.

Directors’ Responsibilities Statement

In accordance with the provisions of Section 134(5) of the Companies Act, 2013, the Board hereby submit its

responsibility Statement:—

(a) In the preparation of the annual accounts, the applicable accounting standards had been

followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made

judgments and estimates that are reasonable and prudent so as to give a true and fair view of

the state of affairs of the Company at the end of the financial year and of the profit and loss of

the Company for that period;

(c) _ the Directors had taken proper and sufficient care for the maintenance of adequate accounting

records in accordance with the provisions of this Act for safeguarding the assets of the

Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis; and

(e) the Directors had devised proper systems to ensure compliance with the provisions of all

applicable laws and that such systems were adequate and operating effectively.

Company’s policy on directors’ appointment and remuneration including criteria for determining

qualifications, positive attributes, independence of a director and other matters provided under sub-

section (3) of section 178.

Since being a State Govt. Company, the appointment of all directors is being done by the State Govt. only.

Further, their remuneration, qualification, etc. are being regulated as per the norms/notifications of the State

Govt. issued from time to time.

12

29.

30.

31.

32.

33.

Corporate Social Responsibility initiatives taken during the year

Under the provisions Section 135 of the Companies Act, 2013, a CSR Committee has been constituted and

Company is extending all help for the development of various section of the State.

(a) Environment

All the Environment Management Plans (EMP) of the State Government or the Company are proposed to be

implemented diligently with a view to ensure safeguarding environment and improving the same, wherever

possible. To this end, the HPSEBL may go beyond the provisions in EMP.

(b) Industrial Relations

The work of Hydel generation, distribution and transmission is extended mostly through

Contractors/Contractors Companies/itself by the HPSEBL. In order to accomplish goals and objectives of

organization, due attention has been focused on Industrial Relation issues. During the year 2017-18, we have

taken number of steps to maintain peaceful and proper Industrial Relations. Regular Meetings are held with

the representatives of the various Associations/Unions to sort out the issues as well as policies related

matters. Better employee-employer relations and cordial industrial relations have been maintained during the

year. Industrial relations remained peaceful and cordial during the period under review. It has always been our

endeavor to strengthen the relations with all trade unions.

Accounts

The Profit & Loss Account Statement for the period ended 31% March, 2018 and Balance Sheet as on that

date of the Himachal Pradesh State Electricity Board Limited have been prepared and are annexed along with

the annual accounts of its subsidiary Company, Beas Valley Power Corporation Limited & joint venture

Company, Himachal Renewable Ltd for the same year. The Annual Accounts of three (3) these companies

are placed for the perusal and further directions of the Shareholders to the BOD to file them with the Registrar

of Companies/MCA.

Internal Control Systems

The Company has adequate internal control systems and the transactions/processes are guided by delegation

of powers, documented policies, guidelines etc. of the Company as well as of the State Govt. The

Organizational Structure is well defined in terms of the structured authority! responsibility involved at a

particular hierarchy level.

In order to ensure that all checks and balances are in place and internal control systems are in order, regular

internal audit is conducted by the Firms of Chartered Accountants in close coordination with Company’s own

internal Audit Department.

Particulars of employees pursuant to section 217 (2a) of the Companies Act, 1956 and now as per

the Companies Act, 2013.

The information under Section 217 (2a) of the Companies Act, 1956 for the year ending 31t March, 2018 is

Nil.

Statutory and other information

13

a) Industry Overview

Power is the backbone for economic development. India needs to sustain 8% to 10% economic growth rate

over the next 30 years, if it is to eradicate poverty and meet its human development goals. To deliver a

sustained growth rate of 8% till 2031-32 and to meet the lifeline energy needs of all citizens, India needs at

least increase in its primary energy supply by 3 to 4 times and its electricity generation capacity by 5 to 6 times

of 2003-04 levels. With this base, India’s commercial energy supply would need to grow from 5.2% to 6.1%

per annum, while its total primary energy supply would need to grow at 4.3% to 5.1.% annually. By 2030-31,

power generation capacity must increase to nearly 8,00,000 MW from the current capacity of around 2,98,000

MW inclusive of all captive plants during March, 2018.

As regards hydro potential, India has an estimated hydro potential of about 1,50,000 MW of which only about

42783.42 MW has been commissioned so far. Himachal Pradesh has huge potential in its five river basins and

state can play a major role in the power development. Out of this potential 487.45 MW installed capacity is

under the control of HPSEBL. No Power cut was imposed during the year FY 2017-18 in the state except

periodical maintenance shut downs/ breaks downs and repair work in various power houses.

The above Industry scenario signifies that there is an ample opportunity for consistent growth in the business

of power sector in the times to come. All efforts are being made and we hope that HPSEBL and its subsidiary

BVPCL will certainly be one of the producers and distributors of hydro power in Himachal Pradesh.

b) Corporate Governance

The Companies Act, 2013 has been implemented with effect from 1s April, 2014 and as per provisions of this

Act, HPSEBL has formulated Corporate Social Responsibility (CSR) Policy which has been approved by the

Board in its 29th Board meeting vide agenda item No 29.14 dated 21.03.2018 . The CSR Committee in its

meeting held on 30-12-2016 decided and recommended that HPSEBL has accumulated loss to the tune of Rs.

1535.78 Crore in the FY 2017-18, therefore in the absence of any net profit; the Company is not required to

spent any amount towards Corporate Social Responsibility obligation.

