B.P.RAO & GO. No.S, POORNA PRASAD ROAD, CHARTERED ...knnlindia.com/annual_pdf/Sep 14 half yearly... · B.P.RAO & CO. CHARTERED ACCOUNTANTS No.5, POORNA PRASAD ROAD, HIGH GROUNDS,

B.P.RAO & GO.CHARTERED ACGOUNTANTS

No.S, POORNA PRASAD ROAD,HIGH GROUNDS, BANGALORE -560001.PH :22200200,22200201.FAX :22205030,E-MAIL: [email protected]

REPORT ON REVIEW OX'FINANCIAL RESULTS F'OR THE HALF YEAR ENDED30TH SEPTEMBER,2014.

To,

The Board of Directors,Karnataka Neeravari Ni gam Ltd.,Coffee Board Building,Bangalore -560001.

INTRODUCTION

l. We have reviewed the accompanying Statement of unaudited financial results ofKarnataka Neeravari Nigam Limited for the half year ended 30-09-2014. Thisstatement is the responsibility of the company and has been taken on record andapproved by the Audit Committee of Board of Directors.

SCOPE OF REVIEW:

2. We have conducted our revierv in accordance with Standards on Review Engagement(SRE) 2410, "Review of Interim Financial Information performed by the IndipindentAuditor of the Entity" issued by the Institute of Chartered Accountants of India. Areview of financial information consists of making inquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical and otherreview procedures. A review is substantially less in scope than an audit conducted inaccordance with Standards on Auditing and consequently does not enable us to obtainassurance that we would become aware of all significant matters that might beidentified in an audit. Accordingly, we do not express an audit opinion.

BASIS FOR QUALTFIED CONCLUSION:

3. Attention is drawn to Notes 2 to the unaudited financial results, that these results havebeen prepared following the same Accounting Policies as were applicable whilepreparing the financial statements for the Jinancial year ended 31il March 2014. Wreare of the opinion that the following Accounting Policies/practices of the companyrequire review:

*lt'ifioii .]No.45, Medavakkam Tank Road, Kitapauk, chennai- 600 010. ph.2641s112,26421972.

No.14lC" sth Main, Yadavgiri,'Mysore - S70 020. ph. 2S1SgZg,2S14B8O,No.106, 7'n 'A' Main, 3'o Block, jayanagar, Bangalore-560 011. ph: 26550200

Asy

B.P.RAO & CO.CHARTERED ACCOUNTANTS

No.5, POORNA PRASAD ROAD,HIGH GROUNDS, BANGALORE -560001.PH :222Q0200,22200201.FAX :22205030.E-MAI L: [email protected]. in

a)

b)

Non Provisionfor liability in respect of additional quantity ofworfts executed by thecontractors, crop compensation to farmers and land owners, worlrer welfare cessprior to I't November 2006 and New deJined contributory pension schemei

The apportionment of administrative charges, other general overheads and actualdate of capitalization which is not in accordance wtih Accounting Standard I0 onAccounting for Fixed Assets issued under the Companies (Accointing Standards)Rules, 2006;

The apportionment of the administrative charges and other general overheadspreliminarily on the basis of consolidated assets in progresi which is not inaccordance with its Accounting Policy and Accounting Practices of apportioningover completed assets and assets in progress.

d) The non allocation of expenses during construction period up to thecapitalization which is not in accordance with the Accounting policyCompany;

For the purposes of depreciation, the life of assets transferredfrom the Governmentand the life of assets capitalized during the year (other than moveable assets) andadded to the original assets, have been considered as if these were new at the timeof capitalization which policy requires review as depreciation in terms ofAccounting Standard 6 is to be provided over the residual useful tife of the asset;

The company is making provision in the books in respect of ,,demands,,for watercharges outstanding for collection more than 3 years. It is however obsirved thatthe recoveries are not significant vis-a-vis the demand and hence as a prudentmeasure the provision in our opinion ought to have been based on the eitimatedrecoveries:

g) The excess allocation of EDC which is not quantifiable, on those assets amountingto Rs'319.06 Crores, completed.and put to use in earlier years but capitalizedduring the period uniformly on I't April 2014;

c)

date ofof the

e)

J)

No.45, Medavakkam Tank Road, Kitapauk, chennai - 600 olo. ph.2€/19112,2u21822.No,14lC.. sth Main, y_adavgiri,'Mysore - 570 O2O. ph. 2S1Sg2g,2S14ilBO.

No.106, 7'' 'A' Main, 3'o Block, jayanagar, Bangalore-560 011. ph: 26550200

/

B.P.RAO & GO.CHARTERED ACCOUNTANTS

No.S, POORNA PRASAD ROAD,HIGH GROUNDS, BANGALORE -560001.PH :22200200,22200201.FAX :22205030.E-MAI L: bprao@satyam. net. in

h) The charging of depreciation by the Company on Assets hetd for transfer toGovernment -Harinala Project. We are of the opinion that as "assets held fortransfer" are not assets held by the company for the purpose of its business,accordingly depreciation charged up to 30-09-2014: Rs.477.93 takhs includingdepreciation for the period Rs.37.04 Lakhs made in the accounts requires to bereversed by credit to the appropriate accounts;

i) The Company states that it is not possible to ascertain whether there is animpairmentloss and make necessary provision in the accounts. We are of the opinion that the"value in use" has to be established, as the present cash flow from supply of waterdoes not meet the cost of operations and as there is no precedence of the transfer ofIrrigation Infrastructure in an arm's length transaction.

The non recognition of revenue due from KPTCL in the absence of an agreement.

The allocation of borr:owing costs to the qualifying assets as on date instead of tothe qualifying assets of the year in which the borrowings are made, is not inCompliance with Accounting Standard 16 on Borrowing cost issued under theCompanies (Accounting Standards) Rules, 2006.

4. Attention is also drawn tofollowing Notes to the Results:

a) Note 4(j) that provision towards gratutty and leave encashment made on estimated basis,the adequacy ofwhich could not be determined.

b) Note 4(k) that the depreciation based on useful ltfe of asset as per Schedule II of theCompanies Act, 2013 will be adhered to only while Jinalizing the accounts for the yearending 31.3.2015, the consequential effect ofwhich could not be ascertained.

QUALTFTED CONCLUSTON:

5. Based on our review, with the exception of the matters described in the precedingparagraphs 3 and 4, the effect of which could not be quantified, nothing has come toour attention that causes us to believe that the accompanying statement of unaudited

i)

k)

Also At:No.45, Medavakkam Tank Road, Kilapauk, chennai- 600 010. Ph.26419112,26421'972.

No.14lC" stn Main, Yadavgiri,'Mysore - S70 O2O. ph. 21'l1g2g,2S14ggO.No.106, 7'n 'A' Main, 3' Block, jayanagar, Bangalore-560 011. ph: 26550200