REC- 1-51.p65 - Rural Electrification Corporation Ltd.

78
To
The Members of
Rural Electrification Corporation Ltd,
1. We have audited the attached Balance Sheet of RURAL
ELECTRIFICATION CORPORATION LIMITED as at 31st March 2010 and also the Profit & Loss Account and the Cash
Flow Statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of
the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing
standards generally accepted in India. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by the management, as well as
evaluating the overall financial statements presentation. We
believe that our audit provides a reasonable basis for our
opinion.
3. As required by the Companies (Auditors’ Report) Order, 2003
(as amended) issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of the Companies
Act, 1956, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said order to
the extent applicable to the Company.
4. Further to our comments in the Annexure referred in
paragraph 3 above, we report that:
i) We have obtained all the information and explanations
which to be best of our knowledge and belief were
necessary for the purposes of our audit;
ii) In our opinion, proper books of account as required by
law have been kept by the Company so far as appears
from our examination of such books;
iii) The Balance Sheet, Profit & Loss account and Cash
Flow Statement dealt with by this report are in
agreement with the books of account;
iv) In our opinion, the Balance Sheet, Profit & Loss account
and Cash Flow Statement dealt with by this report
comply with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act,
1956 to the extent applicable.
v) Vide notification No. 2/5/2001-CL.V dated 22.03.2002
of the Department of Company Affairs, Government of
India, Government Companies have been exempted
from applicability of the provisions of Section 274(1)(g)
of the Companies Act, 1956.
AUDITORS’ REPORT
vi) In our opinion and to the best of our information and
according to explanations given to us, the said financial
statements read together with Note No. 21(B) in
schedule 17 of Notes on Accounts regarding Deferred
Tax Liability that after considering the opinion given
by various concerned authorities, and also the practice
followed by other similarly placed Institutions of not
creating Deferred Tax Liability (DTL) on account of
special reserve created and maintained under Section
36(1)(viii) of the Income Tax Act 1961, the Company
is of the opinion that there is no requirement for DTL
as per AS 22 of ICAI. Accordingly, the Company has
not created Deferred Tax Liability (DTL) of Rs. 155.65
Crore on account of special reserve created and
maintained under Section 36(1)(viii) of the Income Tax
Act, 1961, for the year ended on 31st March, 2010 and
has also reversed the DTL of Rs. 964.57 Crore created
in earlier years on this account as per Notes on
Accounts, note no. 21(B). The reversal of DTL is done
by crediting General Reserve by Rs. 638.80 Crore for
the financial years upto 2005-06 and through Profit and
Loss Appropriation by Rs. 325.77 Crore for the financial
year 2006-07 to financial year 2008-09. Had the
company followed the same accounting treatment
regarding creation of DTL as in earlier years, the profit
after tax for the year ended 31.03.2010 would have been
Rs. 1845.77 Crore against reported profit of Rs. 2001.42
Crore and Reserve & Surplus would have been Rs.
8,972.66 Crore against reported Reserve & Surplus of
Rs. 10,092.88 Crore as on 31.03.2010, together with
other notes and accounting policies thereon, give the
information required by the Companies Act 1956, in
the manner so required and give a true and fair view
in conformity with the accounting principles generally
accepted in India:
a) In the case of the Balance Sheet of the State of Affairs of the
Company as at 31st March 2010.
b) In the case of Profit & Loss Account, of the Profit of the
Company for the year ended on that date; and
c) In the case of the Cash Flow Statement, of the Cash flows for
the year ended on that date.
For Bansal & Co. For K.G. Somani & Co.
Chartered Accountants Chartered Accountants
Firm Regn. No. 001113N Firm Regn. No. 006591N
(D.S Rawat) (Bhuvnesh Maheshwari)
Partner Partner
M. No.83030 M. No. 88155
Place: New Delhi
Date : 19.05.2010