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Company Information

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Tata Power Company Ltd.

Oct 22, 02:25
219.60 -6.45 ( -2.85 %)
 
VOLUME : 6941082
Prev. Close 226.05
Open Price 228.75
TODAY'S LOW / HIGH
216.10
 
 
 
233.85
Bid PRICE (QTY.) 219.50 (3610)
Offer PRICE (Qty.) 219.60 (58)
52 WK LOW / HIGH
51.65
 
 
 
269.70
Oct 22, 01:59
219.00 -7.15 ( -3.16 %)
 
VOLUME : 62300162
Prev. Close 226.15
Open Price 228.50
TODAY'S LOW / HIGH
216.00
 
 
 
233.80
Bid PRICE (QTY.) 218.95 (4638)
Offer PRICE (Qty.) 219.00 (6996)
52 WK LOW / HIGH
51.65
 
 
 
267.85
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Market Cap. ( ₹ ) 69977.94 Cr. P/BV 3.36 Book Value ( ₹ ) 65.16
52 Week High/Low ( ₹ ) 268/52 FV/ML 1/1 P/E(X) 62.07
Bookclosure 05/07/2021 TTM EPS ( ₹ ) 4.11 Div Yield (%) 0.71
AUDITOR'S REPORT
You can view full text of the latest Director's Report for the company.
Year End :2021-03 

To the Members of

The Tata Power Company Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of The Tata Power Company Limited ("the Company"), which comprise the Balance sheet as at March 31, 2021, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone Ind AS financial statements, including a summary of 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 Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("the 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 March 31, 2021, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the 'Auditor's Responsibilities for the Audit of the Standalone Ind AS 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 Ind AS 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 audit opinion on the standalone Ind AS financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2021. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the 'Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements' section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.

Key audit matters

How our audit addressed the key audit matter

Management's assessment of appropriateness of Goina Concern assumption (as described in Note 42.4.3 of the standalone

Ind/AS financial statements)

The Company has current liabilities of Rs. 10,434.06 crores and current assets of Rs. 3,874.50 crores as at March 31, 2021.

Current liabilities exceed current assets as at the year end. Given the nature of its business i.e. contracted long term power supply agreements and a significant composition of cost plus contracts leading to significant stability of cashflows and profitability, management is confident of refinancing and consider the liquidity risk as low and accordingly, the Company uses significant short term borrowings to reduce its borrowing costs.

Management has made an assessment of the Company's ability to continue as a Going Concern as required by Ind AS 1 Presentation of Financial Statements considering all the available information and has concluded that the going concern basis of accounting is appropriate.

Going Concern assessment has been identified as a key audit matter considering the significant judgements and estimates involved in the assessment and its dependence upon management's ability to complete the planned divestments, raising long term capital and / or successful refinancing of certain current financial obligations.

Our procedures included the following:

• Obtained an understanding of the process and tested the internal controls associated with the management's assessment of Going Concern assumption.

• Discussed with management and assessed the assumptions, judgements and estimates used in developing business plan and cash flow projections having regards to past performance and current emerging business trends affecting the business and industry.

• Assessed the Company's ability to refinance its short term obligation based on the past trends, credit ratings, analysis of solvency and liquidity ratios and ability to generate cash flows and access to capital.

• Assessed the adequacy of the disclosures in the standalone Ind AS financial statements.

Revenue recognition and accrual of regulatory deferrals (as described in Note 19 and Note 30 of the standalone Ind AS

financial statements)

In the regulated generation, transmission and distribution business of the Company, the tariff is determined by the regulator on cost plus return on equity basis wherein the cost is subject to prudential norms. The Company invoices its customers on the basis of pre-approved tariff which is based on budget and is subject to true up.

The Company recognizes revenue as the amount invoiced to customers based on pre-approved tariff rates agreed with regulator. As the Company is entitled to a fixed return on equity, the difference between the revenue recognized and entitlement as per the regulation is recognized as regulatory assets / liabilities. The Company has recognized Rs. 1,148.45 crore for generation and transmission business and Rs. 573.60 crore for distribution business as accruals as at March 31,2021.

Accruals are determined based on tariff regulations and past tariff orders and are subject to verification and approval by the regulators. Further the costs incurred are subject to prudential checks and prescribed norms. Significant judgements are made in determining the accruals including interpretation of tariff regulations. Further certain disallowances of claims have been litigated by the Company which are in various stages of dispute.

Revenue recognition and accrual of regulatory deferrals is a key audit matter considering the significance of the amount and significant judgements involved in the determination.

Our procedures included the following:

• Read the Company's accounting policies with respect to accrual ofregulatory deferrals and assessed its compliance with Ind AS 114 "Regulatory Deferral Accounts" and Ind AS 115 "Revenue from Contract with Customers".

• Performed test of controls over revenue recognition and accrual of regulatory deferrals through inspection of evidence of performance of these controls.