The above recommendation of the CSR Committee were approved by the Board with the direction to

incorporate these recommendation in the Board’s Report for the financial year 2014-15, 2015-16, 2016-17and

2017-18 Therefore, the policy would be implemented as per the requirement of the Act.

The approved policy along with requisite perform is attached at Annexure -l.

b) Others

There is no decision to buy back its shares during the year under report under Section-77 (A) of the

Companies Act, 1956 and as per the provisions of Companies Act, 2013.

Further, as per requirement of the Companies Act, 2013, a Remuneration and Nomination Committee, Audit

Committee, Vigil Mechanism Committee of the Company have been constituted & Woman Director/

Independent Director have been appointed with the prior approval of the Board. The Chairman and Director

(F&A) have been appointed as the Key Managerial Personnel and appointment of Independent Company

Secretary is under consideration of the management.

14

Acknowledgements

Your Directors gratefully acknowledge the continuous support and assistance provided by the State Govt. and

its Departments such as Deptt. of Power, Deptt. of Finance, Deptt. of Forests, Deptt. of I&PH, HPERC,

Pollution Control Board etc. The Board of Directors also acknowledge with thanks the guidance and help

extended by various Ministries/Departments of the Government of India, Central Electricity Authority, and

Financial Institutions, such as ADB, PFC, REC and Banks etc.

The Board conveys its gratitude to the outgoing Directors for their dedicated services rendered during their

tenure. The Directors further place on record, their gratitude to the officers of HPPCL, HPPTCL, BVPCL and

other agencies for their institutional support. The Directors would also like to thank the office of A.G. H.P.,

C.A.G. of India, Statutory Auditors, Internal Auditors who have made efforts in conducting and finalizing the

audit report of the Company.

Last but not least, the Board commends the hard work and dedicated efforts put in by the employees of the

Company including the employees on deputation at all levels.

Thanking you.

For and on behalf of Board of Directors

(Sudesh Kumar Mohkta, IAS) (Er. R.K. Sharma)

Director (Finance & Personnel) Managing Director

Place: Shimla

Date:

15

ANNEXURE | TO THE BOARDS’ REPORT

Form No. MGT-9

EXTRACT OF ANNUAL RETURN AS ON THE FINANCIAL YEAR ENDED ON 31°' MARCH, 2018

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the

Companies (MVanagement and Administration) Rules, 2014]

I, REGISTRATION AND OTHER DETAILS:

i. | CIN U40109HP2009SGC031255

ii. | Registration Date 03/12/2009

iii. | Name of the Company Himachal Pradesh State Electricity Board

Limited

iv. | Category / Sub-Category of the Company Company Limited by shares

(State Govt. Company)

v. | Address of the Registered office and contact Vidyut Bhawan, HPSEB, Shimla HP INDIA

details 171004

vi. | Whether listed company No

vii. | Name, Address and Contact details of Registrar | Nil

and Transfer Agent, if any

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the company

shall be stated: -

Sr. Name and Description of main NIC Code of the % to total turnover of the

SB products / services Product/ service company

1 Electricity, gas, steam and air condition | 40101 100 %

supply

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sr. | Name And | CIN/GLN Holding/ % of Applicable No. | Address Of Subsidiary shares

The Company held Section [Associate

16

1. | Beas Valley | U40101HP2003SGC025877 Subsidiary 100 2(46)

Power

Corporation

Limited

2. | HIMACHAL U40106HP2016PLC006347 Joint Venture | 50 2(6)

RENEWABLE

S LIMITED

IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total

Equity)

i.Category-wise Share Holding

Category of No. of Shares held at the beginning No. of Shares held at the %

Shareholders of the year end of the year Change

during

the

year

Demat Physical | Total) % of Total |Dem at Phy Total) % of

Shares ; Total

ce Shares

A. Promoter

1) Indian 0 0 0 0 0 0 0 0 -

a) Individual/ HUF 0 0 0 0 0 0 0 0 -

b) Central Govt 0 0 0 0 0 0 0 0 -

c) State Govt(s) 6,53,26,780 6,53,26,780 | 100.00 -

d) Bodies Corp 0 0 0 0 0 0 0 0 -

e) Banks / FI 0 0 0 0 0 0 0 0 -

f) Any Other 0 0 0 0 0 0 0 6(|0 -

Sub-total(A)(1):- 6,53,26,780 | 100.00 6,53,26,780 | 100.00 -

2) Foreign 0 0 0 0 0 0 0 0 -

g) NRIs-Individuals 0 0 0 0 0 0 0 0 -

h) Other-Individuals 1400 | 0.00 1400 | 0.00 -

(Six Sr. Officers of

the State

Govt./HPSEBL

holding 1400

Shares on behalf

17

Himachal Pradesh

State Electricity

Board Limited)

i) Bodies Corp. 0 0 0 0

j) Banks / FI 0 0 0 0

k) Any Other... 0 0 0 0

Sub-total (A)(2}:- 1400 | 0.00 1400 | 0.00

B. Public

Shareholding

1. Institutions

a) Mutual Funds 0 0 0 0

b) Banks / FI 0 0 0 0

c) Central Govt 0 0 0 0

d) State Govt(s) 0 0 0 0

e) Venture Capital 0 0 0 0

Funds

f) Insurance 0 0 0 0

Companies

g) FIIs 0 0 0 0

h) Foreign Venture 0 0 0 0

Capital Funds

i) Others (specify) 0 0 0 0

Sub-total (B)(1) 0 0 0 0

2. Non Institutions

a) Bodies Corp. 0 0 0 0

(i) Indian

(ii) Overseas

b) Individuals 0 0 0 0

(i)Individual share

holders holding

nominal share capital

upto Rs. 1 lakh

(ii) Individual share

holders holding nominal share capital

18

in excess of Rs 1 lakh

c) Others(Specify) 0 0 0 0 0 0 0 -

Sub-total (B)(2)} 0 0 0 0 0 0 0 -

Total Public 0 0 0 0 0 0 0 -

Shareholding

(B)=(B)(1)+ (B)(2)

