ANNUAL Report 2016-17 - nhai.gov.in · 9.6 Project Management Information System: Project Monitoring Information System (PMIS) has been developed in-house in National Highways Authority

ANNUAL ReportANNUAL Report

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NATIONAL HIGHWAYS AUTHORITY OF INDIAMinistry of Road Transport & Highways

www.nhai.org

Tada to Nellore, NH-16

Elevated Flyover in Nashik-Pimpalgaon-Nashik-Gonde Section of NH-3

ANNUAL ReportANNUAL Report

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www.nhai.org

Sl. No. Particulars Page No.

1. Chairman’s Report 3

2. Indian Economy 4

3. Infrastructure Sector in India 4

4. Road Sector 5

5. National Highways Development Project 6

6. Operational Performance of NHAI 7

7. Sources of Funds 8

8. Credit Rating 8

9. Management Initiatives 9

10. Challenges 12

11. Removal of Impediments 14

12. Implementation of the Official Language Policy of the Government 16

13. Welfare Activities undertaken by the Authority 17

14. Audit 17

1) Audit Report and Audited annual statement of Accounts for F.Y. 2016-17

2) Management Replies on the Comments on Accounts

CONTENTS

To meet the Nation’s need for the provision and maintenance

of National Highways network to global standards and to

meet the user’s expectations in the most time bound and cost

effective manner, within the strategic policy framework set by

the Government of India and thus promote economic

well-being and quality of life of the people.

• To develop, maintain and manage National Highways

vested in it by the Central Government.

• To regulate and control the plying of vehicles on National

Highways for its proper management.

• To develop and provide consultancy and construction

services in India and abroad, and carry out research

activities in relation to the development, maintenance and

management of highways or any other facilities thereat.

• To advise the Central Government on matters relating to

highways.

• To assist, on such terms and conditions as may be

mutually agreed upon, any State Government in the

formulation and implementation of schemes for highway

development.

Members of Authority (As on 31.03.2017)

Full-time Members

Part-time Members

Head Office

Bankers

Special Purpose Vehicles (SPVs) of NHAI:

Associate Company

Auditor

Chairman Shri Yudhvir Singh Malik

Member (Administration)

Member (Finance)

Member (PPP) Shri Niraj Verma

Member (Projects) Shri R. K. Pandey

Member (Projects)

Member (Technical) Shri D.O. Tawade

Secretary, Department of Expenditure,

Ministry of Finance

Secretary, Deptt of Economic Affairs,

Ministry of Finance

Secretary (RT&H), MoRT&H Shri Sanjay Mitra

Director General (RD) & SS, MoRT&H Shri S. K. Das

National Highways Authority of India

G-5 & 6, Sector-10, Dwarka, New Delhi-110075

Tel: +91-11-25074200, Fax: +91-11-25093507/25093514

Email: [email protected]

Website: www.nhai.org

Canara Bank

State Bank of India

Syndicate Bank

1. Mumbai-JNPT Port Road Company Limited

2. Mormugao Port Road Company Limited

3. New Mangalore Port Road Company Limited

4. Cochin Port Road Company Limited

5. Calcatta-Haldia Port Road Company Limited

6. Paradip Port Road Company Limited

7. Vishakhapatnam Port Road Company Limited

8. Chennai Ennore Port Road Company Limited

9. Turicorin Port Road Company Limited

10. Moradabad Toll Road Company Limited

11. Ahmedabad Vadodara Expressway Company Limited

Indian Highway Management Company Limited

Comptroller and Auditor General of India (C&AG)

Smt Veena Ish

Shri Rohit Kumar Singh

Shri Anand Kumar Singh

Shri Ashok Lavasa

Shri Shaktikanta Das

G-5&6, Sector-10, Dwarka, New Delhi-110075

REFERENCE INFORMATION

The National Highways Authority of India (NHAI) plays a key role in the economic and infrastructural

development of the country in the process creating a foundation for rapid and sustained growth in the

coming times. What is most satisfying for NHAI is not the construction of roads but the prosperity it

brings by connecting regions, bringing goods and consumers closer, and truly, NHAI’s impact extends

beyond just what is plainly visible in its achievements.

l The Ministry of Road Transport and Highways, Government of India, is the nodal ministry for

development and maintenance of the National Highways (NHs) across the country. The NH projects

initially used to be got executed through the State PWDs alone with establishment of dedicated

National Highway wings within the state works Departments. Over time, as the network of National

Highways expanded, the NHAI was established primarily as a project execution arm of the Ministry. As

on today, almost all the four-lane, six-lane and eight –lane projects are being executed through the

NHAI though its continues to execute some of two-lane projects as well. Bulk of the two-lane (with

paved shoulders) projects continue to be executed by the Ministry through the state agencies.

National Highways Authority of India (NHAI) has been set up by an Act of the Parliament viz. The

National Highways Authority of India Act, 1988. It has been entrusted with the National Highways

Development Project, along with other projects (Special Accelerated Road Development Plan –North

East & Special Projects in Madhya Pradesh, Maharashtra, Tamil Nadu and West Bengal). This brings

under its purview 48789 kms of National Highways as on 31.03.2017.

National Highways (NH) traverse the length and width of the country connecting the National and

State capitals, major ports and rail junctions and link up with border roads and foreign highways and

serve as arterial roads for movement of passengers and goods. The total length of NH (including

expressways) in the country is 115,235 kms. While National Highways constitute only about 2% of the

length of the country’s road network, they carry about 40% of the road traffic.

As on March 31, 2017, out of the total 55,886 Km (7097Km with Ministry of Road Transport &

Highways) of National Highways that are planned to be developed and upgraded by NHAI, 39,581 Km

of National Highways contracts have been awarded. Out of this 28,479 Km have been completed and

work on 11,102 Km is in progress. Projects with a length of 9,208 Km are yet to be awarded for which

the project preparations are in progress.

Highlights of Financial performance for 2016-17:

Background:

l

l

l

l

1. Chairman's Report:

(Rs. in crores)

Receipts of Cess 15,420.00 2,326.50

Toll Plough Back 6,500.00 7,500.00

Additional budgetary support 370.27 5,649.02

Capital Gain Tax exemption bonds 4,281.17 5,572.74

Other Bonds 19,000.00 27,545.00

Decrease in cash - -

Other Inflows 1,186.50 1900.25

Total 46,757.94 50,493.51

Sources of Funds 2015-16 2016-17

2016-17Annual Report

3


4

Application of Funds 2015-16 2016-17

Land Acquisition 21,933.85 17,823.16

Project Expenditure 12,573.16 20,843.15

Repayment of Loans 5,129.77 7,010.29

Increase in Cash 4,068.45 1,636.00

Other outflows 3,052.71 3,180.91

Total 46,757.94 50,493.51

(Rs. in crores)

Source: Annual Report of Ministry of Statistics and Programme Implementation (MOSPI), GOI, F.Y. 2016-17

2. Indian Economy

3. Infrastructure Sector in India

2.1 The Indian economy is the third largest economy of the world in terms of Purchasing Power

Parity (PPP). The economy appears to be recovering due to a stable macro-economic outlook,

gathering pace of reforms and a friendly external environment that has resulted in the country

becoming a cynosure of eager investors.

2.2 According to the latest estimates of Gross Domestic Product (GDP) released by Central

Statistical Organisation, the Indian economy is certainly getting back to a higher growth path.

Real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in the year 2016-17 is

likely to attain a level of 121.65 lakh crore INR, with growth rate of 7.1 percent over the GDP for

the year 2015-16 of 113.58 lakh crore INR. Nominal GDP or GDP at current prices in the year

2016-17 is projected at Rs. 152.51 lakh crore, with growth rate of 11.5 percent against

Rs. 136.75 lakh crore for 2015-16.

3.1 The availability of efficient infrastructure services is an important determinant of the pace of

market development and output growth. Historically, the infrastructure sector has been one of

the key drivers of growth of the Indian economy and has shown positive growth in the current

reporting year as well. Development of the infrastructure sector has been a priority area for the

government and has witnessed enhanced public investment. Many reforms have been initiated

in the infrastructure sector, resulting in robust growth in most of the sectors. st3.2 As per Ministry records, as on 1 October 2016, 1174 projects with an anticipated cost of

Rs 16,16,457.43 crore were on the monitor of the Ministry. The sector wise break up of these

1174 projects is shown in the figure below:

Road Transport & Highways

Atomic Energy

Coal

Steel

Others

Civil Aviation

Power

Shipping & Ports

Health & Family welfare

Railways

Telecommunications

Petroleum

Urban development

Project Implementation during 2016-17


5

3.3 As shown in the figure above, approximately 36.71% of total projects under implementation

during FY 2016-17 pertained to Road Transport & Highways. These projects are being handled

by the Ministry of Road Transport and Highways (Roads Wing), National Highways Authority of

India (NHAI), State PWDs, and Border Roads Organization (BRO) and the National Highways &

Infrastructure Development Corporation Limited (NHIDCL).

3.4 Considering India’s growth and the government's focus on infrastructure development, all

infrastructure sectors including roads, railways, ports, airports and power are marked for

massive capacity expansion in the near future. This presents a great opportunity for all

stakeholders such as developers, financial institutions and suppliers to invest in this Sector.

4.1 Road transport is considered to be one of the most cost effective and preferred modes of

transport, both for freight and passengers, keeping in view its level of penetration and last mile

connectivity in populated areas. A good road network is vital to the economic development and

social integration of the country. It provides connectivity to remote areas, accessibility to

markets, schools, and hospitals; and opens up backward regions to trade and investment.

Roads also play an important role in inter-modal transport development, establishing links with

airports, railway stations, and ports.

nd4.2 India has the 2 largest road network in the world with over 5.23 million km at present,

consisting of National Highways, Expressways, State Highways, Major District Roads, Other

District Roads and Village Roads with the following length distribution:

4. Road Sector

4.3 The National Highways facilitate medium and long distance inter-city passenger and freight

traffic across the country. The State Highways are intended to carry the traffic along major

centres within the State. Other District Roads and Village Roads provide accessibility to the

towns and villages to meet their social needs as also the means to transport agriculture produce

from villages to nearby markets. Major District Roads provide the secondary function of linkage

between main roads and rural roads.

Source: Ministry of Road Transport & Highways (2015-16)

1433577

154522

2577396

115435

3000000

2500000

2000000

1000000

1500000

500000

0National

Highways/Expressways

State Highways Major & OtherDistrict Roads

Rural Roads

Kilometres

Kilometres as on 31.3.17


6

4.4 National Highways also form the economic backbone of the country and have often facilitated

development along their routes with many new towns developing alongside the major highways.

It also contributes to generating long-term employment through a large number of small

restaurants, inns (known as dhabas) and other amenities along their length.

The National Highways have a total length of 115435 km to serve as the arterial network of the

country. The development of National Highways is the responsibility of the Government of India. The

Government of India has launched major initiatives to upgrade and strengthen National Highways

through various phases of National Highways Development project (NHDP), which are briefly as

under:

5. National Highways Development Project (NHDP)

Phase-I

(GQ, NS-EW corridors,

Port connectivity &

others)

Phase-II

(4/6-laning North

South- East West

Corridor, Others)

Phase-III

(Phase III A + III B)

Upgradation,

4/6-laning

Phase-IV

(2 - laning with paved

shoulders)

Phase-V

(6-laning of GQ and

High density corridor)

Phase-VI

(Expressways) 1000 02.11.2006 16,680 NIL 184 816 9

Phase-VII

(Ring Roads, Bypasses

and flyovers and other

structures)

Phases Total

Length Approval Cost in Completed under awarded Projects

in km Rs Crore in km Imp. UI

Date of Approved Length Length To be No. of

7,522* 12.12.2000 30,300 7521 1 - 1

6,647 18.12.2003 34,339 6058 315 274 29

12,109** - 80,626 7507 2357 1945 72

11,809

20,000*** July -2008 27,800 3773 6373 3057 105

for 5000 km

13,203

6,500 July -2008 27,800 2544 1424 2532 32

for 5000 km

700 km of 06.12.2007 16,680 22 94 584 4

ring roads

/bypass +

flyovers

*Chennai – Ennore port connectivity two projects ( 24 km ) has been re-awarded, these two projects was merged to another

projects ( 6 km ) under Phase – I . Total length increased by 24 km.

**11809 km was assigned to NHAI remaining 300 km with MoRT&H

*** 13203 km was assigned to NHAI remaining 6797 km with MoRT&H.


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6. Operational Performance of NHAI

6.1 Progress of the NHDP and other projects:

(i) The NHAI has constructed 2628 Km of National Highways and awarded contracts for 76

Projects aggregating to a length of 4335 Km costing about Rs. 60915 crores during the

current financial year 2016-17;

(ii) The progress of the NHDP and other projects, as on 31.03.2017, is as follows:

Golden Quadrilateral 5,846 5,846 0 0

North-South & East-West 7,142* 6,563 305 274

Port Connectivity & Other projects 2,479 2,117 362 0

NHDP Phase III 12,109** 7,507 2,357 1,945

NHDP Phase IV 20,000*** 3,773 6,373 3,057

NHDP Phase V 6,500 2,544 1,424 2,532

NHDP Phase VI 1,000 0 184 816

NHDP Phase VII 700 22 94 584

SARDP-NE 110 107 3 0

Total 55,886 28,479 11,102 9,208

Phase Total length 4/6 laningcompleted implementation award

Under Balance for

* The original approved length of Corridors is 7300 km. The variation in the actual length of 7142 km from the original

approved length of 7300 km is mainly on account of variation in the design length after preparation of DPRs.

