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AUDITOR'S REPORT

GE Power India Ltd.

You can view full text of the latest Auditor's Report for the company.
Market Cap. (₹) 4616.17 Cr. P/BV 5.23 Book Value (₹) 131.18
52 Week High/Low (₹) 938/670 FV/ML 10/1 P/E(X) 61.23
Bookclosure 23/07/2019 EPS (₹) 11.22 Div Yield (%) 0.87
Year End :2019-03 

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

We have audited the standalone financial statements of GE Power India Limited (“the Company”), which comprise the standalone balance sheet as at 31 March 2019, the standalone statement of profit and loss (including other comprehensive income), standalone statement of changes in equity and standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2019, and profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Description of Key Audit Matter

The key audit matter

How the matter was addressed in our audit

Revenue and margin recognition

The Company conducts a significant portion of its business under long-term projects, including construction-type, fixed price projects.

Revenue from long-term construction contracts is recognized in accordance with Ind AS 115, Revenue from Contracts with Customers, based on the extent of progress towards completion. The revenue on contracts may also include variations and claims. Variations and claims are recognised on a contract-by-contract basis when the Company’s negotiations have reached a stage such that it is probable that the customer will accept the claim and the amount can be measured reliably.

Our procedures included the following:

A. We obtained an understanding of the Company’s internally established methods, processes and control mechanisms for project management in the bid and execution phase of construction contracts. We also assessed the design and operating effectiveness of the accounting related internal controls by obtaining an understanding of business transactions specific to construction contracts, from the initiation of the transaction through presentation in the standalone financial statements, and testing controls over these processes.

B. We evaluated management’s estimates and assumptions based on a risk-based selection of a sample of contracts. Our sample particularly included projects that are subject to significant future uncertainties and risks, such as projects with a large portion of materials and services to be provided by suppliers, subcontractors or consortium partners, cross-border projects, and projects with changes in cost estimates, delays and / or low or negative margins. For the selected contract samples, we performed the following:

We consider the accounting for construction contracts

i.

Review of the contracts and their terms and conditions including

to be an area posing a significant risk of material

contractually agreed deliveries and services, termination rights, penalties

misstatement (including the potential risk of management

for delay and breach of contract as well as liquidated damages. In order to

override of internal controls) and accordingly a key audit

evaluate whether revenues were recognized on an accrual basis for the

matter, because management’s assessments significantly

selected projects, we analyzed revenues and corresponding cost of sales

impact the determination of the extent of progress

to be recognized in the statement of profit and loss in the reporting period

towards completion. These assessments include, in

considering the extent of progress towards completion, and examined the

particular, the scope of deliveries and services required

accounting for the associated items in the balance sheet.

to fulfill contractually defined obligations, total estimated contract costs, remaining costs to completion and total estimated contract revenues, as well as contract risks including technical, political, regulatory and legal risks.

ii.

Discussion with the management including challenging the key estimates and assumptions adopted in the forecast of contract revenue and contract

costs, including estimated costs to completion, the recognition of variation orders, the adequacy of contingency provisions and the assessment of

Revenues, total estimated contract costs and contract

potential liquidated and ascertained damages for contracts which were

margins may deviate significantly from original estimates

behind schedule, by obtaining and assessing information in connection

based on new knowledge about cost overruns and

with the assumptions adopted, including contract agreements and sub-.

changes in project scope over the term of a construction

contracts, correspondence with customers regarding contract variations

contract. Furthermore, the first time application of Ind AS

and claims and by considering historical outcomes for similar contracts.

115 in the year ended 31 March 2019 was of relevance for our audit as it required the Company-wide assessment of contracts in relation to the new accounting criteria.

iii.

Obtained detailed breakdown of the total estimated costs to completion and compared to actual costs incurred at the reporting date and cost

estimates with agreements with subcontractors and suppliers and other documentation referred to by management in its assessment of the estimated costs to completion;

iv.

We further performed inquiries of project management (both commercial and technical project managers) with respect to the development of the projects, the reasons for deviations between planned and actual costs, the current estimated costs to complete the projects, and management’s assessments on probabilities that contract risks will materialize. We also obtained an understanding of the stage of completion of the project through inquiries with project managers and by participating in project review meetings. In designing our audit procedures, we also considered results from project audits conducted by the internal audit function.

v.

Challenged the assumptions and critical judgements made by management which impacted their estimations of the liquidated and ascertained damages assessments by comparing the key terms and conditions in the assessments with customers and by comparing the estimated contract completion time with the Company’s updated progress report or correspondence from customers;

vi.

