We have audited the accompanying Standalone Financial Statements of NHPC Limited ("the Company"), which
comprise the Standalone Balance Sheet as at 31 March 2026, 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 for the year then ended, and Notes to the Standalone Financial Statements, including a summary of material
accounting policies and other explanatory Information for the year ended on that date (hereinafter referred to as
"Standalone Financial Statements").
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 ("the Act") in the manner so required
and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the
Act ("Ind AS") and the accounting principles generally accepted in India, of the state of affairs of the Company as at 31
March 2026, and its profit and total comprehensive income, changes in equity and its cash flows for the year ended on
that date.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing (SAs)
specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the
"Auditors' 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 ("the
ICAI") 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 ICAI's Code of Ethics. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion on the Standalone 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 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. We have determined the matters described below to be the Key Audit Matters to
be communicated in our Report.
|
Sl. No.
|
Key Audit Matters
|
Addressing the Key Audit Matters
|
|
1.
|
Recognition and Measurement of revenue
from Sale of Power
The operating activities of the Company are
subject to cost-of-service regulations whereby the
tariff charged for electricity generated is based
on allowable capital, other costs, expenses and
stipulated return there against. The Company
invoices its customers on the basis of pre-approved/
provisional tariff which is subject to truing up.
Further, where revision in tariff due to revision in cost
estimates are pending, tariff is computed based on
the parameters and methods prescribed under the
CERC Tariff Regulations and an estimated amount of
revenue is recognised when an application is made
to the CERC after obtaining necessary approvals to
the extent it is highly probable that there will be no
downward adjustment to the revenue recognised.
The Company recognizes revenue as the amount
invoiced to customers based on pre-approved/
|
Our audit procedures based on which we arrived
at the conclusion regarding reasonableness of
Recognition and Measurement of revenue from Sale
of Power include the following:
• Understanding and testing the design and
operating effectiveness of controls as established
by the management for accrual of income and
determination of the amounts recoverable there
against.
• Obtaining and understanding of the amount
recoverable in terms of CERC Regulations
and assessing, testing and evaluating the
reasonableness thereof keeping in view the
significant judgements applied by the management
for such assessments.
• The above includes the evaluation of the CERC
guidelines and acceptance of the claim made by the
Company in the past and the trend of disallowances
on various count and adherences and compliances
thereof by the management and rationale for
assumptions taken under the given situation and
business environment.
|
|
Sl. No.
|
Key Audit Matters
|
Addressing the Key Audit Matters
|
| |
provisional tariff rates agreed with the regulator. As
the Company is entitled to a fixed return on equity,
the difference between the revenue recognized and
entitlement as per the regulations is recognized as
assets / liabilities.
The accruals made as above are vital and proprietary
to the business in which the Company is operating.
In absence of rate fixation, these are based on the
management's assumptions and estimates which
are subject to finalization of tariff by CERC and
commencement of operations of the Projects.
Refer Note no. 24.1 of the Standalone Financial
Statements.
|
• Reviewing the adequacy and reasonableness of
amounts recognised and measurement policies
followed by the Company in this respect and
adequacy of the disclosure made with respect to
the same in the Standalone Financial Statements
of the Company.
|
|
2.
|
Impairment Assessment of carrying amount of
Property, Plant and Equipment (PPE) and Capital
Work in Progress (CWIP)
Each of the Power Station/ Project has been
considered as Cash Generating Units (CGU) of
the Company and impairment indicators and
requirements thereof have been assessed with
respect to the Property, Plant and Equipment (PPE)
and Capital Work in Progress (CWIP).
This has been assessed as Key Audit Matter because
the useful life of Property, Plant and Equipment (PPE)
and Capital Work in Progress are based on a number
of factors including the effect of obsolescence,
demand and other economic factors. Further,
evaluation of the impairment involves assessment
of value in use of the Cash Generating Units
(CGUs) of the Company and requires significant
judgements and assumptions about the future
cash flow forecasts, forecast production, forecast
volumes, prices and discount rate.
Refer Note 34(18) of the Standalone Financial
Statements.
|
Our audit procedures based on which we arrived
at the conclusion regarding reasonableness of the
impairment assessment of carrying amount of PPE
and CWIP include the following:
• Critical evaluation of internal and external factors
impacting the entity and indicators of impairment
(or reversal thereof) in line with Ind AS 36.
• Review of impairment valuation models used
in relation to CGU to determine the recoverable
amount by analysing the key assumptions used
by management in this respect including:
- Consistency with respect to forecast for
arriving at the valuation and assessing the
potential impact of any variances;
- Price assumptions used in the models;
- Factoring of risk inherent to the CGUs in the
Cash Flow projections or the discount rate;
- The assumption/estimation for the weighted
average cost of capital and rate of discount
for arriving at the value in use.