** 11,809 Km is assigned to NHAI.

*** 13,203 Km is assigned to NHAI.

6.2 Project Award & Completion:

6.3 Land Acquisition Status:

Sr. No. Achievements 2013-14 2014-15 2015-16 2016-17

1 Land notified u/s 3 D (Ha) 12,336 6,719 6,432 8,303

2 Possession (Ha) 8,465 6,733 9,285 7,491

3 Expenditure on LA (Rs. in Cr) 7793.55 9,097.88 21933.85 17,823.16

2006-07 1730 636

2007-08 1234 1684

2008-09 643 2205

2009-10 3359 2693

2010-11 5058 1783

2011-12 6491 2248

2012-13 1116 2844

2013-14 1435 1901

2014-15 3067 1501

2015-16 4344 1988

2016-17 4335 2628

Financial Year Length Awarded Length Completed

(Length in kms)


8

6.4 Collection of user fee:

6.4.1 User fee (Toll) on 9,538 km length/ sections completed on Public Funded/ BOT

(Annuity) mode involving 170 user fee plazas is being collected through following two

methods:-

6.4.1.1 OMT Contracts: In this method, the agency selected through competitive bidding is

responsible for operation, maintenance and collection of Toll/ User Fee for the stretch,

with a right to retain the toll collected against payment of a fixed sum to NHAI over a

fixed concession period. 2,667 km (comprising of 47 user fee plazas) have already

been handed over to OMT Concessionaires.

6.4.1.2 One Year Contracts based on e-bids: In this method, toll is collected and retained by

the successful bidder (contractor), selected through competitive e-bidding, against

payment of a fixed sum to NHAI on weekly basis for a period of one year.

6.4.2 During the year 2016-17, 1,412 km (Public Funded: 697 km and BOT (Toll): 715 km)

of completed National Highway sections have been added for tolling. The total length

under tolling is 20,070 km. [Public funded 9,538 km; and BOT (Toll) 10,532 km].

7.1 NHAI receives its funding through:

(i) Government support in the form of capital base, cess fund, additional budgetary support,

capital grant, maintenance grant, ploughing back of toll revenue;

(ii) Loan from multilateral agencies, and

(iii) Market borrowings.

7.2 The sources of Funds during the year 2016-17 are as under:

(i) A sum of Rs. 2,326.50 crores was received by NHAI from Ministry of Road Transport &

Highways through Union Budget in the form of Cess Fund for Capital Investment in

National Highways from Central Road Fund. In addition, Rs. 5,649.02 crores was received

for development of other special Projects.

(ii) NHAI has raised Rs. 5,572.74 crores by way of issue of Capital Gain Tax-free Bonds under

Section 54-EC of the Income Tax Act, 1961, apart from raising Rs. 27,545 crores from

Taxable Bonds.

(iii) NHAI has deposited a total amount of Rs. 7,077.52 crores in Consolidated Fund of India

(CFI) during 2016-17 towards User Fee collection, Revenue Share, Negative Grant and

Interest thereon. Against this, the Ministry has released Rs. 7,500.00 crores to NHAI

through Permanent Bridge Fee Fund (PBFF) as plough back of Toll Remittance made to

CFI.

NHAI has been rated AAA, the highest credit rating, by all the major credit rating agencies such as

CRISIL, ICRA, CARE & INDIA Ratings. These ratings enable NHAI to borrow funds at competitive

rates. During the period of reporting, NHAI’s Tax Free Domestic Bonds raising programme of

Rs. 55,000 crores was assessed.

7. Sources of Funds

8. Credit Rating


9

9.1.3 Decentralisation of decision making process:

(i) Regional Officers and Project Directors in the field have been further delegated financial

powers for quick decision making and to expedite the project implementation.

(ii) Standard guidelines and procedures have been formulated to expedite Land Acquisition

and Utility Shifting.

(iii) Regional Officers are empowered to augment the Human Resources required at the field

level by hiring the retired Central/ State Government Officials and private personnel

through the outsourcing agencies.

(iv) Video Conferencing facility is also introduced in all Regional Offices for regular reviews

and interaction with the Headquarters to expedite the decision making process.

(v) Regional Officers have been made the nodal officers and the Convener of the High

Powered Committees chaired by the Chief Secretary of the concerned States to sort out

the local issues for expediting the preconstruction activities like Land Acquisition and

Environment Clearances etc.

9.2 Improvement in Planning and Execution Process:

(i) Based on the feedback received from all the stakeholders, the process for preparation of

9. Management Initiatives

9.1.1 Strengthening of Human Resources:

(i) NHAI is a lean organisation to facilitate faster decision making. The provisions of National

Highways Authority of India (Recruitment, Seniority and Promotion) Regulations, 1996

were amended to attract competent professionals from various sectors to work in NHAI on

deputation.

(ii) For Capacity building of officers/staff of NHAI, employees of NHAI were deputed to

prestigious training institutions in India and abroad for various training programmes.

Details of training programmes attended by officers/staff of NHAI are given below:-

No. of No. of Officers who have

Programme attended the programme attended the programme

43 217 21 43

(iii) Four new Regional Offices, 20 new Project Implementation Units (PIUs) and 3 Site Offices

were set up totalling to 21 Regional Offices and 130 PIUs in the country for expediting the

execution of projects.

9.1.2 The total manpower strength of the Authority under various categories as on 31.03.2017

is as under:

Domestic Training Programmes Foreign Training Programmes

No. of No. of officers who

Programmes

A 556 286 260 10 55 15 112 0

B 259 21 6 232 35 3 70 1

C 161 11 0 150 18 3 54 0

D 1 1 0 0 1 0 0 0

Total 977 319 266 392 109 21 236 1

Group Present Regular Deputation Contract SCof post of the Employees with disability

strength ST OBC Person


10

Detailed Project Report (DPR) has been revamped which will enable futuristic planning of

highways with greater emphasis on expeditious land acquisition. The timelines for various

activities have also been worked out for optimization of planning process of national

highways projects.

(ii) The RFP for Authority Engineer/ Independent Engineer/ Supervision Consultant for

projects under implementation/ O&M Phase have been modified to include equipment

based monitoring of National Highways which would help improve the life of pavements

with better riding quality.

(iii) To encourage usage of new technology/ material/ processes, research studies have been

assigned to IITs for laboratory/ field trials and these technologies shall be adopted in road

construction based on recommendations from these institutions.

9.3 Focus on a network-wise approach for managing the highways under its purview:

An integrated approach focusing on an entire network rather than the operational aspects of

individual highway stretches is a key strategy area for NHAI which includes asset management,

revenue management, road safety, security management, traffic management etc.

9.4 Greater thrust on Information Technology (IT):

Information Technology is crucial for quick communication and collaboration. It is equally

important during the planning, monitoring and evaluation process, and hence introduction of

IT is one of the major focus areas in NHAI.

NHAI is striving for advancement in information technology in various aspects of highway

development and management. In the past, NHAI had used technologies and knowledge

management tools to a limited extent. But this is changing fast now, with a significant thrust on

technology envisaged to be one of the important strategies for NHAI to successfully manage its

systems. Therefore, a comprehensive strengthening of the IT system is proposed to be carried

out. A system for monitoring PPP projects has already been developed and implemented.

9.5 Public Information System:

To facilitate dissemination of information on all projects executed and managed by NHAI, 334

project specific websites, one for each project has been created. During the financial year

2015-16, another 96 Project specific web sites were created. These project specific web-sites

can be accessed by the public (http://www.nhai.org.in) for obtaining detailed information on

each project including key features, project progress, copies of project agreements,

correspondence exchanged, emergency contact numbers, accident reporting, applicable User

Fee rates along with a provision for posting of suggestions.

9.6 Project Management Information System:

Project Monitoring Information System (PMIS) has been developed in-house in National

Highways Authority of India (NHAI) is one of the finest MIS applications in the highways

industry. With the help of this tool, more than 3000 projects of highways construction works,

which include pre-construction stages, under construction stages and post-construction (O&M)

stages in very elaborative manner. PMIS helps the Authority in effective monitoring of activities

for timely completion.

Initially the PMIS was designed for the PPP based projects only, but looking at the merits of

software MoRTH has suggested NHAI to carry out an enhancements drive for the existing

PMIS software by including the EPC, EPC-Item Rate contracts, Hybrid and OMT based projects

and to make a consolidated reporting system with executive dashboard for macro level

reporting purposes.


11

PMIS is robust and comprehensive tool for monitoring Highway projects that covers key

operational parameters such as toll, traffic information, Land acquisition, compensation

disbursement, clearance proposals etc. The system also provides structured dashboard

mechanisms for various levels of authorizations/ levels of authority. The system also provides

analytical tools for measuring parametric progress of projects.

9.7 E-tendering and E-Procurement:

In order to improve transparency and accountability, NHAI has switched to e-procurement and

e-tendering for all types of projects including BOT since July, 2011. NHAI is in the process of

migrating to Central Public Procurement Portal (CPPP) developed by National Informatics

Centre (NIC) for all tendering process of NHAI w.e.f. 01.04.2017.

9.8 Command Control Centre

Being developed to ensure 24X7 real-time Administrative Surveillance. The Centre will enable

on-line visual monitoring of traffic congestion at each Toll Plaza. It shall also help NHAI develop

Incident Detection System and facilitate immediate mitigation of traffic congestion at the

affected toll plaza. The solution shall also enable video conferencing at toll plazas and allow

Multi-party Video conferencing between Control Centre(s) at NHAI, HQ, Regional Offices, and

Toll Plazas.

9.9 Modern Survey Techniques

NHAI is also working on modern techniques for survey and is preparing a digital inventory of

various assets. The study shall develop a web-based GIS network of NHAI road network

database assets and related inventory. NHAI has already completed pilot data collection of

3000+ kilometers and is in the process of developing a RAMS cell to institutionalize the

techniques. The techniques will help NHAI enhance its monitoring and maintenance

capabilities, allow for proactive road maintenance, and reduce the overall maintenance costs.

9.10 FASTag

NHAI has launched a mobile application for tag purchase and top-up of FASTags, and also

initiated a public awareness drive for increasing the FASTag sales. In addition to the efforts,

NHAI has also tied up with CSC for offline Tag sales. The above initiatives have helped increase

ETC penetration wrt toll revenue increase from 4% to 18% in last eight months, while the

number of tags has issued increased by eight times (Current figure stands at 7.50 lakhs), with a

corresponding increase in revenue since December. The sales are expected to reach new heights

with Government notification making it mandatory for all vehicles to have FASTags from st1 December 2017.

9.11 ETC Infrastructure

To support the surge in sales, NHAI is also working towards converting all lanes as ETC enabled

lanes. Further, all Toll plazas are being upgraded to ensure one dedicated lane at all Plazas.

NHAI is also in the process of launching Integrated Toll Management System (ITMS) being

developed for quick & real-time settlement of transactions at Toll Plazas; RFQ for same is under

evaluation while the RFP is being issued. NHAI is also exploring other Technologies of e-Tolling,

BHIM, Prepaid Mobility card, Distance based GPS Tolling, etc. to further enhance the customer

experience at the Toll Plazas.

9.12 Network Architecture

New network architecture has been under formulated and is under execution at NHAI

Headquarter, considering the next stage of services to be offered at Toll plaza and Regional

offices which will be connected to the HQ with video, voice and surveillance traffic. Futuristic up


12

gradation of the network is planned with following perspectives.

(a) Network at Core, Distribution and Access Layer.

(b) Servers and Storage.

(c) Security at the perimeter like firewall and IPS.

(d) Network Device security.

10.1 Operational Impediments:

(i) The Contract Management under the Model Concession/Contract Agreement (MCA) is

complex. Many times Authority is faced with different views and interpretations by various

stakeholders. This has led to legal disputes/claims against NHAI: Such issues are

referred to Interpretation Committee for interpretation of the clauses of

Contract/Concession Agreement which are technical in nature.

` (ii) The Concession Agreement cannot be amended on a mutually agreed basis even in the

project interest. The process for making changes in the MCA is cumbersome: To stream

line the process of examination of principles and formulation of clauses for proposed

amendments in MCA, Ministry vide office order No.H-25011/02/2014-P&P dated

17.08.2015, constituted the following two Committees,

(iii) Drafting Committee to discuss all proposed amendments in MCA & draft the exact

amendments and

(iv) Inter-Ministerial Committee (IMC) to consider the proposals finalized by the Drafting

Committee. In case of the proposed amendments where there is consensus in IMC, the

same shall be adopted for implementation. In case of, the proposals on which there is no

consensus in IMC, the same shall be brought out before Committee of Secretaries (CoS) for

consideration.

(v) Thereafter, vide office orders dated 08.09.2015, 09.11.2015 and 27.01.2016, Ministry

conveyed the amendments approved by the Competent Authority in certain provisions of

MCA. After incorporating the above amendments, modified MCA for BOT (Toll) for 4-laning

and MCA for BOT (Toll) for 6-laning were issued on 09.05.2016 and same were placed on

NHAI-website.

10.2 Project Financing / Financial Closure Impediments:

(i) Lack of Equity and over-leveraged Balance sheets of the developers: Most developers have

significantly leveraged their balance sheets in anticipation of high levels of growth. The

economic downturn seen in the last few years has resulted in revenue realization at a much

lower rate than what was anticipated. Many developers have taken significant future

obligations which creates difficulties in debt servicing.