Inquired into the reasons for significant variation in current cost and revenue estimates when compared with prior estimates to assess the reliability of the management’s process of preparing such estimates.

vii. As a response to the risk of fraud in revenue recognition on long-term

projects, we tested on a sample basis the accuracy of the revenue

recorded, based on inspection of externally available evidence, such as

project acceptance documentation, contractual terms and conditions and

customer correspondence. We assessed the consistency of the accounting

information with the project information obtained.

C. Considering the requirements of Ind AS 115, we also assessed the accounting for contract amendments. With respect to the first-time application of Ind AS 115, we obtained an understanding of the processes implemented in response to the new standard. We also appraised the disclosures on the effects of the first-time application of Ind AS 115 in the notes to the standalone financial statements.

Uncertain tax provisions and deferred taxes

The Company has material uncertain tax positions including matters under dispute which involve significant judgment to determine the possible outcome of these disputes.

This also affects the measurement and completeness of uncertain tax positions, the recoverability of deferred tax assets as well as the measurement and completeness of deferred tax liabilities.

Accruals for tax contingencies require the management to make judgements and estimates in relation to tax issues and exposures. This is a key audit risk due to the time taken for tax matters to be agreed with the tax authorities and complexity of tax legislation.

Our procedures included the following:

- We used our tax specialists to assist us in assessing the Company’s open tax positions. Our specialists also considered legal precedence and other rulings in evaluating management’s position on these uncertain tax positions. Additionally, we considered the effect of new information in respect of uncertain tax positions to evaluate whether any change was required to management’s position on these uncertainties.

- We analysed and challenged the assumptions used to determine tax accruals (including allowances/ disallowances and their consequential impact on deferred taxes) based on our knowledge and experiences of the application of local legislation by the relevant authorities and courts.

- We assessed the adequacy of the Company’s disclosures in respect of tax and uncertain tax positions by reference to the relevant accounting standards and statute.

Assets held for sale

The Company announced its intention to dispose off its assets held at Shahabad and Vadodara location. The Company does not yet have an active buyer for its assets located at Vadodara. The management is actively looking for buyer and remains committed to the plan to dispose off the assets and thereby, continues to classify the same as Assets held for sale.

Management’s assessment of the basis for classification of the assets as non-current assets held for sale is judgemental, as the sale has to be considered highly probable and is expected to be completed within one year in accordance with Ind AS 105 “Non-current Assets Held For Sale and Discontinued Operations”.

At the same time, management is required to measure the assets at the lower of carrying amount and fair value less costs to sell. Inaccurate management’s estimates made in the fair value less costs to sell could result in a significant impact on the value of the assets recorded at the end of the reporting period and the impairment loss in the statement of profit and loss and other comprehensive income for the year ended 31 March 2019.

Our procedures included the following:

- We challenged management’s basis for the continued classification of the assets as held for sale through understanding of the status of the sale process and obtained necessary documentary support, including the correspondences with prospective buyers;

- Involved our valuation specialists in assessing the appropriateness and reasonableness of the value assessed.

- We reviewed management’s assessment of the valuation of the non-current assets held for sale and assessed the reasonableness of the carrying value of the underlying assets.

- We also assessed and validated the adequacy of the Company’s disclosures by reference to the relevant accounting standards and statute.

Other information

The Company’s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company’s annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the standalone financial statements does 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 materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude 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.

MANAGEMENT’S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company’s management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs, profit/loss and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 and Board of Directors are 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 so.

Board of Directors is also responsible for overseeing the Company’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalone 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 not a 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 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 resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal control 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 with reference to financial statements 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 conditions 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.

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.

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.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of section 143 (11) of the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. (A) As required by Section 143(3) of the Act, we report that:

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

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The standalone balance sheet, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under section 133 of the Act.

e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.

(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, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2019 on its financial position in its standalone financial statements - Refer Note 40 to the standalone financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts- Refer Note 46 to the standalone financial statements;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

iv. The disclosures in the standalone financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made in these financial statements since they do not pertain to the financial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditor’s Report under section 197(16):

In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

ANNEXUREA REFERRED IN THE INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF GE POWER INDIA LIMITED ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2019.

We report that:

i. (A) According to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets (property, plant and equipment and intangible assets).