• Reviewed the Government policy and approval
for setting up the Projects, decision of the Board
of Directors and the efforts and steps being
undertaken in this respect.
• Reliance has been placed on management
projections for completion timeline, volume
of generation and resultant revenue based on
expected tariff there against.
• Evaluation of adequacy and appropriateness of
disclosures made in the Standalone Financial
Statements.
|
|
Sl. No.
|
Key Audit Matters
|
Addressing the Key Audit Matters
|
|
3.
|
Contingent Liabilities - against claim from
Contractors
There are number of litigations/claims/arbitration
cases pending before various forums against the
Company in which the management's judgement is
required for estimating the amount to be disclosed
as contingent.
We have identified this as a key audit matter
because claims made against the Company are
significant and these are pending for decision
before arbitration, or other judicial forums and
consequential and possible impact and disclosures
involve a significant degree of management
judgement in interpreting the cases and it may be
subject to management assessment.
Refer Note 34(1 )(a)(i) of Standalone Financial
Statements.
|
Our audit procedures based on which we arrived
at the conclusion regarding reasonableness of the
Contingent Liabilities include the following:
• Obtained the status of the cases from the legal
department and their view on the matter.
• Evaluated the contractual terms and conditions
and management's rationale for the adequacy
of the provision so far made and the amount
remaining unprovided against the demands
made against the Company.
• Discussion with management and perusing/
reviewing the correspondences, Memos and
Notes on related matters.
• Reliance has been placed on the legal views and
decisions on similar matters and probability of
the liability arising therefrom and provision made
by the Management pending final judgement/
decisions.
• Reviewed the appropriateness and adequacy of
the disclosure and provision by the management
as required in terms of the requirement of Ind
AS 37 "Provisions, Contingent Liabilities and
Contingent Assets".
|
|
4.
|
Recognition of MAT Credit and Regulatory
Deferral (Credit) balances
During the current Financial Year, the Company has
assessed the recoverability of unrecognised MAT
Credit available to it.
The company has recognised deferred tax asset
relating to MAT credit entitlement. Utilisation of
MAT credit will result in lower outflow of Income
Tax in future years and accordingly Regulatory
Deferral Liability attributable to the said MAT credit
entitlement has also been recognised, payable to
the beneficiaries in subsequent periods as per CERC
Tariff Regulations. The recoverability of this deferred
tax asset relating to MAT credit entitlement is
dependent upon the generation of sufficient future
taxable profits to utilise such entitlement prescribed
under the Income Tax Act, 2025.
We identified this as a key audit matter because
of its materiality and requirement of judgement in
forecasting future taxable profits for recognition
of MAT credit entitlement considering the
recoverability of such tax credits as per the
provisions of the Income Tax Act, 2025.
Refer Note No. 14.2, 18, 30.1, 31, 34(22) (E) read
with Material Accounting Policy No. 20.0(b) of the
Standalone Financial Statements.
|
Our audit procedures based on which we arrived
at the conclusion regarding appropriateness of
MAT Credit recognized and Regulatory Deferral
(Credit) balances created there against include the
following:
• Understanding and testing the operating
effectiveness of the Company's control relating
to taxation and assessment of carrying amount of
deferred tax assets/ liabilities.
• Review of the Company's accounting policy in
respect of deferred tax assets on unutilized MAT
credit and current year developments, if any,
requiring change in such policy and management
contention on the same.
• Evaluation of tax credit entitlement as legally
available to the Company based on internal
forecasts prepared by the Company and
probability of future taxable income.
• Review of underlying assumptions for consistency
and uncertainty involved and principle of
prudence for arriving at a reasonable degree of
probability of utilisation of MAT Credit recognized.
• Review of implication pertaining to regulatory
regime under which the Company operates and
estimations prepared by the Company regarding
MAT Credit arising out of generation activity to be
passed on to beneficiaries and impact thereof on
the Standalone Financial Statements under the
given current Regulatory provisions and period of
applicability thereof.
|
|
Sl. No.
|
Key Audit Matters
|
Addressing the Key Audit Matters
|
| |
|
• Evaluation of adequacy and appropriateness of
disclosures made in the Standalone Financial
Statements.
|
Information Other than the Standalone Financial Statements and Auditors' Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises
the information included in the Directors' Report and its Annexures, Report on Corporate Governance, Business
Responsibility and Sustainability Report included in the Annual Report but does not include the Standalone Financial
Statements and our auditors' report thereon. The other information as stated above is expected to be made available
to us after the date of this auditors' report.