(ii) Stress on the existing road infrastructure loan portfolios of Financial Institutions:

Reduced revenue realization due to economic slowdown is affecting the debt servicing

ability of the concessionaires. Often the concessionaire is unable to service the debt and

has to propose restructuring of the debt to the lenders. While the first restructuring exercise

is permitted by lenders without any adverse asset classifications, any subsequent exercise

automatically affects the assets classification in the books of its lenders leading to

disproportionally high level of NPAs.

(iii) Mismatch between project and debt duration: The current practice of financing large

10.Challenges


13

infrastructure projects is based on revenue streams spread over 20 to 30 years. For a project

with a debt that spans over 10 to 15 year tenure period, this leads to sustainability issues

and a consequent asset liability mismatch.

(iv) Sector exposure norms of Financial Institutions getting exhausted: With the debt

obligations mounting on account of debt repayment deferment, FI's exposure to this sector

has increased significantly, reaching defined exposure norms for the sector.

(v) Delayed Projects: A number of projects are stuck or delayed turning many bank loans into

NPAs and further constraining the banks’ lending to such infrastructure projects.

10.3Regulatory Impediments:

10.3.1 Acquisition of Land (LA):

(i) With the promulgation of the Right to Fair Compensation and Transparency in Land

Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act), affected

landowners have, in some cases, refused to hand over possession of land and have

demanded higher compensation even in cases where land acquisition was completed before

promulgation of the Act. Large quantum of litigation seeking enhanced compensation has

affected project schedules.

(ii) Due to provisions of the new Act, land has become costly and land cost in some cases is

more than project cost.

(iii) Legal challenges to some provisions of the National Highways Act, 1956 (NH Act) which

deny payment of Solatium and Interest as admissible under the Land Acquisition Act, 1894,

have resulted in substantial financial implication, besides causing delays in project

implementation.

(iv) Competent Authorities for Land Acquisition (CALAs), who acquire land for highway-

development projects are State Government officials. They accord low priority to land

acquisition for NHAI vis-a-vis their regular official duties, and they also lack adequate

infrastructure for expeditious acquisition of land.

(v) Acquisition of land for highway-development projects has proved to be expensive and time

consuming in spite of additional man power and financial support provided by NHAI to CALAs.

10.3.2 Approvals for Railway Over Bridges (ROBs) / Railway Under Bridges (RUBs), General

Approval Drawings (GADs), etc.:

To avoid delay in GAD from Railways, an MOU has been signed between MoRTH and Ministry

of Railways on 10.11.2014. Time line of 60 days for GAD approval is proposed and various

charges imposed by Railway has been waved off. After signing of this GAD approval became

easier and fast. In this regard during year 2016-2017 total 100 number of GAD has been

approved.

10.3.3 State Support Agreements not in place in some States:

Some of the States are yet to sign the State Support Agreement which is essential for

orderly execution of projects.

10.3.4 Approval for shifting of utilities:

This requires close interaction and supervision of State level entities managing utilities

such as power distribution, water supply, sewerage etc. In certain cases, projects have been

inordinately delayed on account of such utilities not extending the required timely

cooperation for shifting of utilities from the corridors.


14

10.3.5 Judicial Interventions and action by other Ministries and State Governments:

National Green Tribunal abruptly stopped mining of sand. This resulted in the prices of

sand shooting to extremely high levels. A similar handicap was faced when restrictions were

placed on the mining of aggregates and on soil borrows by many State Governments.

11.1 Measures for Operational efficiency:

11.1.1 Project Preparation:

Going forward, NHAI has decided not to award projects until all regulatory approvals are

obtained for the project and the minimum required land is available in possession to

avoid post-bid delays and litigations.

11.1.2 Simplification of process of Environment and Forest Clearance:

NHAI approached the Hon’ble Supreme Court, in March 2013 for delinking the forest

clearance from the process of environment clearance. Accordingly, Ministry of

Environment & Forest have revised their policy which has resulted in to faster clearances

for grounding the projects.

11.1.3 Shifting of utilities:

System of identification of utilities requiring shifting has been digitized by way of

mandatory survey at the stage of preparation of detailed project report through Light

Detection and Ranging (LIDAR) technique and ground penetration radars for timely

identification. System of approval of estimates for utility shifting has been streamlined

with delegation to field officers for timely utility shifting.

11.2 Measures Facilitating Investment:

11.2.1:Loans to Highway Projects classified as “secured” by Lenders:

At NHAI’s initiative, Reserve Bank of India has effected a policy shift mandating that the

Financial Institutions now consider loans to Highway Projects as secured loan to the

extent covered by termination payment provisions under the Concession Agreement.

Due to this changed classification, the road sector projects will not be able to access

debt funds from a larger pool for secured loans (as against the restricted pool available

for unsecured loans) and also get the benefit of lesser interest rates.

11.2.2 Refinancing/Restructuring loan:

NHAI is actively supporting refinancing/restructuring of loans. The Authority has

decided that in refinancing/restructuring of the loan, where there is no increase in the

overall liability of NHAI (though it may differ on any particular date as per the revised

repayment schedule), should actively supported. During 2016-17, 21 projects were

refinanced to the extent of Rs. 11950 Crore (outstanding Senior Debt) and Rs. 1703

Crore (additional debt) by the banks.

11.2.3Equity Divestment:

During 2015-16, the Cabinet Committee on Economic Affairs (CCEA) approved the

proposal for permitting 100% equity divestment after two years of construction

completion for all BOT projects. Accordingly, in 13 projects, 100% equity divestment

was permitting during the period under report i.e. the FY 2016-17.

11.Removal of Impediments


15

11.2.4 Substitution Option:

No harmonious substitution has been taken place during FY 2016-17.

11.2.5 Infrastructure Debt Fund:

The Infrastructure Debt Fund created in the last fiscal year is a step towards easing the

burden for the banks. During 2016-17, 11projects received IDF funding of Rs.2266.48 Crore.

11.2.6 Premium rescheduling:

To ensure that project execution does not suffer due to cash flow constraints, an Expert

Committee was constituted by the Central Government on the proposal made by NHAI,

and rescheduling of premium was approved, which is being made available to stconcessionaires which have a revenue shortfall. Till 31 of March 2017, 24 projects

were considered and approved by the Board of NHAI for grant of deferment of

premium. In all, these 24 proposals involve deferment of premium for a total value of

Rs. 10,819.60 Crore. The period during which such deferment has been considered

spans FY 2015 to FY 2031, with the deferment granted during FY17 amounting to

Rs.1,034.21 Crore. This facility should provide breathing space to cash constrained

concessionaire.

11.2.7 Hybrid Annuity Mode:

A new PPP mode i.e. Hybrid Annuity Mode (HAM) was introduced whereby NHAI bears

40% of the Project Cost besides providing semi-annual Annuities for 15 years during

operation and maintenance period.

11.2.8 Increase in share of Engineering, Procurement and Construction (EPC) - Many projects

are implemented on Engineering, Procurement and Construction (EPC) mode with

100% public funding.

11.3 Regulatory Measures:

11.3.1 Streamlining the approval process through inter-ministerial coordination:

The system of approvals from Ministry of Railways in ROB /RUB & GAD have been

streamlined and pendency has been reduced.

11.3.2 Dispute Resolution:

NHAI has made efforts for dispute resolution through the established mechanism of

Alternate Dispute Resolution through three tier stages of (i) 3-CGMs committees, (ii)

Independent Settlement Advisory Committee (ISAC) and (iii) Executive Committee /

Board of NHAI for settlement / conciliation of disputes. As a result, it was possible to

settle claims amounting to Rs. 853.631 Cr. for an amount of Rs. 165.649 Cr. during the

year 2016-17.

11.3.3 Society for Affordable Redressal of Disputes (SAROD):

NHAI, in association with National Highways Builders Federation (NHBF), has formed a

society for the speedy and affordable redressal of disputes called as the Society for

Affordable Redressal of Disputes (SAROD) registered under the Societies Registration

Act, 1860. Builders/ Contractors are the Primary members and Consultants are the

associate members. This provides for dispute resolution at reasonable cost. Provision

for mandatory application of this mode of dispute resolution has also been

incorporated in the Model Concession Agreement (MCA). 27 Primary members and 5

Associate Members have been enrolled with SAROD. A total of 287 Arbitrators have

already been empanelled.


16

11.3.4 Improving the Model Concession Agreement (MCA) for 4-laning DBFOT (Toll):

Modified MCA for BOT (Toll) for 4-laning and MCA for BOT (Toll) 6-laning were issued on

09.05.2016 after incorporating all the approved amendments issued vide office orders

dated 08.09.2015, 09.11.2015 and 27.01.2016 of Ministry and the same were placed

on NHAI-website.

11.4 Systemic Improvements:

11.4.1 Improvement in Toll Collection:

th(a) Electronic Toll Collection (ETC) was rolled out across the country on 25 April 2016. In

order to enhance the adoption of interoperability toll payment; Ministry of Road

Transport & Highways (MoRTH), along with the National Highways Authority of India

(NHAI) had relaunched the National Electronic Toll Payment System (NETC) based on rdRFID technology at all National Toll Plazas on 3 December, 2016 with inclusion of

multiple issues and multiple acquirers bank model incorporating NPCI (National

Payment Corporation of India) as CCH (Central Clearing House).

(b) FASTag is a device that employs Radio Frequency Identification (RFID) technology for

making toll payments directly from the prepaid or savings account linked to it. It is

affixed on the windscreen of a vehicle and enables one to drive non-stop through the toll

plazas without any hassle of cash transactions. The tag can be purchased from Tag

issuers and can be recharged as per the user’s requirement.

(c) Indian Highway Management Company Limited (IHMCL), a company formed in

association with select financial institutions & developers/ promoters of

concessionaires under the Companies Act, 1956 with equity participation from NHAI

(25%), Concessionaires (50%) and Financial Institutions (25%), is actively involved in

implementation of ETC. 358 toll plazas across the country have been enabled with ETC

and 5,36,135 RFID tags have been issued.

11.4.2 CCTV Surveillance System

Going forward, IP (Internet Protocol) based CCTV Surveillance Systems are proposed to

be installed at toll plazas. The CCTV system will be used to monitor the lane area.

A control centre equipped with Video Wall for online monitoring of Video feeds from all

toll plazas will be established at NHAI Head Quarter.

11.4.3 Implementation of Automatic Vehicle Counter & Classifier (AVCC) System at

Toll Plazas

AVCC Systems provide classification and counting of vehicles passing through the lanes

and used as an audit tool for toll collection. Toll Management System checks AVCC class

and classification entered by the Toll Collector. If there is a mismatch, the Lane Camera

captures a digital image of the vehicle together with details of the class discrepancy

message, transaction number with its date and time, lane number and toll collector. The

image and discrepancy information is communicated to the supervisory console for

further processing by the toll supervision staff. Data on counting and classification

can also be accessed remotely. Necessary action has already been initiated for

implementation of AVCC systems at all toll plazas.

Strenuous efforts have been made during the year for Implementation of the Official Language Policy

of the Government in the National Highways Authority of India. Hindi Fortnight was organized from

12.Implementation of the Official Language Policy of the Government


17

September 01 to September 15, 2016 in the Authority to create a congenial atmosphere for working

in Hindi. Various Hindi competitions were organized in which the officers and employees

participated with great enthusiasm and outstanding performers were awarded with cash award and

certificates in the function organized on the occasion of Hindi Diwas. Four Hindi workshops were

conducted during the year for the benefit of the officers/employees, in which they were provided

detailed knowledge about the Official Language Policy and the rules made thereunder, imparted

training for working in Hindi on computers and practice in Hindi noting & drafting. Meetings of the

Official Language Implementation Committee of the Authority have been held regularly in each

quarter wherein necessary decisions were taken after reviewing the progressive use of Hindi in the

Authority. An attractive Hindi Incentive Scheme has also been implemented to inspire the officers

and employees to do more & more of their official work in Hindi. The overall percentage of Hindi

correspondence during the year 2016-17 in region A, B and C has been 70.2%, 79.6% and 51.5%

respectively,.

13.1 NHAI Club:

NHAI club was constituted in November 2001 for looking after various social, cultural and other

related activities for the employees of the NHAI. All the officers and staff of NHAI posted at the

Headquarters are members of the club. NHAI Club also contributes a sum of Rs. 40,000/- to

the family of a deceased member of the Club towards immediate financial support. The Club thalso organized the NHAI Day Programme on 10 February, 2017 including a cultural

programme, sports tournaments, cultural competitions and family get together etc.

13.2 Death due to Illness, Accident or Natural Causes:

As per the NHAI policy, in case of death of any NHAI employee due to illness, accident or natural

causes, the nominee of the deceased employee is entitled to receive a sum of Rs. 5.00 lakhs for

employees drawing salary in the pay scale of Rs. 6500-10500/- (Pre-revised) and above and

Rs. 4.00 lakhs for the remaining categories. The scheme was first introduced in the year 2005

as part of Group Life Insurance Policy and the scheme is funded through the annual budget of

NHAI from 2013 onwards.

13.3 Death Benevolent Scheme:

A voluntary scheme viz., Death Benevolent Scheme, has also been introduced in NHAI w.e.f.

01.01.2015 wherein a sum of Rs. 50/- is contributed by the employees every month. An

ex-gratia amount of Rs. 1.00 lakh is given as relief in case of death of the employee.

