annual report 2010-2011 - Mahagenco

Annual Report 2010-2011
Annexure
Annexure Referred to in paragraph 3 of our report of even date
1a. The Fixed assets of the Company were physically verified during the year by the management with the help
of an external firm of Chartered Accountants. Based on its report necessary adjustments have been made
in the books of account at Head Office. However, exercise of updating the fixed assets register at respective
locations is still in progress.
1b. As informed to us, the Company has a policy of conducting Physical verification of fixed assets once in
three years, which in our opinion is reasonable and commensurate with the size of the Company and the
nature of its business. As stated at Para 1a above, the Company has carried out physical verification of
fixed assets during the year.
1c. During the year under audit, the Company has not disposed off a substantial part of the fixed assets.
2a. The physical verification of inventory has been conducted at reasonable intervals by the management.
2b. In our opinion and according to the information and explanations given to us, the procedures of physical
verification of inventories followed by the management are reasonable and adequate in relation to the size
of the company and the nature of its business.
2c. On the basis of our examination of the records of inventory and the reports of physical verification, we
are of the opinion that the Company is maintaining proper records of inventory. No material discrepancies
other than in respect of coal were observed. The discrepancies observed in respect of coal were adjusted
appropriately in the accounts.
3a. As per the information and explanations given to us, the Company has not granted any loans to companies,
firms and other parties covered in the Register maintained under section 301 of the Companies Act, 1956
during the year. Hence the question of reporting under sub-clause a to d of clause (iii) of paragraph 4 of
the aforesaid Order does not arise.
Maharashtra State Power Generation Co. Ltd.
3b. As per the information and explanations given to us, the Company has not taken any loans, secured or
unsecured, from companies, firms and other parties covered in the Register maintained under Section 301
of the Companies Act, 1956. Hence the question of reporting under sub-clause e to g of clause (iii) of
paragraph 4 of the aforesaid Order does not arise.
4. In our opinion and according to the information and explanations given to us, there is an adequate internal
control system commensurate with the size of the Company and the nature of its business, for the purchase
of inventory and fixed assets and for the sale of goods and services. However there is a scope to strengthen
the internal controls in relation to the purchase of inventory and fixed assets. Further, we have observed
weaknesses in internal controls in compiling and maintaining the party-wise and age-wise details of various
current liabilities and current assets. As regards the purchase of Coal, we have been informed that few
grievances were received by the management connected with the sub-standard/inferior quality of coal
supplied to the Company. The management is of the view that the internal controls for the purchase of coal
need to be reviewed and strengthened further. Therefore, based on such complaints and to strengthen the
internal controls, the management has inter-alia appointed a third party inspection agency to check the
quality of coal supplied to the Company. Pending report of such agency, at this stage, it is not possible to
comment whether steps taken by the management are adequate to strengthen the weakness in the system.
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