C. Shares held by 0 0 0 0 0 0 0 -

Custodian for GDRs &

ADRs

Grand Total 6,53,28,180 6,53,28,180 100 -

(A+B+C)

ii.Shareholding of Promoters

Sr. Shareholder’s | Shareholding at the beginning of | Shareholding at the end of the

No Name the year year

No. of % of total |% of No. of Shares |% of total|/%of % change

Shares Shares of |Shares Shares of Shares jin share

the Pledged/ the Pledged /|holding

compa ny company \encumbe |during the

Se red to year

ee total coe shares shares

1. | Governor of 6,53,26,780 | 100 6,53,26,780 | 100 - -

Himachal

Pradesh

2. | Sh. Vidya 200 0.00 - 0.00 - -

Chandra Pharka

3. | Sh. Vineet - 0.00 200 0.00 - -

Chawdhry

4. | Sh. Tarun 400 0.00 - - - -

Shridhar

5. | Shri R. D. 400 0.00

Dhiman

19

of the year

6. | Sh. Pavan 200 0.00 - 200 0.00 - -

Kumar Kohli

7. | Shri Rajiv 200 0.00 200 0.00

Sharma

8. | Dr. Shrikant 200 0.00 - 200 0.00 - -

Baldi

9. | Shri Ravinder 200 0.00 - - - - -

Kumar Sharma

10) Shri V.P. Singh 200 0.00

Total 6,53,28,180 | 100 65326780 100

Sr. Shareholding at the beginning |Cumulative Shareholding during

no the year

Sh. R. D.

Dhiman

No. of shares % of total No. of shares % of total

shares of the shares of the

company company

At the beginning of the year 6,53,26,780 100 6,53,26,780 100

Date wise Increase / Decrease NO. OF | TO WHOM | REASON

in Promoters Share holding SHARES ISSUED

during the year specifying the

reasons for increase/ decrease

(e.g. allotment / transfer /

bonus/ sweat equity etc):

ALLOTMENT 1400 The Governor | Allotment to

of H. P. existing Shareholders

The Governor | -do-

of H. P.

TRANSFER NO. OF SHARES | Transferor's & | REASON

Transferee's

Name

17.11.2017 200 Sh. V.C. | AS per Orders Pharka, IAS of State

To Sh. Vineet | Government

Chawdhry, IAs | & approval of BOD

08.03.2018 400 Sh. Tarun | As per Orders

Shridhar, IAS of State

to Government

& approval of BOD

20

08.03.2018 200 Sh. RK. | AS per Orders Sharma To | of State

Sh. V.P. Singh | Government Sharma & approval of

BOD

At the End of the yea 65,328,180 100 65,328,180 100

iii.Change in Promoters’ Shareholding:

V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment:

Secured Loans

excluding

deposits

(including Deb.)

Unsecured

Loans

Deposits Total

Indebtedness

Indebtedness at the

beginning of the financial

year (2017-18)

i} Principal Amount

ii) Interest due but not

paid

iii) Interest accrued but

not due

Total (i+ii+iii)

Change in Indebtedness

during the financial

year(2017-18)

- Addition

- Reduction

Net Change

Indebtedness at the

end of the financial

year(2017-18)

i} Principal Amount(

ii} Interest due but not

paid

iii) Interest accrued but

not due

Total (i+ii+iii) 50,071,564,552

21

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager

Total

SI. No. Particulars of Remuneration Amount Designation (in Rs.)

1. Name of MD/WTD/ Manager:

1) Sh. Pratap Chand Negi: (Managing Director) 2,283,503 Gross salary

(a) Salary as per provisions contained in

section 17(1) of the Income-tax Act,

1961

(b) Value of perquisites u/s 17(2) Income-

tax Act,1961

(c) Profits in lieu of salary under section

17(3) Income- tax Act, 1961

2) Sh. Brij Mohan Sud: (Whole Time Director) 2,775,864

Gross salary

(a) Salary as per provisions contained in

section 17(1) of the Income-tax Act,

1961

(b) Value of perquisites u/s 17(2) Income-

tax Act,1961

(c) Profits in lieu of salary under section

17(3) Income- tax Act, 1961

3) Sh. Rajeev Sharma:

Gross salary (Whole Time Director) 2,479,274

(a) Salary as per provisions contained in

section 17(1) of the Income-tax Act,

1961

(b) Value of perquisites u/s 17(2) Income-

tax Act,1961

(c) Profits in lieu of salary under section

17(3) Income- tax Act, 1961 4) Sh. Jai Parkash Kalta: (Whole Time Director)