The Audit Report on the accounts of the Authority for the year 2016-17 issued by the Office of C&AG

of India is attached as Annexure-I and the Management’s replies on the Audit’s comments on

accounts are attached as Annexure-II.

13.Welfare Activities Undertaken by the Authority

14.Audit


19

Annexure-I


20

AUDIT REPORT OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA

ON THE ACCOUNTS OF NATIONAL HIGHWAYS AUTHORITY OF INDIA FOR

THE YEAR ENDED 31 MARCH 2017

We have audited the attached Balance Sheet of the National Highways Authority of India (NHAI) as at

31 March 2017 and the Profit and Loss Account for the year ended on that date under section 23 of the

National Highways Authority of India Act, 1988 (NHAI Act 1988) and Rule 6(5) of National Highways

Authority of India (Budget, Accounts, Audit, Investment of Funds and Powers to Enter Premises) Rules 1990

as amended from time to time. These financial statements include the accounts of 163 units {138 Project

Implementation Units (PIUs), 23 Regional Offices and one World Bank Technical Assistance loan and the

accounts of NHAI Headquarters}. Preparation of these financial statements is the responsibility of the

Management. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with the auditing standards generally accepted in India. These

standards require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free from material misstatements. An audit includes examining on a test basis,

evidence supporting the amounts and disclosures in the financial statements. An audit also includes

assessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of financial statements. We believe that our audit provides a reasonable

basis for our opinion.

Based on our audit, we report that:

i. The Balance Sheet and Profit and Loss Account dealt with by this report have not been drawn up in the

format approved by the Government of India under Section 34 (2)(g) of NHAI Act, 1988 and Rule 6(1)(b)

of NHAI Rules 1990, as amended from time to time.

ii. Proper books of accounts and other relevant records have not been maintained by the Authority, in so far

as it appears from our examination of such books as enumerated below:

(a) ‘Assets held on behalf of Government of India (completed & ongoing)’ shown under Fixed Assets

represent the amount spent on various National Highways or any stretch thereof vested in, or

entrusted to, by Government of India (GoI) to the NHAI, some of which were completed and others

were in progress at different stages. These assets were developed by NHAI and the ownership of

these National Highways or any stretch thereof vested in, or entrusted to, by GoI to NHAI, vests with

GoI only. Since the assets owned by entity are only depicted as the entity’s Fixed Assets in its

Balance Sheet, depiction of assets belonging to GoI in the books of NHAI as ‘Assets held on behalf

of GoI (completed & ongoing)’ under Fixed Assets is incorrect. GoI has entrusted these National

Highways or any stretch thereof to NHAI for development & maintenance purposes and funds

required for these purposes are provided by GoI. Due to disclosure of ‘Assets held on behalf of GoI

(completed & ongoing)’ under Fixed Assets, Fixed Assets of NHAI are overstated Rs. 2,17,726.57

crore.

(b) The entire amount of borrowing cost of Rs. 4068.16 crore for the year 2016-17 has been booked

under ‘Assets held on behalf of GoI’. This includes borrowing cost in respect of completed projects

and quantification of the same is not possible in the absence of non-maintenance of project-wise

details with respect to ongoing and completed projects. Inclusion of borrowing cost on completed

projects is in contravention of generally accepted accounting principles. As NHAI has not been

maintaining records in respect of project-wise utilization of borrowed funds, correctness of the

total borrowing costs allocated to completed and ongoing projects till date also could not be

verified in Audit.

(c) (i) NHAI has capitalized the entire amount of Rs. 278.72 crore of 'Net establishment expenses for

the year’. As per generally accepted accounting principles, the expenditure of revenue nature

cannot be booked to completed projects and should have been depicted in the Profit and Loss


21

Account. In the absence of project-wise details of such expenditure, Audit was unable to comment

on the impact of such incorrect accounting on the accounts of NHAI.

(ii) The accounting treatment for ‘diminution in the value of the investment’ amounting to

Rs. 403.11 crore has not been done correctly in the accounts of NHAI. The amount of

‘Investments’ in Schedule 6 was required to be reduced by the amount of ‘Provision for diminution in

the value of investments’ of Rs. 403.11 crore and the ‘Profit & Loss Account’ was required to be

debited by the same amount. In actual, the Management has reduced the amount of ‘Investments’

in Schedule 6 by Rs. 403.11 crore correctly, however, after, debiting the amount of Rs. 403.11 crore

in the P&L Account the amount has been shown as transferred to ‘Capital – Schedule 1’. Thus the

effect of the accounting entry in the P&L Account has been nullified. This has resulted in

understatement of Net Establishment Expenses as well as ‘Capital’ each by an amount of

Rs. 403.11 crore.

(d) (i) ‘Assets held on behalf of GoI' included Rs. 10086.56 crore (excluding cost of land amounting to

Rs. 539.83 crore) incurred by NHAI on 19 road projects. NHAI did not hold these projects as on

31.03.2017 as these were handed over along with tolling rights, to various concessionaires for

upgradation to 4/6-lanes of the roads on BOT basis. However, no adjustment has been made in the

accounts for the above amount of Rs. 10086.56 crore. This has resulted in overstatement of

‘Assets held on behalf of GoI’ by Rs. 10086.56 crore.

(ii) Four projects {viz. Karur to Kangeyam Section of NH-67, Barasat-Krishnagar Section of NH-34,

Mehrauli-Gurgaon road from Andheria More to Delhi-Haryana Border on NH-236 and Km 9.400 to

Km 22.300 of Hyderabad-Bangalore section of North-South Corridor (NS-23) held by NHAI on

behalf of GoI}, were transferred to State Governments. Though NHAI did not hold these projects as

on 31.03.2017, no adjustment has been made in the accounts and cost incurred on these projects

amounting to Rs. 1297.41 crore by NHAI on behalf of GoI has been shown under ‘Assets held on

behalf of GoI’ which is factually incorrect. Non-adjustment of this expenditure has resulted in

overstatement of ‘Assets held on behalf of GoI’ by Rs. 1297.41 crore.

iii. Apart from the significant matters stated above, other observations are placed as Annexure – I and II to

Audit Report. Further, details of information/records still to be received from NHAI are given in

Annexure-III to the Audit Report.

iv. In our opinion and to the best of our information and according to the explanations given to us, the said

financial statements read together with the Accounting Policies and Notes on Accounts, and subject to

the significant matters stated above and other matters mentioned in Annexure-I, II and III to this Audit

Report, gives a true and fair view in conformity with accounting principles generally accepted in India;

a) In so far as it relates to the Balance Sheet, of the state of affairs of the Authority as at 31 March

2017.

b) In so far as it relates to the Profit and Loss Account, of the excess of expenditure over income

transferred to Assets held on behalf of Government of India for the year ended on that date.

Place: New Delhi

Date: 26 December 2017

For and on behalf of the

Comptroller and Auditor General of India

Sd/-

(Neelesh Kumar Sah)

Principal Director of Commercial Audit

& Ex-officio Member, Audit Board-I

New Delhi


22

(A) BALANCE SHEET

(I) SOURCES OF FUNDS

(1) Shareholders' Fund

(1.1) Capital U/S 17 (Schedule-1)

Capital-Net off Toll Collection, Negative Grant etc. upto 31.03.2010: Rs. 6,183.56 crore

The above amount represents Current Liability towards 'Net of Toll Receipts,

Maintenance Expenditure over Grant etc. payable to GoI upto 31.03.2010' which the

NHAI has transferred during the year 2012-13 to Capital Account u/s 17 of the NHAI Act

1988 without obtaining approval of the Ministry of Finance and Ministry of Road

Transport and Highways. The issue was also raised on the accounts for the years

2012-13, 2013-14, 2014-15 and 2015-16. NHAI has taken up the matter in March 2014

for obtaining approval of Ministry of Road Transport and Highways (MoRTH)/ Ministry

of Finance (MoF). However, the specific approval/ consent of Government of India (GoI)

on the same is not yet received. Thus, this fact should have been disclosed in the Notes

on Accounts.

(1.2) Reserve & Surplus (Schedule-2)

As per Significant Accounting Policy no. 7 (i)(a) "Assets held on behalf of GoI includes

interest earned on unutilized capital, on advances/loans granted to the contractors/

consultants and receipts from ongoing projects is shown under capital reserve" . As per

generally accepted accounting principles, the amount of interest earned on unutilized

capital is not the revenue of NHAI hence should have been shown as payable to

Government of India, therefore the accounting policy 7(i)(a) needed to be revisited.

(2) Borrowings: Rs.75384.65 crore (Schedule-4)

(2.1) As per Rule 9 - Reserve Fund of NHAI Rules, 1990, every loan raised by NHAI not being a

loan repayable before expiration of one year from the date of the loan, the Authority shall

set apart a sum half yearly, out of its income in the reserve fund, sufficient to liquidate

the loan within a period which shall not in any case exceed thirty years. NHAI may apply

the whole or any part of the sums accumulated in the reserve fund in or towards the

discharge of the loan liabilities for the repayment of which the fund has been

established. Provided that Authority pays into the fund each year, and accumulated

until the whole of the money borrowed is discharged, a sum equivalent to the interest

which would have been produced by the reserve fund or the part of the reserve funds

so applied.

As on 31 March 2017, an amount of Rs. 75384.65 crore was shown as payable,

towards the bond holders of Capital Gain Tax Free Bonds-54EC (Rs. 13197.32 crore),

Tax Free Secured Redeemable Non-Convertible Bonds (Rs. 34000 crore), Taxable Bonds

(Rs. 27545 crore) and Loan from ADB (Rs. 642.33 crore). However, NHAI has not created

such reserve fund as contemplated in NHAI Rules. This has resulted in non-adherence to

the NHAI Rules,1990. A similar Comment was included in the Audit Report on the

accounts of NHAI for year 2015-16, however, Management did not take any corrective

action.

(2.2) As per the commitment by way of 'Statement by the Members of the Board' under the

Annexure- I to Audit Report


23

heading 'Other Regulatory and Statutory Disclosures' in the prospectus issued in

connection with the public issue of

i. Tax Free Secured Redeemable Non-Convertible Bonds of Rs. 10000 crore issued

during 2011-12,

ii. Tax Free Secured Redeemable Non-Convertible Bonds of Rs. 5000 crore issued

during 2013-14 and

iii. Tax Free Secured Redeemable Non-Convertible Bonds of Rs. 19000 crore, issued

during 2015-16 etc.

It was committed that:

i. All monies received out of each tranche issue of the bonds to the public shall be

transferred to a separate bank account;

ii. Details of all monies utilized out of each tranche issue shall be disclosed under an

appropriate separate head in the Balance Sheet indicating the purpose for which

such monies were utilized;

iii. Details of all unutilized monies out of each tranche issue shall be disclosed under an

appropriate separate head in the Balance Sheet indicating the form in which such

unutilized monies have been invested.

However, the above commitment was not adhered to and NHAI has only given a general

disclosure vide Note No. 23 (f) of Notes on Accounts wherein it was mentioned that 'All

receipts of NHAI viz. Funds received from the Ministry, Market borrowings through issue

of NHAI Tax free Bonds, Taxable Bonds, NHAI Capital Gains Tax Exemption Bonds under

Section 54-EC, interest on surplus funds etc. are credited in the National Highways

Authority of India Funds and all expenditure is met out of this Fund as per the provisions

of Article 18 of NHAI Act, 1988. As such, no separate Account is maintained for

utilisation of NHAI Bond proceeds'. Similar observation was included in the Audit report

on the annual accounts of NHAI for the year 2012-13, 2013-14, 2014-15 and 2015-16.

However, no corrective action has been taken by NHAI.

(II) APPLICATION OF FUNDS

(1) Fixed Assets (Schedule 5) — Gross Block: Rs.125.33 crore

(1.1) Land Freehold: Rs. 0.74 crore

The above does not include Rs.1.52 crore being the cost of Institutional Plot no. 20 at

sector 32, Gurgaon purchased by NHAI from Haryana Urban Development Authority

(HUDA) in 1997. The ownership and possession of the same is with NHAI. NHAI has

assured to investigate the matter and to take corrective action after ascertaining the facts.

(1.2) Assets held on behalf of Government of India (Completed & Ongoing): Rs.

217,726.57 crore (Schedule 5)

(1.2.1) Instead of deducting from the cost of the respective projects, an amount of Rs. 203.49

crore received as income during the year from the projects under construction, NHAI

has added the amount of Rs. 203.49 crore to the cumulative amount of Rs. 887.29

crore received by NHAI as income over the past years, from the projects under

construction and deducted the entire amount of Rs. 1090.78 crore from CWIP for arriving

at the amount of 'Assets held on behalf of GoI'. As per generally accepted accounting

principles (GAAP), no revenue/ capital income can be deducted from capital assets


24

after commissioning/ putting to use of an asset. Thus, the financial statements of NHAI

have been prepared without following the GAAP and recognising the revenue income of

NHAI in the accounts in line with the Accounting Policy No. 11 (iii). Similar audit

observation was issued during the audit of annual accounts of NHAI for the years 2014-

15 and 2015-16.

(1.2.2) The amount of Rs. 7.49 crore received as premium on issue of Tax-Free Bond during the

year 2013-14 and 2015-16, was transferred by NHAI to 'Capital Reserve' during the year

2016-17 and the same was deducted from 'Assets held on behalf of GoI’ in Schedule-5

'Fixed Assets'. Since the Tax Free Bonds were issued by NHAI, premium received thereon

should have been shown under 'Reserves & Surplus'. Deduction of premium received on

Tax-Free Bonds from Assets held on Behalf of GoI has resulted in understatement of

'Reserves & Surplus' and 'Assets held on behalf of GoI' each by Rs. 7.49 crore.

