Independent Auditor's Report to the Program Financial Statements for the period 01.04.2017 to 31.03.2019 for Energy Efficiency Scale Up Program under Loan No. 8857- IN To, Mr. Saurabh Kumar, Managing Director, Energy Efficiency Services Limited, 5th& 6th Floor, Core - 3, Scope Complex, Lodhi Road, New Delhi 110003. Report on the Audit of the Program Financial Statements Opinion We have audited the accompanying special purpose financial statements Energy Efficiency Scale Up Program financed by the International Bank for Reconstruction and Development (IBRD) under Loan No. 8857-IN and implemented by Energy Efficiency Services Limited. These financial statements comprise of Statement and Applications of Funds and notes to thes financial statements, including a summary of significant accounting policies (collectively referred to as the "Program Financial Statements"). In our opinion, the aforesaid special purpose Program Financial Statements (PFS) give a true and fair view of the receipts and disbursements of the Program for the year ended March 31, 2019 and the expenditure of the Program for the year ended March 31, 2019, in accordance with the financial reporting provisions of Section 5.09 of the General Conditions of the World Bank read with the Loan No. 8857-IN dated 28th August, 2018 described in the Financial Statements. Basis for Opinion We conducted our audit in accordance with the Standards on Auditing issued by Institute of Chartered Accountants of India (ICAI). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the implementing agency in accordance, with the ICAI's Code of Ethics for undertaking this assignment and we have fulfilled our ethical responsibilities in accordance with 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. Emphasis of Matter The PFS is prepared to assist the Energy Efficiency Services Limited to meet the financial reporting requirements of the Program Loan Agreement for Energy Efficiency Scale Up Program dated August 28, 2018 in respect of preparation of the Program Head Office: E-149, Opp. Sainik Vihar Gate No.1, Rishi Nagar, Rani Bagh, New Delhi-110034 Ph.: 011-47014141, Mobile: 9810189050, 9899812155 Email:- gulshan@vpgs.in / mohit@vpgs.in Website : www.vpgs.in co Financial Statements in a manner to reflect the operations, resources and expenditures related to the Program. As a result, these special purpose financial statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter. Responsibilities of Management and those charged with Governance for the Program Financial Statements The Management of the implementing agency is responsible for the preparation and fair presentation of the Program Financial Statements in accordance with the financial reporting framework and for such internal control as management determines is necessary to enable the preparation of Program Financial Statements that are free from material misstatement, whether due to fraud or error. The Management and those charged with governance are responsible for overseeing the implementing agency's financial reporting process. Auditor's Responsibilities for the Audit of the Program Financial Statements Our objectives are to obtain reasonable assurance about whether the Program 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 the Standards of Aqditing 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 financial statements. As part of an audit in accordance with Standard of Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * identify and assess the risks of material misstatement of the Program 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. * evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management * evaluate the overall presentation, structure and content of the Program Financial Statements, including the disclosures and whether these financial statements present the Program's operations and underlying transactions and events in a manner that achieves fair presentation in accordance with the financial reporting provisions described in Annexure-2 to the Program Financial Statements. * 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. * 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. Other Matter The implementing agency Energy Efficiency Services Limited has prepared a separate set of entity financial statements for the year ended March 31, 2019 on which KK Soni & Co. have issued a separate auditor's report to the Shareholders dated 27th May 2019 and expressed a modified audit opinion. Report on Other Legal and Regulatory Requirements Further to our opinion on the Program Financial Statements we further report that: a. Program Expenditure reflected in the PFS has been exclusively financed through sources as detailed in the AFS and no other sources of funds were used. b. Program expenditure is in accordance with the financing agreement and necessary documents, records, and accounts have been kept in support thereof. c. Contracts of values higher than the stipulated thresholds have been excluded from Program Expenditure. d. Program funds were utilized for the purposes for which they were intended. e. That the PFS are in agreement with the books of account; and clear linkage exists between the books of account and the PFS. f. Accounting and internal control systems including internal audit underlying the Program were adequate and maintained throughout the audit period. 