Gross salary 2,325,698

(a) Salary as per provisions contained in

section 17(1) of the Income-tax Act,

1961

(b) Value of perquisites u/s 17(2) Income-

tax Act,1961

(c) Profits in lieu of salary under section

22

17(3) Income- tax Act, 1961

5} Sh. Pavan Kumar Kohli:

Gross salary

(a) Salary as per provisions contained in

section 17(1) of the Income-tax Act,

1961

(b) Value of perquisites u/s 17(2) Income-

tax Act,1961

(c) Profits in lieu of salary under section

17(3) Income- tax Act, 1961

(Whole Time Director)

2,366,422

6} Sh. Ravinder Kumar Sharma:

Gross salary

(a) Salary as per provisions contained in

section 17(1) of the Income-tax Act,

1961

(b) Value of perquisites u/s 17(2) Income-

tax Act,1961

(c) Profits in lieu of salary under section

17(3) Income- tax Act, 1961

(Whole Time Director)

2,029,012

Stock Option

Sweat Equity

Commission

- as % of profit

- others, specify...

Others, please specify

Total (A)

Ceiling as per the Act

B. Remuneration to other directors:

SI. No. Particulars of Remuneration Name of MD/WTD/

Manager

Total

Amount

Independent Directors

- Fee for attending board committee

meetings

- Commission

- Others, please specify

Total (1) Other Non-Executive Directors

- Fee for attending board committee

meetings

- Commission

- Others, please specify

23

Total (2)

Total (B)=(1+2)

Total Managerial Remuneration

Overall Ceiling as per the Act - - - -

C. Remuneration to Key Managerial Personnel Other Than MD /Manager /WTD

SI. Particulars of Key Managerial Personnel

ho. Remuneration

(Name) CEO Company CFO Total

Secretary

11. Gross salary - - - -

(a) Salary as per provisions

contained in section 17(1)

of the Income-tax Act, 1961

(b) Value of perquisites

u/s

17(2) Income-tax

Act, 1961

(c) Profits in lieu of salary under

section

17(3) Income-tax

Act, 1961

12. Stock Option - - -

13. Sweat Equity - - -

14. Commission - - -

- as % of profit

- others, specify...

15. Others, please specify - - -

16. Total

VII. PENALTIES _/ PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of Brief Details of Authority[RD Appeal

the description Penalty/ /NCLT/Court] made. If

companies Punishment/ any(give

Act Compounding details)

fees imposed

A. Company

Penalty - - - - -

Punishment - - - - -

Compounding - - - - -

24

B. Directors

Penalty - - - - -

Punishment - - - - -

Compounding - - - - -

C. Other Officers In Default

Penalty - - - - -

Punishment - - - - -

Compounding - - - - -

Sd/- Sd/-

S.k. Mohkta, IAS Er. R.K. Sharma

Director (Finance & Personnel) Managing Director

25

Annexure -Il

Annual Report on Corporate Social Responsibility and Sustainability for the financial year 2017-18.

1. Brief outlines of the Company’s CSR policy and overview of CSR

HPSEBL has formulated a well perceived corporate social Responsibility Policy in its 29" meeting held on 21.03.2017 which is in consonanance with Company Act, 2013 and CSR guidelines, 2014 of DPE. To meet this commitment HPSEBL will respect the rule of law, local communities and societies at large and it will make conscious efforts to enhance the quality of life and environmental sustainability through its CSR. In accordance with the provisions of Section 135 of the Companies Act, 2013, CSR Committee of the Company has now been re-constituted on 30.12.2016 with the following Directors of the Company:-

i) Addl. Chief Secretary (MPP & Power) to the Govt. H.P. (i) | Managing Director, HPSEBL (il) | Director (Finance & Accounts), HPSEBL (iv) — Sh. S.C. Negi, IAS (Retd.) Independent Director (v) — Smt. Anita Tegta, IAS (Retd.) Woman Director

The Executive Director (Pers) is the Secretary to the CSR Committee.

The Corporate Social Responsibility Committee in its meeting held on 30-12-2016 has approved that as per CSR policy the Company is required to spend in every financial year, two (2%) of the average net profit of the Company made during the three immediately preceding financial years towards CSR obligation. Since, HPSEBL has accumulated loss to the tune of Rs.1989.12 Crore in the financial year 2014-15, Rs.1999.64 Crore in FY 2015-16,

Rs.2043.85 Crore in FY 2016-17 and at the end of FY 2017-18 these losses will decrease above Rs. 2038.15 crore,

therefore, in the absence of any net profit, the Company is not required to spend any amount towards CSR obligation.

Sd/- Sd/- Sd/- Kumad Singh, HAS Rajeev Sharma, IAS Tarun Shridhar, IAS Executive Director (Pers) Director (Personnel) Addl. Chief Secretary (MPP & Power)

26

Annexure- Ill

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31°’ MARCH 2018

[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014]

To,

The Members,

Himachal Pradesh State Electricity Board Limited,

Vidyut Bhawan,

Shimla — 171 004

| have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Himachal Pradesh State Electricity Board Limited (the “company”) CIN U40109HP2009SGC031255 The Company is a State Government Company and is Listed on Bombay Stock Exchange for its Debt Securities issued on Private Placement. Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.