(1.3) Assets held on behalf of GoI less Interest on un-utilized capital: Rs. 10297.76 crore

'Fixed Assets - Assets held on behalf of GoI' are shown after deduction of Rs. 172.09

crore of gross interest accrued up to 31.03.2017 on the loan amount disbursed to

Special Purpose Vehicle (SPV) companies. This accrued interest is in the nature of

income and should have been shown as income of the authority in Profit and Loss

Account. This has resulted in understatement of 'Asset held on behalf of GoI' and

income for the year by Rs. 172.09 crore. Similar audit observation was also made

during the audit of annual accounts of NHAI for the years 2014-15 and 2015-16.

(1.4) Assets held on behalf of GoI (completed & ongoing): Rs. 2,17,726.57 crore.

(1.4.1) Assets held on behalf of GoI is overstated by Rs. 1.28 crore due to accounting of

compensation paid to the concessionaire towards interest on loan availed by them, for

the period for which toll collection was suspended as per the instruction of GoI. This has

resulted in understatement of Expenditure on toll collection activities by the same

amount.

(1.4.2) Assets held on behalf of GoI is understated by Rs. 3.59 crore being amount paid to

various contractors for activities viz. balance works, change of scope, relating to the

projects. This has also resulted in overstatement of Expenditure on/ Advance for

Maintenance of Highways/ Toll collection activities/ by the same amount.

(1.4.3) 'Assets held on behalf of GoI' did not include cost of construction of toll plaza at

Jallandhar-Jammu Section amounting to Rs. 5.77 crore. The amount of Rs. 5.77 crore

was booked as revenue expenditure. This resulted in understatement of Assets held on

behalf of GoI and Capital by Rs. 5.77 crore. An identical comment was issued in the

Audit Report on the annual accounts of NHAI for the year 2014-15 & 2015-16 also. No

corrective action has been taken.

(1.5) As per clause 16.3.2 of the Concession Agreement for Muzaffarnagar to Haridwar

project, all costs arising out of change of scope order issued during construction period

shall be borne by the Concessionaire upto 0.25 % of the Total Project Cost (TPC) and

any cost in excess of the above ceiling shall be reimbursed by NHAI to the

concessionaire. However, instead of transferring only the actual amount of Rs. 4.51

crore paid for change of scope to Assets held on behalf of GoI, the amount of Rs. 1.88

crore required to be borne by the concessionaire was also debited to Assets held on

behalf of GoI and credited to Capital Reserve. This has resulted in overstatement of

Capital Reserve as well as 'Assets held on behalf of GoI’ each by Rs. 1.88 crore.


25

56.89

1.27

0.12

4.95

12.87

0.96

77.06

(2) Investment (Schedule-6): Rs. 909.59 crore

Shares issued to NHAI by New Mangalore Port Road Company Limited (NMPRCL), a Special rdPurpose Vehicle (SPV) of NHAI, vide Share Certificate dated 23 March 2017 having distinctive

numbers from 128610001 to 133580000, have not been shown as fully paid equity shares and

the amount of investment of Rs. 4.97 crore was disclosed as Share Application money. Hence,

the disclosure is incorrect.

(3) Current Assets, Loans and Advances (Schedule 7): Rs.41870.28 crore

(3.1) Deposits, Loans and Advances: Rs. 32,953.20 crore

(3.1.1) Claims Recoverable: Rs. 2617.52 crore (Schedule 7)

Above did not include an amount of Rs. 77.06 crore which was recoverable as on 31 March 2017

from various concessionaires/ contractors as detailed below:

i Negative Grant (Premium) of Rs. 52.67 crore and interest amounting to

Rs. 4.22 crore thereon, recoverable from M/s IVRCL Chengapalli

Tollways Ltd. in respect of Chengapalli – Walayar stretch on NH-47.

ii Toll Revenue of Rs. 1.23 crore and interest of Rs. 0.04 crore thereon

recoverable from M/s Jhansi-Baran Pathways Pvt. Ltd. (OMT

Concessionaire)

iii Interest on delayed reimbursement of fee paid by NHAI to the

Independent Consultant in respect of Gwalior – Shivpuri section of

NH-73, recoverable from concessionaire (M/s Essel Gwalior – Shivpuri

Toll Roads Pvt. Ltd.).

iv Damages recoverable from the concessionaire M/s Transstroy

Obedullaganj Betul Tollways Pvt. Ltd. at the contractual rate of

20 percent of the expenditure incurred by NHAI on repair and

maintenance of Obedullaganj-Betul section of NH-69 at the risk and

cost of the concessionaire.

v Short remittance of concession fee by the concessionaires viz. M/s

Ayodhya Gorakhpur SMS Tolls Pvt. Ltd. (Rs. 7.01 crore) and M/s Gorakhpur

Kasia Tollway Pvt. Ltd. (Rs. 5.86 crore), in respect of NH-28)

vi Short remittance of toll by M/s Sri SAI Enterprises Hyderabad

Total

Thus non-inclusion of the amount of Rs. 77.06 crore in the 'Claims Recoverable’ has resulted in

understatement of 'Claims Recoverable' as well as Current Liabilities towards 'Toll Receipts

Payable to GoI' each by Rs. 77.06 crore.

(3.2) Interest accrued and due on Competent Authority of Land Acquisition (CALA) deposits:

Rs. 526.28 crore

This did not include an amount of Rs. 8.26 crore towards interest earned on the CALA joint bank account by 2 PlUs (viz. Indore Rs. 5.33 crore, Kolkata Rs. 2.93 crore) during the year 2016-17. This resulted in understatement of Interest accrued and due on CALA deposits and overstatement of 'Assets held on behalf of GoI' being accounted as net of interest on unutilised capital.

SI. Particulars Amount

No. Rs. Crore


26

(4) Current Liabilities and Provisions

(4.1) Current Liabilities (Schedule 8)

(4.1.1) Other Liabilities: Rs. 10634.44 crore

a) This did not include liabilities amounting to Rs. 1809.78 crore as under:

Rs. in crore

A Compensation payable for acquisition of land despite issue of 3D

Notification/ 3G award by CALA.

B Compensation payable to land losers as per Arbitration award.

C Positive grant/ Annuity payable to concessionaires.

F Amounts payable to contractors/ concessionaires/ consultants in respect

of construction/ supervision work done.

G Amount payable in respect of O&M cost/ Interest on the debt availed by the

concessionaires for the period for which toll collection was under

suspension from 09.11.2016 to 02.12.2016 as per instructions of MoRTH.

H Amounts payable to GoI in respect of Toll collected.

I Amounts payable to GoI in respect of interest received on amount deposited

with Supreme Court of India and Bank.

J Amounts payable to Govt. Agencies/ bodies/ concessionaire for utility

shifting.

K Amounts payable to the employees of NHAI on implementation of th7 Central Pay Commission.

L Amounts refundable to contractor for excess BG encashed/ deduction made.

M Amounts payable to contractors for maintenance work done.

Total

This resulted in understatement of 'Assets held on behalf of GoI' by Rs. 1782.29 crore, Net

Establishment Expenses by Rs. 17.73 crore, Personnel & Administrative Expenses by Rs. 2.99

crore, overstatement of Capital by Rs. 5.33 crore and ‘Cash & Bank’ by Rs. 1.44 crore.

b) Current Liabilities included a provision of Rs. 17.89 crore towards demand raised by

CALA for acquisition of Government Land. Since payment is not required to be made for

acquisition of Government land, no provision was required to be made. This resulted in

overstatement of 'Current Liabilities' as well as 'Assets held on behalf of GoI' each by an

amount of Rs. 17.89 crore.

(B) General

1) As provided under Section 23 of the NHAI Act 1988, the format of annual statement of

accounts of NHAI has been duly prescribed by the Government of India in consultation with

C&AG of India. However, the following deviations were noticed in the accounts prepared by the

Management when compared to the approved format of accounts:

1461.80

10.06

217.43

91.94

14.97

0.09

5.33

1.06

2.99

1.35

2.76

1809.78


27

• The approved format provides that the surplus/deficit in the P&L Account is to be carried to

the Balance Sheet under Reserves and Surplus. As against this, NHAI without arriving the

surplus/ deficit, arrived at the 'Net Establishment Expenditure' which is in the form of deficit

and the same was transferred to 'Assets held on behalf of GoI' under 'Fixed Assets'. The

'Assets held on behalf of GoI' include both completed and ongoing projects.

• As per Schedule 5 (Fixed Assets) of the prescribed format, one of the sub-heads is 'Roads &

Bridges'. However, this sub-head had been left blank in spite of completed road projects.

NHAI has not segregated the cost of ongoing and completed projects and the same are

depicted at a consolidated figure of Rs. 2,17,726.57 crore (including cost of land of

Rs. 80,616.20 crore and excluding, Fixed assets of NHAI of Rs. 40.63 crore) during the year

under the head ‘Assets held on behalf of GoI'.

NHAI disclosed the amount spent on various projects (both completed and under execution)

on behalf of GoI as its executing agency as 'Assets held on behalf of Gol'. NHAI sought

through MoRTH, a legal opinion from Ministry of Law and Justice and Company Affairs

regarding ownership of highways, capitalisation of completed road stretches of National

Highways and depreciation thereof. The Solicitor General of India had opined (January 2015)

that NHAI is merely an executive agency of the Central Government and ownership of the

NHs, road & bridges are vested with GoI and NHAI is not the owner of stretches of NHs

developed and maintained by the NHAI. Further, the accounting treatment and disclosure

given by NHAI in its Financial Statements is in deviation to the opinion given by the Expert

Advisory Committee (EAC) of the Institute of Chartered Accountants of India which opined

that if the NHAI is only acting only as an executing agency on behalf of the Government and

does not exercise any control over the roads/ highways and/ or future economic benefits out

of such resources do not accrue to the NHAI, then, NHs are not NHAI's assets and

accordingly, recognizing these as its assets and recognizing them as Capital work in

progress/ Assets held on Behalf of Government of India in NHAI's Balance Sheet is not

correct.

As per the Approved format of Accounts, the Grant-in-aid received for Maintenance of

Highways and expenditure incurred thereon should be accounted for in Profit and Loss

Account. However, NHAI deviated from this and adjusted the Maintenance Grant and

Expenditure incurred on Maintenance of Highways against Capital Account (Plough back of

Toll Remittance, etc.). During the year 2016-17, NHAI incurred Rs. 1071.96 crore as the total

expenditure on maintenance of highways (Rs. 853.26 crore) and toll collection activities (Rs.

218.70 crore). Against this, the MoRTH released during the year, a grant of Rs. 100 crore for

maintenance of highways. After adjusting Rs. 23.56 crore of 'Other Receipts from O&M of

Highways' during the year 2016-17, the balance amount of Rs. 948.40 crore, has been set

off against the Shareholder's fund. Thus, this has resulted in understatement of Loss for the

year and Shareholder's fund-Capital by Rs. 948.40 crore.

Similar comment was included in the Audit Report on the annual accounts of NHAI for the

years 2012-13, 2013-14, 2014-15 and 2015-16. However, no corrective action has been

taken by NHAI.

2) Significant Account Policies (Schedule 18)

A reference is invited to Accounting Policy No. 5 in Schedule 18 - Significant Accounting Policies

which inter alia stated that "the funds borrowed under a) Capital Gains Tax Exemption Bonds

•


28

u/s 54 EC of Income Tax (IT) Act, b) Tax free, secured, redeemable, non-convertible bonds

u/s 10 (15) (iv) (h) of IT Act and c) Taxable bonds for tenure of 5/25/30 years are

secured against a flat at Ahmedabad, the highway projects and the superstructures

constructed on National Highways, for which the NOC has been issued by the GoI". Audit

observed that the above disclosure made in the Accounting Policy No. 5 was misleading and

deficient to the extent that the NOC given by MoRTH was only for superstructure constructed

on National Highways.

3) Notes on Accounts (Schedule 19)

3.1) Note No. 17

The above Note disclosed that against a deposit of Rs. 800.25 crore, NHAI had spent

Rs. 3990.03 crore thus the recoverable stood at Rs. 3189.78 crore.

rd However, as per the status report filed on 23 March 2017 by MoRTH before the

Honorable Supreme Court of India, an amount of Rs. 937.92 crore was released to NHAI

by MoRTH and NHAI had an additional fund requirement of Rs. 4962.08 crore from the

central pool. The discrepancy in the amount received by NHAI from MoRTH required

justification.

3.2) Note No. 24

The Note states that "pending the approval of revised format of accounts by MoRTH in

consultation with C&AG, existing format of accounts has been used for FY 2016- 17". The

above disclosure was deficient to the extent that the existing format has been deviated by

changing CWIP in to 'Assets held on behalf of GoI'.

3.3) Note No. 26

The above Note on Contingent Liabilities does not include contingent liability of

Rs. 212.38 crore claimed by the concessionaires/ contractors and 83 no. of cases

pending for land acquisition which are under litigation.

3.4) Adequate disclosure of the following has not been made in the Notes on Accounts

which are silent as to the following:

(a) Fact of non-availability of title deeds of 2.86 acres of land located at Delhi - Gurgaon

border RHS (KM 24.00) and about one acre of land available near Hero Honda

Chowk in Gurgaon, possession of which rests with NHAI.