0o g. Procurements made by EESL under the program had been undertaken in accordance with agreed procedures. For V P G S & Co Chartered Accountants FRN No. 507971C (GuPshan Gaba) Partner Membership No. 088726 Place: New Delhi Date: 24.01.2020 UDIN:- 20088726AAAAAJ4861 Energy Efficiency Services Limited JV ofPSU's of Ministry of Power, Govermment of India Ener-gY EfficIenCY SUale Up Program IWR) Loan Number 8857-IN NOTES TO TIE FINANCIAL STATEMENTS FOR THE PERIOD 01.04.2017 TO 31.03.2019 . PROJECT NATURE AN) ACTIVIIES 1.1 In order to develop a viable ESCO industry, Ministry ofl Power has set up Energy Efficiency Services Limited (hereinafter referred to as 'EESL' or 'Company'), a Joint Venture of NTPC Limited, Power Finance Corporation, Rural Electrification Corporation Limited arid Power Grid to facilitate implementation of energy officiency projects. 1ESL vorks as Energy Saving Company (ESCO)O as Consultancy Organization for Clean Development Mechanism, as a Resource Centre for capacity building of State Development Authorities (SDAs), financial institutions, etc. It is registered under the companies Act, 1956 on 10 December 2009. It is the first such company exclusively for implementation of energy cfficiency in South Asia and amongst a very few such instances in the world. 1.2 EESL has availed a line of credit of UDS 220 million for Energy Efficiency Scale Up Program under PforR (Loan No.8857-1N).The objectives of the Program are to scale up energy savings in residential and public.sectors, strengthen the Borrower's institutional capacity, and enhance its access to commercial financing. The Program consists of the following activities in the Borrower's overall corporate investments program: L Energy Savings and EE Alarket Transformalion in Ihe Residential Sector: Scaling-up the EE delivery in the residential sector under the UJALA Program, focusing on LED bulbs, tube lights and ceiling fans. I. Energy Savings and EE Markef Transformation in Public Street Lighting. Providing the financing necessary for investments. in public street lighting, under the SLNP Program. 1. Development ofSustainable Business Afodels in new E Market Segments: Supporting up-stream program development and incorporation of technical, environmental and social sustainability elements into the design of the new initiatives, such as air-conditioning, agriculture demand side management and Building EE Program, which require additional preparatory work to ensure sustainable scale-up. I. Institutional Strengthening fir Sutainable AE Scale- Up.: Strengthening and developing the institution capacities of the Borrower, especially with respect to technical, managerial, procurement, environmental and social capacity and practices. yPGs~ 0 b a n Scanned by CamScanner 2. STATEMENT OF COMPLIANCE 2.1 The company has followed the generally accepted accounting principle in India and complied with the mandatory accounting standards notified under the relevant provisions of the Companies Act 2013. 2.2 Contracts of values higher than the stipulated thresholds have been excluded from Program Expenditure. 2.3 Program fiunds were utilized for the purposes for which they were intended. 3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Financial Statements This comprises of the Statement of Program Financial Statements and related notes to the financial statements. 3.2 Basis ofmcasurement. Financial statements have been prepared uider the historical cost convention and in accrual basis of accounting. 3.3 Changes in Accounting policies Therc were no significant change in accounting policies. 3.4 Disbursement IBRD disburses the Loan under PforR. The IBRD Loan proceeds are disbursed on achievement of the six DLls (Disbursement Linked Indicator), and are disbursed over a period between 2018 to 2022. Disbursements are made after verification by the Independent Verification Agency (IVA). Application for withdrawal are sent to the World Bank after EEISL is notified in writing by the Bank that the Bank has accepted evidence of achievement of the DLRs. 4. FUNDS RECEIVED FROM GOVEIRNMENT As at 31.03.2019, EESL has not received any Iunds from Government. All the counterpart funds are arranged by EESL through Debt and Equity. 5. DATE OF AUTHORIZATION These financial statements have been authorized for issue by the Mohit Khatri S Gopal GM (Finance) Dire or (Commercial) Date: 24h January, 2020 NEWDELHI O'Acco' INn Scanned by CamScanner 引 Scanned by Camscanner