(B) According to the information and explanations given to us, the fixed assets are physically verified by the management in accordance with a phased programme designed to cover all items of fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its fixed assets. In accordance with this programme, a portion of fixed assets has been physically verified by the management during the year. As informed to us, no material discrepancies were observed on such verification.

(C) According the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of the immovable properties are held in the name of the Company, except the following land (and buildings appurtenant thereto), held in erstwhile name of the Company for which name change is in process:

(Rs. in million)

Name of the property

Gross Block as at 31 March 2019

Accumulated Depreciation as at 31 March 2019

Net Block as at 31 March 2019

Freehold Land#

3.2

-

3.2

Factory Building#

90.9

71.7

19.2

Office Building#

14.6

11.8

2.8

Total

108.7

83.5

25.2

#included under Assets held for sale as at 31 March 2019.

ii. According to the information and explanations given to us, the inventories, except for goods in transit and inventories lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For inventories lying with third parties, written confirmation have been obtained. Further, as informed, the discrepancies noticed on verification between the physical inventory and the book records were not material.

iii. According to the information and explanations given to us, the Company, has not granted any loans, secured or unsecured, to companies or other parties covered in the register maintained under Section 189 of the Act. Further, there are no firms and limited liability partnerships covered in the register required under Section 189 of the Act. Accordingly, para 3 (iii) of the Order is not applicable.

iv. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has complied with the provisions of Section 185 and 186 of the Act, with respect to loans and investments made.

v. According to the information and explanations given to us, the Company has not accepted any deposits covered under Section 73 to 76 of the Act.

vi. We have broadly reviewed the books of account maintained by the Company in respect of products and services where, pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed under sub section (1) of Section 148 of the Companies Act, 2013 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of such records with a view to determine whether they are accurate or complete.

vii. (A) According to the information and explanations given to us and on the basis of our examination 'of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income tax, Duty of Customs, Goods and Service tax, Cess and any other material statutory dues, to the extent applicable, have been regularly deposited with the appropriate authorities during the year.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income tax, Goods and Service tax, Duty of Customs, Cess and other material statutory dues, to the extent applicable, were in arrears as at 31 March 2019 for a period of more than six months from the date they became payable.

(B) According to the information and explanations given to us, and on the basis of the records of the Company examined by us, there are no dues of Income-tax, Sales-tax, Service tax, Goods and Service Tax, Duty of Customs, Value Added Tax and Duty of Excise which have not been deposited with the appropriate authorities on account of any dispute, except as mentioned below:

Name of the

Nature of Statutory dues

Amount

Amount

Period to which it

Forum where dispute is

Statute

of dispute

paid

relates

pending

(Rs. in

(Rs. in

million) *

million)

Central Sales Tax

Works Contract Tax on Inter

115.2

-

1984-89 and 1992-97

High Court

and Local Sales

State Sales

Tax Acts (including

Sales Tax

4.0

-

2006-07, 2008-09 and

Appellate Authority, Dhanbad

works contract tax)