• Performed substantive audit procedures including:

o Evaluated the key assumptions used by the Company by comparing it with prior years, past precedents and the opinion of management's expert.

o Considered the independence, objectivity and competence of management's expert.

o Assessed management's evaluation of the likely outcome of the key disputes based on past precedents and / or advice of management's expert.

o Assessed the impact recognized by the Company In respect of tariff orders received.

o Assessed the disclosures in accordance with the requirements of Ind AS 114 "Regulatory Deferral Accounts" and Ind AS 115 "Revenue from Contract with Customers".

Recognition and Measurement of Deferred Tax (as described in Note 35 of the standalone Ind AS financial statements)

The Company has recognized Minimum Alternate Tax (MAT)

Our procedures included the following:

credit receivable of Rs. 437.51 crores as at March 31, 2021.

• Read Company's accounting policies with respect

The Company also has recognized deferred tax assets of

to recognition and measurement of tax balances in

Rs. 492.56 crores on long term capital loss on sale of investments.

accordance with Ind AS 12 "Income Taxes"

• Performed test of controls over recognition and

Further, pursuant to the Taxation Laws (Amendment) Act, 2019

measurement of tax balances through inspection of

(new tax regime), the Company has measured its deferred tax balances expected to reverse after the likely transition to new

evidence of performance of these controls.

tax regime, at the rate specified in the new tax regime.

• Performed substantive audit procedures including: o Involved tax specialists who evaluated the

The recognition and measurement of MAT credit receivable

Company's tax positions basis the tax law and also

and deferred tax balances; is a key audit matter considering the significance of the amount, judgement involved in

by comparing it with prior years and past precedents

assessing the recoverability of such credits, estimation of

o Discussed the future business plans and financial

the financial projections for determination of the year of

projections with the management

transition to new tax regime and judgements involved in the

o Assessed the management's long-term financial

interpretation of tax regulations and tax positions adopted

projections and the key assumptions used in the

by the Company.

projections by comparing it to the approved business plan, projections used for estimation of likely year of transition to the new tax regime and projections used for impairment assessment where applicable.

• Assessed the disclosures in accordance with the requirements of Ind AS 12 "Income Taxes".

Impairment of assets (as described in Note 5 and Note 7 of the standalone Ind AS financial statements)

At the end of every reporting period, the Company assesses whether there is any indication that an asset or cash generating unit (CGU) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset or CGU.

Our procedures included the following:

• Read the Company's accounting policies with respect to impairment in accordance with Ind AS 36 "Impairment of assets"

The determination of recoverable amount, being the higher

• Performed test of controls over key financial controls

of fair value less costs to sell and value-in-use involves

related to accounting, valuation and recoverability of

significant estimates, assumptions and judgements of the

assets through inspection of evidence.

long-term financial projections.

• Performed substantive audit procedures including:

The Company is carrying impairment provision amounting to

o Obtained the management's impairment assessment

Rs. 3,555.00 crores with respect to Mundra CGU (comprising of investment in companies owning Mundra power plant,

o Evaluated the key assumptions including projected

coal mines and related infrastructure), Rs. 446.09 crores

generation, coal prices, exchange rate, energy

for investment in Company owning hydro power plant in

prices post power purchase agreement period and

Georgia and Rs. 100 crores with respect to a generating unit

weighted average cost of capital by comparing them

in Trombay. During the year, as the indication exists, the

with prior years and external data, where available.

Company has reassessed its impairment assessment with respect to the specified CGUs.

o Obtained and evaluated the sensitivity analysis

• Assessed the disclosures in accordance with the

Impairment of assets is a key audit matter considering the significance of the carrying value, estimations and the significant judgements involved in the impairment assessment.

requirements of Ind AS 36 "Impairment of assets".

Other Information

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 Ind AS 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 Ind AS 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 standalone Ind AS 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 Ind AS 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

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The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone Ind AS financial statements and our auditor's report thereon.

Our opinion on the standalone Ind AS 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 Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the standalone Ind AS 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.

Responsibilities of Management for the Standalone Ind AS Financial Statements

The 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity 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 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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 Ind AS 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 Ind AS 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 so.

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

Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

• Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS 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 Ind AS financial statements for the financial year ended March 31, 2021 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 of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. 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 Balance Sheet, the Statement of

Profit and Loss including the statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the

(e) On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 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 these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(g) In our opinion, the managerial remuneration for the year ended March 31, 2021 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;

(h) 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, as amended 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 on its financial position in its standalone Ind AS financial statements - Refer Note 38 to the standalone Ind AS 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 24 to the standalone Ind AS 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

For S R B C & CO LLP Chartered Accountants ICAI Firm Registration Number: 324982E/E300003

per Abhishek Agarwal Partner

Mumbai Membership Number: 112773

Date: May 12, 2021 UDIN: 21112773AAAADG2459