Based on my verification of the books, papers, minute books, forms and returns

filed and other records maintained by the company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, | hereby report that in my opinion, the company has, during the audit period covering the financial year ended on 31% March 2018 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

| have examined the books, papers, minute books, forms and returns filed, and

other records maintained by the Company for the financial year ended on 31° March 2018 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made there under;

27

During the period under review the Company had compliance with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above

subject to the following observations:

a)

b)

Cc)

d)

The Company is yet to comply with Section 129(2) of the Act in respect of presentation of Financial Statements for the year 2017-18before the Annual General Meeting ought to have been held on or before 30° September 2018. The Audit was informed that presently statutory audit for the Financial Year 2017-18 is in progress.

During the financial year 2017-18, the Company held 03 Board Meetings and thus one meeting is short for compliance with the provisions of Section 173(1) of the Companies Act 2013.

On perusal of few returns, the Company is not filing MGT-14 in respect of Approval of Financial Statements, Approval of Board’s Report, and Appointment of Internal Auditors. The Company is of the opinion that these Returns are not applicable.

In respect of debt securities listed on Bombay Stock Exchange, the Company not complied with Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. Few non-compliances listed such as furnishing Limited Audit Review half-yearly financial results and Board’s approval for furnishing financial results (Regulation 52), intimation to debenture trustee (Regulation 54), display of information on website (Regulation 62) etc.

The charge creation against various borrowings in favour of lenders requires review in view of huge number of charge creations are filed against Movable properties of the Company.

The constitution of the Audit Committee and proceedings thereof are not in accordance with the provisions of Section 177 of the Companies Act 2013 read with the Rules thereunder. It is not clear whether the Committee is headed by an Independent Director as Chairman or official Director as Chairman.

| further report compliance under:

(i)

(ii)

(iii)

The Securities Contracts (Regulation) Act, 1956 (SCRA’) and the rules made thereunder;

The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas

Direct Investment and External Commercial Borrowings; (Not applicable

28

for the period ending 31° March 2018 as there were no transactions reported).

(iv) | The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (Not Applicable for the period ending 31° March 2018).

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992; (Not Applicable for the period ending 31°* March 2018).

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; (Not Applicable for the period ending 31°‘ March 2018)

(e) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

(f} The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not Applicable for the period ending 31°t March 2018); and,

(g) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998(Not Applicable for the period ending31* March 2018);

| have also examined compliance with the applicable clauses of the Secretarial Standards issued by The Institute of Company Secretaries of India.

| further report that

The Board of Directors of the Company is constituted with Executive Directors, Non-Executive Directors and Independent Directors for the financial year 2017-18. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice of the Meeting was given to all directors to schedule the Board Meetings. Agenda and detailed notes on agenda, however were sent in advance less than seven days prescribed. A system exists for seeking and obtaining

29

further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members’ views are captured and recorded as part of the minutes.

| further report that monitoring the compliance with applicable laws, rules, regulations and guidelines commensurate with the size and operations of the company is not evidenced from the Board records. However, the Company reported through Management Representation that during the year 2017-18, the company has not violated any Rules or Regulations as applicable and that there was no penalty or show-cause notices received from any Statutory or Regulatory Authorities excepting one Notice from the Ministry of Corporate Affairs for not complying with the provisions of Section 96 for the Financial Year 2016-17 and section 148 of the Companies Act 2013 for the Financial Year 2015-16. The Company submitted a detailed reply against the Show-Cause Notices.

| further report that during the audit period the company has no specific events/actions having a major bearing on the company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. referred to

above.

(P.S.R. Murthy) Practicing Company Secretary

A-5880 CP 13090 UDINA005880A000411472

Place: New Delhi

Date: 16 December 2019

This Report is to be read with our letter of even date which is annexed as Annexure A and forms integral part of this Report.

Annexure-A

The Members Himachal Pradesh State Electricity Board Limited Shimla — 171 004

My Report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of the company. My responsibility is to express an opinion on these secretarial records based on my audit.

2. | have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness

30

of the contents of the secretarial records. The verification was

done on test basis to ensure that correct facts are reflected in

secretarial records. | believe that the processes and practices, | followed provide a reasonable basis for my opinion.

3. | have not verified the correctness and appropriateness of financial records and Books of Accounts of the company.

4. Wherever required, | have obtained the management representation about the compliance of laws, rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of the

management. My examination was limited to the verification of procedures on test basis.

6. The Secretarial Audit Report is neither an assurance as to the future viability of the company nor of the efficacy or effectiveness with which the management has conducted the affairs of the company.

(P.S.R. Murthy) Practicing Company Secretary

A-5880 CP 13090 UDINA005880A000411472

Place: New Delhi

Date: 16" December 2019

Annexure- IV Reply to the Secretarial Auditor's Observations

HIMACHAL PRADESH STATE ELECTRICITY BOARD LIMITED

MANAGEMENT REPRESENTATION OF COMPLIANCE FOR THE PERIOD COMMENCING FROM 01°' APRIL 2017 TO 31°' MARCH 2018

A. To the best of our knowledge and belief, HPSEB Limited, CIN

No.U40109HP2009SGC031255 is governed, inter alia, by following Acts:

(ii) The Companies Act, 2013 (the Act) and the rules made thereunder;

(iii) ©§ The Securities Contracts (Regulation) Act, 1956 (SCRA’) and the rules made thereunder;

31

(iv) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(v) Applicable Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’), such as,

(g) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

(h) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

(d) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

Apart from above, the Company is governed by various Central and State Laws out of which the following laws, inter alia, are generally applicable:

Indian Electricity Act, 2003

Environmental (Protection) Act, 1986 Income Tax Act 1961 Service Tax Act 1994/GST Act Prevention of Money Laundering Act 2002 The Indian Stamp Act 1889, and,

Right to Information Act 2005 The Industrial and Labour Laws A

NON

PRWN

>

We Certify-

B. That applicable provisions of Companies Act 1956/2013 and Rules there under are complied with and all Returns, Registers, Procedures and

disclosures as due are filed/maintained.