2009-10

Works Contract Tax on Inter

23.9

18.6

1993-94 to 96-97

First/ Second appellate

State Sales

authority

Non-submission of C-forms

168.7

13.1

2012-16

Tax Officer

Sales tax

11.7

11.7

2016-17

Assistant Commissioner Sales Tax, Noida

28.9

-

2011-12 to 2013-14

Commissioner Appeal

50.5

-

2014-15

Dy.Comm. Pithoragarh

2.4

-

2013 -2014 and 2014-15

CTO-Circle-Jammu

319.9

-

2011-13

First appellate authority-Audit

34.1

10.6

2011-13

2004-05

Tribunal

2.6

-

2014-15

Dy.Comm. Ahemdabad

Disallowance of ITC and

30.4

6.1

2015-16

First appellate authority

deemed sale

Non submission of form E1

37.1

2.9

2010-16

Revision Board

and C

Non-submission of C-forms

0.2

2.3

2012-13

Astt. Commissioner, Appeals

Liability for Statutory Forms

0.5

9.6

2013-14

Second Appellate Authority

& Export Proofs,

Ex-parte assessment

36.0

4.5

2013-14

Tribunal

Vehicle Detention and

0.5

0.3

2013-14

AC Appeals

Reversal of ITC

Entry Tax

85.4

48.2

2013-16

Deputy. Commissioner

Central Excise Act,

Excise duty

8.1

0.8

2010-11

Additional commissioner,

1944

Bolpur

69.1

8.1

1994-1997

CESTAT, Kolkata

1,616.6

-

2011-2015

Commissioner Bolpur

4.9

-

2013-14

Revision Board

49.0

3.7

2001-04

Tribunal

685.0

-

2014-2015, 2016-17

Commissioner Durgapur

0.9

-

2006-07

Commissinor Appeals

71.3

3.0

1979-2008

CESTAT

0.2

-

2002-03 and 2003-04

Adjudicating Authority

Service Tax

37.3

-

2016-2017

Commissioner Appeal

Excise Duty refund for supply made without Mega Power Project certification

6.8

2014-15

Tribunal, CESTAT

Service Tax Input Reversal from April 11 to May 15

280.6

-

2011-15

Tribunal, CESTAT

Service Tax wrongly deposited at the time of Audit

3.0

2011-15

Commissioner, Appeal

Service Provided at J&K Nov-2014 to March-2016

7.5

-

Nov-2014 to March-2016

Commissioner, Appeal

Construction Worker Welfare Cess Act, 1996

Labour cess on cost construction

18.5

2010-11

Assistant Labour Commissioner

GST Act

Credit of cess from Pre-GST regime

23.7

-

2017

First appellate authority

Finance Act, 1994

Service tax

1.0

33.3

55.0

4.2

3.2

27.2

2016-17

2005-07 and 2006-08

2009-13

2017

Assistant Comm. CGST & Central Excise , Vadodara Tribunal Delhi Tribunal - Allahabad Commissioner Appeal

Services tax paid after due date

65.5

-

2010-11

CESTAT

Service tax input reversal

31.0

-

2015-16

Commissioner, Appeal

Service Tax

19.1

-

2010-2015

Tribunal

Service tax on catering services

2.7

0.3

2006- 07 to 2011-12

CESTAT

DGFT

Duty Draw Back

18.4

-

2009-10

Supreme Court

Income Tax Act, 1961

Income Tax

754.0

240.7

179.3

100.0

FY 2001-03, 2007-08, 2009-14

FY 2006-07 and 2008-09 FY 2014-15

ITAT, Mumbai High Court

Dispute resolution panel

*amount as per demand orders including interest and penalty, wherever indicated in the order.

viii. According to the information and explanations given to us, the Company does not have any loans or borrowings from any financial institutions, banks, government or debenture holders during the year. Accordingly, paragrapRs. 3 (viii) of the order is not applicable.

ix. According to the information and explanations given to us, the Company did not raise any money by way of initial public offer or further public offer (including debt instrument) and any term loans during the year. Accordingly, paragrapRs. 3 (ix) of the Order is not applicable.

x. According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xi. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/ provided for managerial remuneration in accordance with the provisions of Section 197 read with Schedule V to the Act.

xii. According to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragrapRs. 3(xii) of the Order is not applicable.

xiii. According to information and explanations given to us and on the basis of our examination of the records of the Company, all transactions with the related parties are in compliance with Section 177 and 188 of the Act where applicable and the details have been disclosed in the standalone financial statements, as required by the applicable accounting standards.

xiv. According to information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragrapRs. 3(xiv) of the Order is not applicable.

xv. According to information and explanations given to us, the Company has not entered into any noncash transactions with directors or persons connected with him. Accordingly, paragrapRs. 3(xv) of the Order is not applicable.

xvi. According to information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

ANNEXUREB TO THE INDEPENDENT AUDITOR’S REPORT

ON THE STANDALONE FINANCIAL STATEMENTS OF GE POWER INDIA LIMITED FOR THE YEAR ENDED 31 MARCH 2019.

Report on the Internal Financial controls with reference to the aforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013

(Referred to in paragraph (2A(f)) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date) OPINION

We have audited the internal financial controls with reference to financial statements of GE Power India Limited (“the Company”) as of 31 March 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively as at 31 March 2019, based on the internal financial controls with reference to financial statements 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 (the “Guidance Note”).

MANAGEMENT’S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company’s management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note. 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 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 (hereinafter referred to as “the Act”).

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. 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 with reference to financial statements were established and maintained and whether 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 with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of such internal financial controls, assessing the 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 selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the standalone 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 Company’s internal financial controls with reference to financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

A company's internal financial controls with reference to financial statements 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 controls with reference to financial statements include 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls with reference to financial statements, 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 controls with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

For B S R & Co LLP

Chartered Accountants

Firm’s Registration No.101248W/ W100022

Rajesh Arora

Place: Noida Partner

Date: 27 May 2019 Membership No.076124

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