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
identified above when it becomes available, and, in doing so, consider whether the other information is materially
inconsistent with the Standalone Financial Statements or our knowledge obtained during our audit or otherwise
appears to be materially misstated.
When we read the other information as stated above, if we conclude that there is a material misstatement therein,
we are required to communicate the matter to those charged with governance and shall comply with the relevant
applicable requirement of SA 720 (Revised), 'The Auditor's Responsibilities Relating to Other Information'.
Responsibilities of Management and Those Charged with Governance for the Standalone 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 Financial Statements that give a true and fair view of the financial position,
financial performance, (including 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
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 the 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 the Board of Directors either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditors' 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 auditors' 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 scepticism
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 financial controls 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
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 the management and the Board of Directors 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 Auditors' 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 auditors' 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 financial controls 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 Auditors' 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.
Other Matters
The comparative financial information of the Company has been reclassified due to certain items of financial statements
reclassification as stated in Note 35 of the Standalone Financial Statements.
Our opinion on the Standalone Financial Statements is not modified in respect of above matter on comparative
financial information.
Report on Other Legal and Regulatory Requirements
i. As required by the Companies (Auditor's Report) Order, 2020 ("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 A" a statement on
the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
ii. Based on the verification of books of account of the Company and according to information and explanations
given to us, we give below a report on the Directions and Sub-Directions issued by the Comptroller and
Auditor General of India in terms of Section 143 (5) of the Act, refer to our separate Report in "Annexure B".
iii. As required by Section 143(3) of the Act, we report to the extent applicable 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 purpose 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 Other Comprehensive Income), the
Statement of Changes in Equity and the 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 Indian Accounting
Standards specified under Section 133 of the Act.
e) in terms of Notification no. G.S.R. 463 (E) dated 05 June 2015 issued by the Ministry of Corporate Affairs,
provisions of Section 164(2) of the Act regarding disqualifications of the Directors, are not applicable
as it is a Government Company.
f) With respect to the adequacy of the internal financial controls with reference to Standalone Financial
Statements of the Company and the operating effectiveness of such controls, refer to our separate
Report in "Annexure C".
g) As per notification number G.S.R. 463 (E) dated 5 June 2015 issued by Ministry of Corporate Affairs,
section 197 of the Act as regards the managerial remuneration is not applicable to the Company, since
it is a Government Company.
h) With respect to the other matters to be included in the Auditors' 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 Financial Statements - Refer Note 34(1) 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.
iii. There has been no delay in transferring amounts, required to be transferred to the Investor
Education and Protection Fund by the Company.
iv.
a. The management has represented that, to the best of its knowledge and belief, no funds have
been advanced or loaned or invested (either from borrowed funds or share premium or any other
sources or kind of funds) by the Company to or in any other persons or entities, including foreign
entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that
the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in
any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any
guarantee, security or the like on behalf of the Ultimate Beneficiaries.
b. The management has represented, that, to the best of its knowledge and belief, no funds have been
received by the Company from any persons or entities, including foreign entities ("Funding Parties"),
with the understanding, whether recorded in writing or otherwise, that the Company shall, directly
or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.
c. Based on the audit procedures performed that have been considered reasonable and appropriate in the
circumstances, nothing has come to our notice that has caused us to believe that the representations
under sub clause (i) and (ii) of Rule 11 (e) as provided under (a) and (b) above, contain any material
misstatement.
v. a. The final dividend proposed for the previous year, declared and paid by the Company during the year
is in accordance with Section 123 of the Act, as applicable.
b. The interim dividend declared and paid by the Company during the year is in accordance with Section
123 of the Act.
c. As stated in note 33(3)(c) to the Standalone Financial Statements, the Board of Directors of the
Company has proposed final dividend for the year which is subject to the approval of the members at
the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with Section
123 of the Act to the extent it applies to declaration of dividend.
vi. Based on our examination which included test checks, the Company has used an accounting software for
maintaining its books of account for the financial year ended 31 March 2026, which has a feature of recording
audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions
recorded in the software. Further, during the course of our audit we did not come across any instance of
audit trail feature being tampered with. . ^ .
Additionally, the audit trail has been preserved by the Company as per the statutory requirements for record
retention.
For S N Dhawan & CO LLP For S. Jaykishan For Dharam Raj & CO
Chartered Accountants Chartered Accountants Chartered Accountants
FRN: 000050N/N500045 FRN:309005E FRN: 014461N
(Mukesh Bansal) (Ritesh Agarwal) (Dharam Raj)
Partner Partner Partner
Membership No.505269 Membership No. 062410 Membership No. 094108
UDIN:26505269FFIOZR4910 UDIN:26062410NGHFGC8059 UDIN:26094108XYWQSC4550
Place: Faridabad
Date: 15 May, 2026
|