C. That all taxes payable under Income Tax Act 1961, Service Tax, GST

Professional Tax etc. as due have been remitted to the concerned authorities

within the time permitted and Returns as due thereof have been filed.

D. That there are no transactions pertaining to the Prevention of the Money Laundering Act 2002 or matters connected therewith or incidental thereto.

E. That provisions of Stamp Duty as applicable and required Stamp Duty has been remitted as assessed in respect of securities of the Company.

32

F. That in Labour and Industrial Laws, it is certified that all compliances,

approvals wherever required, including filing of Returns, Payments, Maintenance of Accounts, Settlements as are called for under each Act has

been implemented.

G. During the year 2017-18, we certify that the Company complied with various provisions of Acts/Laws as are applicable. It is also certified that during the year no penalties were levied nor show-cause notices were received by the Company from any Statutory or Regulatory Authorities.

Sd/- Sd/- COMPANY SECRETARY CHIEF FINANCIAL OFFICER

FORM-CRA-3

(Pursuant to Rule 6 (4) of the Companies (Cost Records and Audit), rules, 2014)

FORM OF THE COST AUDIT REPORT

1 We, SDM & Associates , Cost Accountants, having been appointed as Cost Auditors under

section 148 of the Companies Act, 2013 of Himachal Pradesh State Electricity Board Limited, having

its registered office at Vidyut Bhawan, Shimla-171004 (hereinafter referred to as the Company), have

audited the Cost Records maintained under section 148 of the said Act, in compliance with the Cost

Auditing standard, in respect of the GENERATION,TRANSMISSION & DISTRIBUTION of ELECTRICITY

for the Period 2017-18 maintained by the company and report, in addition to our observation and

suggestions in Para 2.

(i) We have obtained the information and explanation, which to the best of our knowledge and

belief were necessary for the purpose of this audit.

(ii) In our opinion, proper cost records, as per Rule 5 of the Companies (Cost Records and Audit)

Rules, 2014 have not been maintained by the company in respect of units/products/services

under reference.

(iil) In our opinion, proper returns adequate for the purpose of the Cost Audit have not been

received from the branches not visited by us.

(iv) In our opinion and to the best of our information, the said books and records not give the

information required by the Companies Act, 2013 in the manner so required.

(v) In our opinion, company has adopted adequate systems of internal audit of cost records

which to our opinion is commensurate to its nature and size of its business.

(vi) In our opinion, information statements in the annexure to this Cost Audit Report gives true

and fair view of the Cost of Production of product/ rendering of services, Cost of Sales,

Margin and Other Information relating to product/services under reference.

33

(vil) Details unit-wise and product/services-wise cost statements and schedules thereto in respect

of the product /services under reference of the company duly audited and certified by us are

kept in the company.

Observations and suggestions, if any, of the Cost Auditor, relevant to the cost auditor

- Company has operated at less than 46% capacity during the year which has adverse

impact on its overall performance.

- Though company has improved in its operations but has incurred losses of Rs. 0.14 per

unit during the year. (P/Y 0.24 PU).

- Repair and Maintenance Cost (Ref Note 2.28 of Balance sheet) increased by 38% and

Administration cost by 17.9% as compared to previous year.

- Stock of Stores and Spares is on higher side at 9.53 times.

- Debt Equity ratio is also on higher side and has increased further.

- Current Assets to Current Liabilities ratio is also on higher side and in current year has

again increased further.

- Company has replaced non-operational meters with new without having adjustment of

replaced meters in depreciation which has impact on cost of units generated.

- Intangible assets i.e software etc are amortised on SLM at rates specified in Appendix-ll

of HPSERC Regulation 2014 which might have some impact on cost of generation of

electricity which has not been worked out.

- As per the records maintained and produced to us, in case of Thirot which has operated

at 19% of installed capacity, PU cost of generation of power is Rs. 14.53 PU which needs

a review.

- In case of Khauli which consist four generating units, operating at 29% of installed

capacity, cost pu of generation is Rs. 9.21 which seems to be on higher side.

- As per information and justification given, machine wise/turbine wise cost data at

generating units is not maintained. It is suggested to maintain turbine wise Cost sheet, if

not maintained and compare the same for per unit cost of generation of power.

- Distribution losses of the company as a whole are at 12.14% (P/Y 11.18%). But in case

of Shimla and Rohroo losses are too high at 24.17% & 43.36% respectively.

Date: Chandigarh For SDM & Associates

Place Cost Accountant (Firm Regd. No 000281)

CMA Anil Sharma Partner

M-15091

34

COST ACCOUNTING POLICIES:

General information

The Himachal Pradesh State Electricity Board was constituted on 7 September 1971 in accordance with the Electricity (Supply) Act, 1948 for Generation, Transmission and Distribution of electricity within the State of Himachal Pradesh. The Board has been re-organised as Himachal Pradesh State Electricity Board Limited with effect from 14.06.2010. The Company has own hydel generation. HPSEBL also purchased electricity from PSEB on banking basis, it also purchased/obtained energy against HP’s share from BBMB, PSEB, SJVNL, UJVNL, UPPCL, NHPC, NTPC and NPCL. HPSEBL also sell electricity to other states after meeting its own

demand.