(b) As per the Cash Flow Statement, Closing cash and cash equivalents were

Rs. 8779.91 crore which consist of i) Cash and cheques in hand/in transit - Rs. 1.15

crore, ii) Balance with banks in Current Account - Rs. 8116.82 crore and iii) Balance

with banks in FD Account - Rs. 258.83 crore totalling to Rs. 8376.80 crore only.

Hence, there is a difference of Rs. 403.11 crore.

4) Based on the information compiled by Audit in respect of 42 projects (under 15 PIUs) it was

noticed that out of 8152.414 hectares of land acquired till 2016-17, for road Projects,

3379.442 hectares of land (41.45 per cent of total land acquired) was not mutated as on

31 March 2017. However, the fact regarding non-mutation of land to the above extent was not

disclosed in the Notes on Accounts.

5) Gross Block and Net Block of Fixed Assets as on 31 March 2017 have been shown at


29

(Rs. in crore)

Rs. 12533.36 lakh & Rs. 4675.97 lakh respectively in the Balance Sheet which includes Assets

created out of Grant amounting to Rs. 612.58 lakh. As depreciation is not charged on Assets

created out of Grant, these Assets should have been deducted from the Gross Block before

charging depreciation.

(6) Corrections carried out at the instance of Audit

On the basis of observations of Audit, the Management carried out corrections in the accounts

to the extent of Rs. 10.45 crore as detailed below:

1. Assets 7.77 7.77 - -

2. Liabilities 2.68 2.68 - -

3. P&L A/c - - - -

Total 10.45 10.45 - -

Sr. No. Particulars Inter Head Intra Head

Debit Credit Debit Credit


30

1) Internal Audit System st

Internal Audit of all 145 Units that existed on 1 April 2016, comprising NHAI Headquarters, Regional

Offices and Project Implementation Units, was outsourced to the firms of Chartered Accountants for the

year 2016-17. The Internal Audit Reports issued by the Internal Auditor of NHAI Hqrs. did not include

any reference to the Action Taken by NHAI on the observations included in the previous internal audit

reports.

2) Internal Control System

Internal Control system needs to be strengthened in view of the following:

a) In the books of accounts of NHAI Headquarters, following amounts are lying un-reconciled for

more than 9 years, as detailed below:

(i) Advance against deposit work for utility shifting,

agency charges, D&S charges for RoBs, etc., pending for more

than 13 years

(ii) Advances given to various Government Departments

during the year 2003 to 2008 for maintenance of Pending for

highway. 09-14 years

These issues were raised on the accounts for the year 2013-14, 2014-15 and 2015-16, but NHAI

did not take any corrective action.

b) National Highways Fee (Determination of Rates and Collection Rules) 2008, as amended in

January 2011 stipulated that after recovery of the capital cost of the public funded projects through

user fee realized, fee leviable would be reduced to 40 per cent of the user fee. MoRTH issued (24

January 2013) guidelines on the method of working out of capital cost. As per guidelines, capital

cost inter alia includes interest during construction period (IDC). Further, NHAI was also required

to prepare the balance sheet and cash flow of each project for each financial year from April 2013.

However, NHAI has not prepared any such project wise balance sheet and cash flow statement.

Working out the capital cost and thus the reduction a user fee to 40% would not be possible due to

failures of compliance with the guidelines issued by the MoRTH.

c) Non-confirmation of Balances

Management has not sent 'Confirmation of Balance' letters and got the balances confirmed both at

Hqrs. and PIUs. Hence, correctness of the balances mentioned in the Financial Statements as

regards i) Claims recoverable: Rs. 2617.52 crore ii) Recoverable from Subsidiary Companies:

Rs. 1.79 crore and iii) Recoverable on account of Expenditure on Eastern Peripheral Expressways:

Rs. 3990.04 crore are subject to confirmation by the above parties. Further, instances of

non-reconciliation of balances with Bank Accounts (including CALA Bank Accounts) in four PIUs of

NHAI and non-receipt of balance confirmation in one PIU of NHAI were noticed.

3) System of Physical Verification of Fixed Assets

Physical verification report of fixed assets at NHAI Head Office was not furnished to Audit. In the

absence of the same the authenticity of fixed assets available could not be ascertained by Audit.

4) Systern of Physical Verification of Inventory

There is no inventory.

5) Regularity in payment of Statutory Dues

No instances of delay in depositing TDS were noticed.

S. Details/Heads of Account Amount Period

No. (Rs. in crore)

22.29 Reconciliation

100.03 Reconciliation

Annexure- II to Audit Report


31

Annexure - III

Information/records still to be received

Sl. Particulars Requisition Reminder Date

No. No. & Date

1 Status report of Legal and Arbitration cases as on

31.03.2017.

2 Status report of pending files as on 31.03.2017 in

respect of Change of Scope of various projects.

3 Minutes of 3 CGM Committee Meeting held up to

31.03.2017 for the years 2015-16 and 2016-17.

4 List of abandoned projects.

5 Claims received from different concessionaires st against NHAI up to 31 March 2017, for violation of

‘State Support Agreements’ by different State

Governments.

6 Measurement books in respect of ‘Residential

Complex for NHAI Staff' and ‘Second Office Building

of NHAI’ at Dwarka in respect of payments made for

work certified and measured up to 31.03.2017.

7 Accounting policy no. 4 on Land Acquisition inter alia

states, “the compensation for land acquisition as

determined by the Competent Authority is paid to

Land owners from a separate joint bank account

linked to Central CALA account”. In this regard, the

date from which the old system was dispensed with

and this new policy has been adopted along with the

copy of guidelines circulated in this respect.

8 Guidelines received, if any, from MoRTH in respect of

accountal and treatment of penalties/damages etc.

levied and collected by NHAI.

01

04.08.17

01

04.08.17

01

04.08.17

06

13.09.17

06

13.09.17

07

14.09.17

08

15.09.17

08

15.09.17

14.09.17, 22.09.17,

25.09.17 & 27.09.17

14.09.17, 22.09.17,

25.09.17 & 27.09.17

14.09.17, 22.09.17,

25.09.17 & 27.09.17

22.09.17, 25.09.17

& 27.09.17

22.09.17, 25.09.17

& 27.09.17

22.09.17, 25.09.17

& 27.09.17

22.09.17, 25.09.17

& 27.09.17

22.09.17, 25.09.17

& 27.09.17


33

NATIONAL HIGHWAYS AUTHORITY OF INDIAG-5 & 6, Sector-10, Dwarka

NEW DELHI - 110 075st

BALANCE SHEET AS AT 31 MARCH, 2017

For and on behalf of the Board of the Authority

Place : New Delhi. Sd/- Sd/-Date : 26.07.2017 Member (Finance) Chairman

I. SOURCES OF FUNDS

1 Shareholders' Fund

a) Capital 1 1,39,59,380.47 1,25,51,457.89

b) Reserves & Surplus 2 0.00 748.68

2 Grants

a) Capital 3 13,65,643.01 13,66,280.32

3 Borrowings 4 75,38,464.71 45,27,036.70

TOTAL 2,28,63,488.18 1,84,45,523.58

II. APPLICATION OF FUNDS

1 Fixed Assets 5

a) Gross Block 12,533.36 11,870.62

b) Less: Depreciation 7,857.39 7,217.40

c) Net Block 4,675.97 4,653.21

d) Less: Assets created out of Grants 612.58 612.58

e) Assets held on behalf of GoI (completed & ongoing) 2,17,72,656.62 1,76,45,402.50

Total 2,17,76,720.00 1,76,49,443.14

2 Investment 6 90,959.00 1,21,652.89

3 Current Assets, Loans and Advance 7

a) Inventories - -

b) Deposits, Loans & Advances 32,95,320.19 25,77,831.04

c) Interest accrued but not due on deposits 1,399.71 2,826.98

d) Interest accrued and due on CALA deposits 52,628.05 59,569.52

e) Cash & Bank Balance 8,37,680.26 6,74,079.72

f) Inter Unit Account 0.00 -

sub total 41,87,028.21 33,14,307.25

Less: Current Liabilities and Provisions

a) Liabilities 8 31,87,098.88 26,36,198.49

b) Reserves & Provisions 9 4,120.15 3,681.20

sub total 31,91,219.03 26,39,879.69

Net Current Assets 9,95,809.18 6,74,427.56

4 Misc. Expenditure 10

(to the extent not written off)

5 Profit & Loss Account

(Debit balance if any)

TOTAL 2,28,63,488.18 1,84,45,523.58

As onst st PARTICULARS SCHEDULE 31 March, 2017 31 March, 2016

Rs. in Lakhs Rs. in Lakhs

(1) (2) (3) (4)


34


NEW DELHI - 110 075ST

PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR ENDED 31 MARCH, 2017



I. INCOME

a) Value of Work done

b) Other income 11 1,353.35 1,293.36

c) Interest (Gross) 12 1.06 0.88

d) Net Increase/Decrease in 13

Work-in-progress (+)/(-)

TOTAL INCOME 1,354.40 1,294.24

II. EXPENDITURE

a) Construction Stores/Material consumed

Other stores, spares & tools etc. consumed

Work Expenses 14 0.00 -

Personnel & Administrative Expenses 15 27,282.06 22,537.20

Finance Charges 16 14.71 7.76

Depreciation 771.52 870.43

Assets of Small Value Charged Off 22.01 21.50

Exceptional Item

Provision for diminution in the value of investment 40,310.88 -

Less: Provision transferred to Capital (Sch-1) (40,310.88) -

TOTAL EXPENDITURE 28,090.30 23,436.89

Profit / (Loss ) for the period (26,735.89) (22,142.65)

Add: Prior Period Items net(+/-) 17 (1,135.83) (747.01)

(details to be given)

Transfer of Net Establishment Expenses 27,871.73 22,889.66

for the year to Sch-5

Less/Add: Provision for Taxation - -

Net Profit

Less: Transfer to Capital Reserve

Less: Transfer to other specific

Reserve/Fund

Less/Add: Transfer to/Transfer from

General Reserve (+/-)

Less/Add: Surplus brought forward

from previous year

Surplus carried to Balance Sheet

Year endedst st PARTICULARS SCHEDULE 31 March, 2017 31 March, 2016


(1) (2) (3) (4)

Year ended


35


NEW DELHI - 110 075

CASH FLOW STATEMENT FOR THE YEAR ENDED 31.03.2017

A. Cash flow from operating activities:

Net profit before tax (26,735.89) (22,142.65)

Adjustments for:

Depreciation 771.52 870.43

Profit/Loss on sale of assets (2.77) (3.55)

Interest income (1.06) (0.88)

Operating profit before working capital changes (25,968.20) (21,276.65)

Adjustments for:

Increase in Deposits, Loans & Advances (7,17,489.15) (11,51,482.74)

(Decrease)/Increase in liabilities 5,50,900.39 10,08,785.80

Increase in Provision for gratuity and Leave encashment 438.95 609.89

Cash flow before extraordinary item & prior period items (1,92,118.01) (1,63,363.70)

Prior period items (1,135.83) (747.01)

Net cash generated from operating activities (1,93,253.85) (1,64,110.71)

B. Cash flow from investing activities:

Purchase of fixed assets (803.66) (757.79)

Realisation from sale of assets 12.16 13.13

Increase in Capital Work in progress (38,66,631.06) (34,50,701.69)

Increase/Decrease in investment 30,693.88 (27.88)

Interest Income 1,62,085.61 96,759.82

Capital Reserve (Receipts) 20,349.00 11,188.98

Net cash used in investing activities (36,54,294.06) (35,66,295.75)

C. Cash flow from financing activities:

Cess funds received from Govt of India 2,32,650.00 15,42,000.00

Capital additional budgetary receipts 5,64,902.00 37,027.00

EAP Grant utilised towards Revenue Expenditure (637.31) (621.09)

Transfer of "Premium on Bonds" to "Capital Reserve" (748.68)

Adjusted Plough back of Toll Remittance,etc 6,50,681.46 5,20,390.71

Net decrease in loan from ADB due to Exchange Loss after Adjustment of Repayments (6,133.29) (159.09)

Proceeds from issue of 54EC Capital Gains Tax-Free Bonds 5,57,274.20 4,28,117.00

Proceeds from issue of Tax Free Bonds 2015-16, including Premium - 19,00,703.22

Proceeds from issue of Taxable bonds 27,54,500.00 -

Redemption of Capital Gains Tax- Free Bonds (2,94,212.90) (2,90,206.80)

Interest and other expenditure on Bond (4,06,816.15) (2,22,770.32)

Net cash generated from financing activities 40,51,459.33 41,37,250.94

Net increase/(decrease) in cash and cash equivalents (A+B+C) 2,03,911.43 4,06,844.49

Opening cash and cash equivalents 6,74,079.72 2,67,235.23

Closing cash and cash equivalents 8,77,991.14 6,74,079.72

Notes:Cash and cash equivalents include:

Cash and cheques in hand / in transit 114.81 4.39

Balance with banks: - In Current Account 8,11,682.59 73,702.37

- In FD account 25,882.86 6,00,372.95

Balance as per books of account 8,37,680.26 6,74,079.72

PARTICULARS CURRENT YEAR PREVIOUS YEAR





36



SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2017

PARTICULARS


st st 31 March, 2017 31 March, 2016

SCHEDULE - 1

i) Capital U/S 12(i)(b) - Commencing Capital

ii) Capital U/S 17

a) Capital Base 80,100.00 80,100.00

b) Cess Fund 91,16,270.00 75,74,270.00

Add : Received during the Period 2,32,650.00 93,48,920.00 15,42,000.00

c) Additional Budetary Support

- Additional Budetary Support (NHDP) 10,06,670.00 4,41,768.00

- Additional Budetary Support (others) 3,76,584.00 13,83,254.00 3,76,584.00

d) Capital -Net off Toll Collection, Negative Grant etc. upto 31.03.10 6,18,355.88 6,18,355.88

e) Plough back of Toll Remittance,etc.w.e.f. 01.04.10 (Gross) 30,31,089.00 22,81,089.00

Less: Plough back transferred to SPVs (15,207.23) (10,728.96)

Less: 1) Expenditure on Toll Collection Activities (wef. 01.04.2010) (84,727.05) (62,857.09)

2) (Excess)/Surplus of Expenditure on Maintenance of Highways

over Maintenance Grant Received (wef. 01.04.2010). (3,62,093.25) (2,89,122.95)

3) Transfer of Exceptional item from P & L A/c (40,310.88) 31,47,106.47 0.00

Total (Schedule 1) 1,39,59,380.47 1,25,51,457.89

(Additions and deductions since last balance sheet to be

shown under each of the specified heads)

i) Capital Reserve

Opening Balance 88,729.49

Add : Additions during the Period 20,349.00

Capital Receipts transferred to Sch-5 1,09,078.49

ii) General Reserve

iii) Premium on Tax-Free Bond issue - 748.68

iv) National Highways Authority of India fund under Section 18(i)

v) Credit balance of P & L A/C

Opening Balance

Less : Adjusted during the year

Total (Schedule 2) - 748.68

Grants

i) Capital Grant

ia) For Externally Aided Projects 13,70,982.00 13,70,982.00

Interest earned on un-utilized Grant 1,001.00 1,001.00

Less : Assets created out of Grants (Sch.-5) (612.58) (612.58)

Less : Revenue Expenditure out of Grant (5,727.41) 13,65,643.01 (5,090.10)

ib) For Office Building at Dwarka 150.00 150.00

Less: Transferred to Building Account (Sch.- 5) (150.00) - (150.00)

ic) For servicing of 54EC Bonds issue 1,000.00 1,000.00

Interest earned on un-utilized Grant 496.68 496.68

Less : Expenditure incurred on 54EC Bonds:

Bond Issue Expenses (8,300.57) (7,216.70)

Interest on Bond (5,59,764.64) (4,90,073.95)

Others (3.00) (3.00)

Deficit transferred to schedule-5 5,66,571.53 4,95,796.97

Total (Schedule 3) 13,65,643.01 13,66,280.32

Secured Loans

Capital Gains Taxfree Bonds- 54EC 13,19,731.60 10,56,670.30

Tax Free Secured Redeemable Non-Convertible Bonds (10Yr & 15Yr) 11-12 10,00,000.00 10,00,000.00



Taxable Bonds (25Yrs) 2016-17 10,00,000.00 -

Taxable Bonds (5Yr) 2016-17 9,04,500.00 -

Taxable Bonds (30Yr) 2016-17 8,50,000.00 -

(Secured against a Flat in Ahmedabad and Fixed Assets of NHAI )

Loan from ADB- (Surat Manor Project) 64,233.11 70,366.40

(Guaranteed by GoI)

Total (Schedule 4) 75,38,464.71 45,27,036.70

SCHEDULE - 2

SCHEDULE - 3

SCHEDULE - 4

st st PARTICULARS SCHEDULE 31 March, 2017 31 March, 2016


As on


37

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38




As on

st st PARTICULARS 31 March, 2017 31 March, 2016Rs. in Lakhs Rs. in Lakhs

SCHEDULE - 6

Investment

a) 25500000 Equity Shares of Rs.10 each fully paid-up in M/s Moradabad Toll Road Co. Ltd. In addition,

4500000 Equity Shares of Rs.10 each in M/s Moradabad Toll Road Co. Ltd.

acquired from M/s UPSBCL in 2009-10 at a cost of Rs.6,85,88,305/- 3,235.88 3,235.88

Equity shares of Rs.10 each fully paid-up in each of the following

b) Ahmedadabad-Vadodara Expressway Co. Ltd.(31,28,50,000 equity shares) 31,285.00 31,285.00

c) Mumbai-JNP Port Road Co. Ltd. (9,96,60,007 equity shares) 9,966.00 9,966.00

d) Mormugao Port Road Co. Ltd. (7,47,00,000 equity shares) 7,470.00 4,350.00

e) Visakhapatnam Port Road Co. Ltd.(3,87,00,007 equity shares) 3,870.00 1,870.00

f) Calcutta-Haldia Port Road Co. Ltd (15,66,00,007 equity shares)of Rs. 10 each and 1,60,00,000 equity shares of Rs. 10 each at a premium of Rs. 15 each 19,660.00 15,660.00

g) Cochin Port Road Co. Ltd. (5,79,00,000 equity shares) 5,790.00 5,790.00

h) Tuticorin Port Road Co. Ltd. (9,87,00,000 equity shares) 9,870.00 9,870.00

i) Paradeep Port Road Co. Ltd. (15,00,00,000 equity shares) 15,000.00 15,000.00

j) New Manglore Port Road Co. Ltd.(9,89,60,000 equity shares) 9,896.00 9,896.00

k) Application Money (New Manglore Port Road Co. Ltd.) 497.00 -

Less: Provision for Diminution in the value of investment in AVEXCL, CPRCL & MTRCL (40,310.88) -

Sub Total 76,229.00 1,06,922.89

M/s Indian Highways Management Co. Ltd (75,00,000 equity shares) 750.00 750.00

Chennai-Ennore Port Road Co. Ltd. (13,98,00,007 equity shares) 13,980.00 13,980.00

Sub Total 14,730.00 14,730.00

Total (Schedule 6) 90,959.00 1,21,652.89

A. Investment in Share Capital of Subsidiary Companies:

B. Investment in Share Capital of Other Companies:


39




As on

st st PARTICULARS 31 March, 2017 31 March, 2016Rs. in Lakhs Rs. in Lakhs

Current Assets, Loans & Advances

a. Inventories (As taken, valued & certified by the management)

i) Tools

ii) Stores & Spares (at cost including in transit)

iii) construction Stores/Materials

iv) Work-in-progress (mode of valuation to be stated)

Sub Total (a) - -

b. Deposits, Loans & Advances

i) Deposits

ii) Advances to Staff 110.79 107.09

iii) Advances to Contractors / Consultants

a) Mobilisation Advance 2,76,811.69 2,15,093.76

b) Material Advance 4,417.53 5,917.91

iv) a) Advance against deposit works 60,441.51 58,118.84

b) Advance for maintenance of highways 23,097.14 25,337.53

v) Advances to Suppliers 7,126.28 6,465.10

vi) Claims recoverable 2,61,751.97 1,87,738.06

vii) Prepaid expenses 58.16 6.02

viii) Advance Others Including Advance Income Tax (TDS) 55,970.13 36,402.97

ix) Security deposits & retention money 98,094.88 71,248.34

x) Advance rent 8.42 5.06

xi) Recoverable from Subsidiary Companies 179.08 2,279.60

xii) Loan to Subsidiary Companies 1,97,287.15 1,88,189.60

xiii)Recoverable on account of Expenditure on Eastern Peripheral Expressways 3,99,003.84 1,77,758.18

xiv) (As per Contra in Schedule-8) Un-disbursed balance with:

1) various old CALA A/c 1,43,827.90 15,90,806.74

2) Central SBI CALA A/c 14,11,156.03 -

xv) Recoverable from MORTH 3,37,882.06 -

xvi) Loan to contractor/consultant/others 18,095.63 12,356.25

Sub Total (b) 32,95,320.19 25,77,831.04

c. Interest accrued but not due on deposits 1,399.71 2,826.98

d. Interest accrued and due on CALA deposits 52,628.05 59,569.52

e. Cash & Bank balances

i) Cash & Cheques in hand including stamps. 0.38 3.75

ii) Balances with Scheduled Banks - On deposits accounts (excluding interest accrued & due

on Deposits with CALA) 25,882.86 6,00,372.95

- On current accounts 8,11,682.59 73,702.37

iii) Balances with Non scheduled banks - On deposits accounts (incl. interest accrued)

iv) Remittance in transit 114.43 0.64

Sub Total (e) 8,37,680.26 6,74,079.72

f. Inter Unit Account - -

Grand Total 41,87,028.21 33,14,307.25

SCHEDULE - 7


40

Current Liabilities

i) Liabilities for sundry creditors

ii) Other liabilities 10,63,444.38 6,64,218.75

- Application money for 54EC Bonds 0.06 0.00

iii) Deposits held on account of others (if applicable)

a) Sundry parties 1,24,329.65 35,694.54

b) Contractors 1,62,101.91 1,22,846.05

c) Suppliers - -

d) (As per Contra Schedule-7) Un-disbursed balances with:

1) various old CALA A/c 1,43,827.90 15,90,806.74

2) Central SBI CALA A/c 14,11,156.03 -

e) Received on A/c of Eastern Peripheral Expressway 80,025.00 80,025.00

iv) Payable to GOI w.e.f. 01.04.2010

a) Toll Revenue, Shared Revenue, Negative Grant, etc. 1,98,522.57 1,40,917.72

b) Other Receipts 3,691.38 1,689.70

Total (Schedule 8) 31,87,098.88 26,36,198.49

Provisions

i) Provisions for taxes

ii) Provisions for gratuity 2,104.20 1,792.48

iii) Provisions for Leave Salary 2,007.65 1,888.72

iv) Other provisions 8.31

Total (Schedule 9) 4,120.15 3,681.20

Misc. Expenditure to the extent not written off.

Total (Schedule 10)

Other Income

Sale of Tender Documents 1,220.07 1,201.93

Fee for other services 76.15 62.66

Profit/Loss on sale of assets 2.77 3.55

Misc. Receipts 54.36 25.22

Total (Schedule 11) 1,353.35 1,293.36

Interest (Gross)

From banks on deposits - -

From employees on advances 1.06 0.88

From others - -

Total (Schedule 12) 1.06 0.88

As onst st PARTICULARS 31 March, 2017 31 March, 2016


SCHEDULE - 8

SCHEDULE - 9

SCHEDULE - 10

SCHEDULE - 11

SCHEDULE - 12





41




st st PARTICULARS 31 March, 2017 31 March, 2016


SCHEDULE - 13

Net Increase/Decrease in Work-in-progress

Closing Stock

Work-in-progress

Less: Opening Stock

Work-in-progress

Received on A/c of Eastern Peripheral Expressway

Net Increase/Decrease

Total (Schedule 13)

SCHEDULE - 14 - WORKS EXPENSES

a. Work Expenses etc.

Electricity Power & Fuel

Survey Expenses

Consultancy Expenses

Payment to Contractor

Escalation claims

Sub Total (a)

b. Repair & Maintenance

Roads & Bridges

Less : Transfer from Grant A/C

Buildings

Plant, Machinery & Equipment

Sub Total (b)

c. Others

Insurance:-

Technical studies & consultancy charges

Research & Development expenses

others

Sub Total (c)

Total (Schedule 14)

As on


42

As on




st st PARTICULARS 31 March, 2017 31 March, 2016


SCHEDULE - 15

Personnel & Other administrative expenses,

salaries wages & other staff benefit:

Salaries & Allowances Chairman/Members 162.99 82.18

Salaries Allowances other than Chairman/Members 10,485.47 9,467.63

Workman Staff Welfare Expenses 1,825.93 1,506.79

Contribution to Provident Fund 674.56 581.49

Pension & Leave Salary -Chairman & Members 31.15 10.97

Pension & Leave Salary -others 760.10 792.69

Gratuity 317.28 293.59

Rent for office accommodation 1,204.75 1,042.42

Rates and Taxes 26.39 11.57

Repairs & maintenance 669.59 719.07

Insurance 8.59 6.12

Honoraria fee and other professional charges 1,263.67 478.26

Travelling expenses, Conveyance 3,268.32 2,493.50

Printing & Stationery 376.58 268.45

Postage & communications 516.85 504.43

Advertisement & publicity 930.23 596.33

Remuneration to Auditors-C&AG 349.60 314.78

Other Revenue Expenses 4,409.55 3,366.82

Misc. Expenses 0.45 0.14

Total (Schedule 15) 27,282.06 22,537.20

i) Interest

On over draft

On Loans from banks

On Tax deducted at Source 11.69 5.40

On Tax

On Bonds/Debentures

On Loans from Govt. of India

ii) Discounting Charges

iii) Guarantee Commission/Bank charges 3.02 2.36

iv) Bond Issue Expenses

Total (Schedule 16) 14.71 7.76

Prior Period Adjustments

Prior period income (Debit) 46.49 8.17

Prior period Expenses (Debit) 1,089.34 738.84

Total (Schedule 17) 1,135.83 747.01

SCHEDULE - 16 FINANCE CHARGES

SCHEDULE - 17


43

PARTICULARS FY 2016-17

Personnel & Other Administrative Expenses

a) Salaries, Wages & Other Staff benefits.