Process of Manufacture

The Himachal Pradesh State Electricity Board Limited (HPSEBL) has huge hydel potential in its five river basins. The Company has generated about 1950.790 MKwh units of electricity during the year from its . Electricity is generated with renewable source of energy i.e. water. Water is dropped from certain height to rotate the turbines which in turn generate electricity. This electricity is evacuated with the help of transmission lines and distributed within and outside the state. The shortage of electricity to meet the demand in the state is made by purchasing from other states. In case of excessive supply of electricity, it is sold to other states.

Cost Accounting System

The division of the company has maintained cash and bank books. The adjustment entries are passed in the memorandum statement. The divisions extract monthly Trial balance for the purpose of consolidation of records by Circles and wings. The Head office on the basis of memorandum statement submitted by Circles and Wings compile the records. At the Head office level cost records and annexure there to are derived from above said records and company has not maintained formal cost records. So, in the absence of formal cost records we are unable to comment upon and give our opinion on true and fair costing of power generated/purchased and sold.

a) Identification of cost centres/cost objects

The Company has apportioned the cost on the different cost centres such as Generation, Transmission, SLDC, Distribution, Head Office, Maintenance, System Operation, and Projects.

b) Accounting for material cost including packing materials, stores and spares etc, employee cost, utilities and other relevant cost

The company has no material cost because electricity is generated with help of water through turbines. The company maintains separate stores and spares account. Cost of Stores and spares is determined on weighted average method. The issues are made for both capital and revenue spares. Generally, for repairs and maintenance Company has its own staff. The company also take major repairs with the help of contractors. All consumptions are booked under Repair and Maintenance heads. All items are codified on the basis of Tata Consultancy Report of 1984. Employee cost is directly allocated to respective cost centres. Employees cost at Head Office has been allocated to respective cost centre based upon their assets value.

c) Disclosure regarding accounting, allocation and absorption of overheads

Production overheads are allocated to cost centres on actual basis and overhead incurred at Head office has been allocated to cost centre on their asset value.

d) Disclosure regarding accounting for depreciation or amortization

Depreciation has been charged at the rates as given by Regulatory Commission for electricity companies. The same has been taken to work out the cost of power units generated. The impact of difference with rates as applicable under Companies Act, 2013 has to be work out. So, we are not in a position to comment the cost implication of the same.

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As per the practices followed by the company depreciation has been booked at Head office and the same has been allocated to cost centre at their assets value basis.

e) Disclosure regarding accounting for by products, joint products and scraps or wastage

Company has been generating, transmitting and distributing single product i.e. electricity. There is no by product and joint product. Scraps and wastage arises due usage are recorded under separate cost centres. Loss or gain arising due to sale of these products is taken into reconciliation statement.

f) Disclosure regarding basis of inventory valuation

Company produces the electricity with help of water which is renewable source of energy so there is no stock of inventory except Stores and Spares. Stores and Spares are valued at weighted average method.

g) Disclosure regarding valuation of inter unit or inter-ccompany and related party transaction

Company works as single organisation for generation, transmission and distribution so there is no inter-unit or inter-company transaction. HPSEBL transfers free power to HP Govt. as their share as per agreement signed.

h) Disclosure regarding treatment of abnormal and non-recurring costs including classification of non-cost items

Abnormal and non-recurring costs are not considered while calculating the cost of production

and cost of sales. These items are considered as non-cost items and its effect is considered in reconciliation statement.

i) Disclosure regarding other relevant cost accounting policy

Costing policies not define above are as per generally accepted Cost Accounting Principles and Cost accounting standards as prescribed by The Institute of Cost Accountant of India..

j) Disclosure regarding changes in cost accounting policy during reporting period.

Company has changed the method of charging of depreciation from 2010-11. Prior to that company had used average rate of 2.5% per annum. So impact for the same on cost of units generated during current year has to be determined.

Depreciation has been charged on Straight Line Method at the rates as given by Regulatory Commission for electricity companies. Where rates are not provided by HPREC, rates as per Companies Act are considered except in case of Computers.

The impact of difference with rates as applicable under Companies Act, 2013 has to be worked out. So we are notin a position to determine the cost implication of the same.

k) Disclosure regarding adequacy of budgetary control system

The Finance & Accounts wing of HPSEBL has been assigned the functions of preparation of

final Accounts and Budget of the company. This wing is responsible for all financial planning and forecasting, funds management of the Company. Annual budgets on capital projects and revenues are made. These budgeted figures are compared with actual.

Date: Chandigarh For SDM & Associates

Place : 05.06 , 2020 Cost Accountant

(Firm Regd. No 000281)

CMA Anil Sharma

Partner

M-15091

36

Replies to cost auditor Observations and suggestions on Cost Audit Records of Himachal Pradesh State Electricity Board Limited for the year ended 31° March, 2018.

CAG Comments Management Reply

We, SDM & Associates, Cost Accountants, | Statement of facts, hence no comments are required.

having been appointed as Cost Auditors under section 148 of the Companies Act,

2013 of Himachal Pradesh _ State

Electricity Board Limited, having its

registered office at Vidyut Bhawan, Shimla- 171004 (hereinafter referred to as the Company), have audited the Cost Records maintained under section 148 of the said Act, in compliance with the Cost Auditing standard, in respect of the GENERATION,

TRANSMISSION & DISTRIBUTION of ELECTRICITY for the Period 2017-18

maintained by the company and report, in addition to our observation and suggestions in Para 2.

(i) We have obtained the information and explanation, which to the best of our

knowledge and belief were necessary for the purpose of this audit.

(vi) In our opinion, proper cost records, as per Rule 5 of the Companies (Cost Records and Audit) Rules, 2014 have

not been maintained by the company in respect of units/products/services under reference.

(vii) In our opinion, proper returns adequate for the purpose of the Cost

Audit have not been received from the branches not visited by us.

(viii) In our opinion and to the best of our information, the said books and

records not give the information required by the Companies Act, 2013, in the manner so required.

(ix) In our opinion, company has adopted adequate systems of internal audit of cost records which to our opinion is commensurate to its nature and size of its business.

(x) In our opinion, information statements in the annexure to this Cost Audit Report gives true and fair view of the Cost of Production of product/ rendering of services, Cost of Sales,

Margin and Other Information relating to product/services under reference.

(xi) Details unit-wise and __ product/ services-wise cost statements and schedules thereto in respect of the product /services under reference of the company duly audited and certified by us are kept in the company.

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2. Observations and suggestions, if any,

of the Cost Auditor, relevant to the cost

auditor

- Company has operated at less than4d6% capacity during the year which has adverse impact on its overall performance.

In reply to this para, it is submitted that due to technical,

geographical and climatic reasons, HPSEBL was not in

a position to utilize the available capacity during the FY

2017-18. Further, the utilization of average plant

availability factor is depend upon the availability of

adequate water in sourced rivers since all generating

units are hydro based. Other reason of poor utilization

of available capacity were as under:-

i) Apart from closing the generating units for their

routine maintenance and routine works, these

units could not generate the electricity due to

some technical breakdown caused by the failure

of equipments and components.

ii) Most of generating units are situated in deep

terrain hills which are severely affected by heavy

flood during rainy season. The silt in muddy water

affects the smooth operation of these Generating

units and is responsible for frequent breakdown of

these Units.

Many generating units are forced to shut down in

extreme winter season due to non-availability of

water in sourced rivers.

iii)

The management of HPSEB Ltd. is making all possible

efforts to increase capacity utilization to improve its

operation efficiency.

-Though company has improved in its operations but has incurred losses of Rs 0.14 per unit during the year .(P/Y0.24 PU)

All out efforts are being made at every respective level to reduce these losses.

-Repair and Maintenance cost (Ref Note 2.28 of Balance sheet) increased by 38% and Administration cost by 17.9% as compared to previous year.

Due to the Annual Technical charges of SAP , ISU

billing and increased in gross fixed assets had increased the Repair and Mtc. , Admn & General

charges of the Company

-Stock of Stores and spares is on higher sides at 9.53 times.

(i) The HPSEB Ltd. maintains the optimum level of stocks which is divided into critical and non-critical items. The minimum stock of critical items has to maintain at every Divisional level for restoring the electricity immediately being an essential organization. (ii) The Company is taking all possible steps to

streamlines its overall inventory system and overstocking of any items will not be allowed in future.

-Debt Equity ratio is also on higher side and has increased further

Statements of facts, The debit equity ratio of the Company for last two year are as under:- Year Total Debt Total Net worth Ratio

2016-17 4859.75 -871.01 -5.58:1 2017-18 5068.79 -848.91 -5.97:1

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-Current Assets to current Liabilities ratio is

also on higher side in current year has again increased further

Statements of facts and last two year ration is as under: Year Current Assets Current liability Ratio 2016-17 2005.75 3652.62 0.55.1 2017-18 1591.80 2984.87 0.53.1

-Company has replaced no -operational

meters with new without having adjustment of replaced meters in depreciation which has impact on cost of units generated.

The new meter are being replaced as per the policy of the Company. Hence the version of the audit are not acceptable.

-Intangible assets i.e. software etc are amortized on SLM at rates specified in Appendix-ll of HPSERC Regulation 2014 which might have some impact on cost of generation of electricity which has not been worked out.

Intangible assets i.e. software etc are amortized on SLM at rates specified in Appendix-ll of HPSERC Regulation 2014. Hence the version of the audit are not acceptable.

-As per records maintained and produce to us , in case of Thirot which has operated at

19% of installed capacity ,PU cost generation of power is Rs.14.53 PU which needs a review .

The operation of Thirot P/H has been shut down due to renovation and moderation of the plants.

-In_ case of Khauli which consist four generating units ,operating at 29% of installed capacity cost pu of generation is Rs 9.21 which seems to be on higher side.

Statements of facts, hence no comments required.

-As per information and justification given, machine wise /turbine wise cost data at generating units is not maintain. It is suggested to maintain turbine wise Cost sheet , if not maintained and compare the

same for per unit cost of generation of power.

Formal Costing mechanism of Cost Records shall be made from next year at each power generating units of the company.

-Distribution losses of the company as a whole are at 12.14%(P/Y 11.18%). But in case of Shimla & Rohroo losses are too high at 24.17% & 43.36% respectively.

Every effort are being made to reduce the T&D losses of Shimla and Rohru .

Sd/- Chief Accounts Officer, F&A Wing, HPSEB Lid., Shimla-171004

Place: Shimla

Dated: 3.9.2020

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