i) Salary & Wages 9,267.10

ii) Chairman & Members 162.99

iii) Over Time Allowance 0.96

iv) Rent for Residence/Licence fee 1,111.35

v) Bonus 22.16

vi) Incentives 2.07

vii) Transport subsidy -

viii)Leave Encashment 26.29

ix) Ex gratia 55.54

Sub Total (a) 10,648

b) Workman Staff Welfare Expenses

i) Medical reimbursement 552.48

ii) Staff Welfare:

Welfare expenses 820.35

Kitchen,Utencil & Appliances 4.69

iii) Seminar/Training expenses 358.16

iv) LTC 90.25

v) Liveries

Sub Total (b) 1,825.93

c) Contribution to:

i) Provident Fund 674.56

ii) Pension & Leave salary Members & Chairman 31.15

iii) Pension & Leave salary Others 760.10

iv) Others-Gratuity 317.28

Sub Total (c) 1,783.09

d) Repairs & Maintenance

i) R & M Office Building 390.38

ii) R & M Office Equipments 87.01

iii) R & M Light vehicles 7.38

iv) R & M Others 95.71

v) R & M Computer & EDP 89.11

Sub Total (d) 669.59

e) Insurance

i) Light Vehicles 1.75

ii) Others 6.84

Sub Total (e) 8.59


NEW DELHI - 110 075

GROUPING SCHEDULE - 15 (Rs. In Lakhs)


44


NEW DELHI - 110 075

GROUPING SCHEDULE - 15 (Rs. In Lakhs)

PARTICULARS FY 2016-17

f) Honoraria fee & other professional charges

i) Fee of liasion work

ii) Consultancy fee 917.32

iii) Honoraria fee 3.95

iv) Legal, & Statutory fee 85.51

v) Professional charges -

vi) Internal Audit fee 256.89

Sub Total (f) 1,263.67

g) Travelling Expenses

i) Local conveyance 1,829.84

ii) Travelling Expenses (India) 1,358.42

iii) Travelling Expenses (Abroad) 80.07

Sub Total (g) 3,268.32

h) Printing & Stationery Postage & Communication

i) Printing & stationery 376.58

ii) Postage, Telegram including air freight 120.52

iii) Telephones & Telex 396.33

Sub Total (h) 893.44

i) Remuneration to Auditors -C&AG

i) Audit fee 341.62

a) For taxation -

b) For other services

ii) Reimbursement of Travelling & out of pocket expenses 7.98

Sub Total (i) 349.60

j) Other Revenue Expenses

i) Entertainment Expenses -

ii) Tender bond expenses -

iii) Membership fee 7.60

iv) Publications, Books & Newspaper 23.38

v) Other expenses -

vi) Sundry balances written off 0.00

vii) Staff recruitment expenses 4.92

viii) Deficit from Seminars/Trg. organised (Net) -

ix) Security expenses/Short-Term Contract Staffs 3,673.73

x) Electricity & Water charges 666.58

xi) Gifts & Presents 33.34

Sub Total (j) 4,409.55

k) Miscellaneous office expenses 0.45

l) Rent 1,204.75

m) Rates & Taxes 26.39

n) Advertisement & Publicity 930.23

GRAND TOTAL 27,282.06


45

Significant Accounting Policies 2016-17

1. Basis of Accounting

The financial statements are generally prepared under the historical cost conventions and on accrual

basis, unless indicated otherwise.

2. Capital

Funds are provided by the Government of India for strengthening the Capital Base through:-

i) Allocation of a portion of Cess on diesel & petrol for the national highways out of the Central Road

Fund

ii) Additional budgetary support for NHDP and other specific projects

iii) Plough-back of toll remittances, shared revenue and negative grants.

3. Capital Grant

i. External Assistance (EA), other than loans, provided by the Government of India to execute

various externally Aided Projects is accounted for as Capital Grant.

ii. Fixed assets created out of the grant are not subjected to depreciation and accordingly, the full

value of the fixed assets is shown as a deduction from the amount of grant or the amount of grant

is shown as a deduction from the value of the fixed assets, as the case may be.

iii. Interest earned on the unutilized grant is credited to the Capital Grant account.

4. Land Acquisition

Land is acquired through Competent Authority (Land Acquisition) for the purpose of National

Highways. Compensation, as determined by the Competent Authority, is paid to the Land owners from

a separate joint bank account linked to the Central CALA account. Such payments are capitalized at

time of transfer of amount to Central CALA account. Interest earned on the undisbursed amount is

accounted for on accrual basis and credited to interest on unutilized capital.

5. Loans

i. Authority borrows funds under –

(a) Capital Gains Tax Exemption Bonds under Section 54 EC of the Income Tax Act, 1961.

(b) Public issue of Tax free, secured, redeemable, non-convertible bonds under Section 10 (15)

(iv) (h) of IT Act 1961.

(c) Taxable bonds for tenure of 5/25/30 years.

These bonds are accounted for under the head ‘Secured Loans’. These loans are secured against

a flat at Ahmedabad, the highway projects and the superstructures constructed on National

Highways, for which the NOC has been issued by the GoI.

ii. Loan from ADB is guaranteed by Government of India.

6. Fixed Assets & Depreciation

6.1 Fixed Assets received from Government of India (GOI) are recorded at historical cost. In absence

of transfer price, the total value of assets entrusted to the Authority by the Government of India

(GOI) has not been accounted for / capitalized.

6.2 Financing charges relating to loans obtained for execution of specific projects till the

commissioning of such projects are treated as part of capital work-in progress.

SCHEDULE 18


46

6.3 Authority being an executing agency of GOI, holds the highways projects developed by it on

behalf of GOI, hence, these assets are not depreciated.

6.4 Depreciation on other fixed assets (like Computer EDP, Furniture, Office equipment etc.) is

provided on the basis of written down value (WDV) method as under:

i. No depreciation is provided on the assets or the portion of the assets financed out of the

capital grant.

ii. An item of asset costing Rs.5000/- or less is charged off to revenue in the year of

acquisition/purchase /commission/available for use.

Assets with written down value of Rs.5000/- or less as at the beginning of the year is also fully

depreciated during the year.

iii. Depreciation is provided at the following rates as adopted by the Authority-

Roads and Bridges -

Building 5

Computers 60

Furniture & Fixtures and Electrical Fittings & Installations 10

Motor Vehicles 20

Air Conditioners & Heaters 25

Office Equipment 25

Laboratory and Survey Equipment 25

iv. Depreciation at full rate is charged if the asset is available for/put to use for 180 days or more

in the given financial year. Depreciation @ 50% of the rate shown above is charged if an asset

is available for/put to use for less than 180 days in a given financial year.

7. Assets held on behalf of Government of India (GOI)

i. The Authority is an implementing agency of the Government of India and is mandated to develop,

maintain and manage the national highways and any other highways entrusted to or vested in it by

the Government. Authority is not the owner of the highways entrusted to it therefore highways

developed by the Authority are shown as “Assets held on behalf of GOI”.

Cost of such assets includes:

Direct expenditure:-DPR, Land Acquisition, Utility shifting, Tree Cutting, Civil construction, Annuity,

VGF etc.

Indirect Income/Expenditure:-

(a) Interest earned on unutilized capital, on advances/loans granted to the contractors/consultants

and receipts from ongoing projects as shown under Capital reserve;

(b) Interest and issue expenses on market borrowings / loans availed by the Authority Assets held on

behalf of GoI.

(c) Net establishment expenditure after setting off the income.

Allocation of Cost:

i. The expenses on pre-construction activities for more than one project [to the extent not

Item of Fixed Asset Rate of Depreciation

(%) per annum


47

specifically allocable to the projects] are apportioned to the projects on the basis of the length of

the projects.

ii. The expenses on construction supervision for more than one project [to the extent not specifically

allocable to the projects] are apportioned to the projects on the basis of the awarded value of the

civil works contracts.

Public-Private Partnership

NHAI is executing a number of projects under Public-Private Partnership on BOT (Toll), BOT (Annuity)

and BOT (Hybrid Annuity Mode) basis.

(a) BOT (Toll) projects- Grants (Viability Gap Funding) paid by NHAI is booked as “Positive Grant /

VGF”. However Negative Grants received by NHAI are accounted for under “Payable to GoI” and

remitted to Consolidated Fund of India (CFI).

(b) BOT (Annuity)/ BOT (Hybrid Annuity Mode) projects- Semi-Annuity paid to concessionaire is

booked under “Semi-Annuity (Civil Works)”.

8. Expenditure on Maintenance of Highways and collection of toll

Expenditure on Maintenance of Highways and toll collection activities, after setting of maintenance

grant received from GoI for maintenance of highways is reduced from plough-back of toll remittances

and shown as capital (Schedule-I) under additional budgetary support-plough back of toll remittance.

9. Payments to Government Departments / Agencies

Payments made to various Central & State Government departments and other Government Agencies

are regulated as under-

(a) Payments made, to forest department on the basis of demands raised by them as per their

prescribed norms, towards afforestation and tree cutting, are directly capitalized.

(b) Payments made to Government Departments towards supervision /agency charges for utility

shifting and to Railways towards construction of ROBs are capitalized on acknowledgement of

receipt of such amount by the concerned department.

(c) Payments towards maintenance of highways to the State Government departments are shown as

‘Advance for maintenance of highways’. Expenditure incurred against such advances, based on

the utilization statements furnished by respective state agencies, is shown as expenditure on

maintenance of highways.

10. Toll Revenue, Shared Revenue and Negative Grant

The amount of toll revenue, shared revenue, negative grant and interest earned thereon, is remitted to

Consolidated Fund of India on actual receipt basis.

11. Revenue Recognition

(i) The proceeds on sale of tender documents are accounted for as income (and the related

expenditure is accounted for under the appropriate heads of expenditure) of the Authority.

(ii) Supervision charges, if any, received against deposit work and supervision and monitoring fees

received under Durg bypass BOT contract are treated as income of the Authority.

(iii) Any other income, which is in the nature of revenue receipt and not payable to the Govt. of India.

12. Agency Charges

Agency charges is recognized notionally at the following rates on the value of various projects

executed w.e.f. 1/4/2008.


48

(a) 1% on all capital works projects, including on the total expenditure on BOT and Annuity projects;

(b) 9% on the expenditure on maintenance of highways directly done by NHAI;

(c) 2% on the expenditure on maintenance of highways carried out through the State Public Works

Departments.

Agency charges are accounted for through a Memorandum Account. All establishment

expenditure, after setting off the income is appropriated against the Agency Charges through the

Memorandum Account. Disclosure for the same is being made in the note forming part of

accounts.

13. Retirement Benefits

The liability for retirement benefits of the regular employees and employees on contract (long term) of

the Authority in respect of gratuity and leave encashment is accounted for on accrual basis and

invested in fixed deposits with banks. Every year these investments are adjusted in line with the

accrued liability.

14. Foreign Exchange Transactions

i. Foreign exchange transactions relating to purchase of/acquisition of or in relation to fixed assets,

goods and services are accounted for at the exchange rates prevailing as on the date of the

transaction.

ii. Foreign Currency loans outstanding at the end of the year are translated at the exchange rate as

indicated by the BC selling rate prevailing on the last date of the financial year or the most

proximate previous working day. Since the Authority is only an implementing agency and all the

capital expenses are incurred on behalf of the Government of India, losses or gains, if any, due to

exchange fluctuations relating to the loans utilized for acquisition of fixed assets/Assets held on

behalf of GoI are adjusted to the carrying cost of the relevant assets/Assets held on behalf of GoI

(instead of recognizing in the profit and loss account).

15. Miscellaneous

i. Cheques issued but not presented within three (3) months from the dates of issuance are

credited to the stale cheque account. Any amount outstanding in the stale cheque account for

three (3) years is transferred to the miscellaneous income account.

ii. At accounting level expenses/Incomes related to earlier years up to value of Rs. 50,000/- under

individual ledger account are charged to natural heads of accounts in current year and items

exceeding Rs. 50,000/- are booked under prior period items account.

iii. The Authority is only an implementing agency of the Government of India to develop, maintain

and manage the national highways and any other highways entrusted to or vested in it by the

Government. As such, there is no different segment reporting as per Accounting Standard-17

issued by the Institute of Chartered Accountants of India.

iv. The Authority is not required to consolidate its financial statements and the financial statements

of its subsidiaries as per the NHAI Act, 1988 and accordingly, the Accounting Standard - 21

issued by the Institute of Chartered Accountants of India is not applicable.

v. Long-term investments are stated at cost.


49

Notes on Accounts

1. Capital - During the year, an amount of Rs. 2326.50 crore (previous year Rs. 15420.00 crore) has

been received from the Government of India as Cess Funds. In addition Rs. 5649.02 crore for

development of National Highways (Original) Works (previous year Rs. 370.27 crore) and Rs. 7500.00

crore (previous year Rs. 6500.00 crore) as plough back of toll remittances have been received from

Govt. of India. These amounts have been credited to the Capital Account.

2. Maintenance Fund - An amount of Rs. 100.00 crore (previous year Rs. 100.00 crore) has been

received during the year from the Government of India towards maintenance of National Highways.

Amount spent on maintenance of highways during the year is Rs. 853.26 crore (previous year Rs.

1296.61 crore).

3. Interest on unutilized capital, loans & advances - Cumulative interest on unutilized capital and also

on loans & advances to contractors/consultants etc., amounting to Rs 10297.76 crore which includes

Rs. 526.28 crore accrued on CALA deposits as on 31.03.2017 (previous year Rs 8760.60 crore and

Rs. 595.70 crore respectively) have been shown (Schedule 5) as a reduction from the Assets held on

behalf of GoI.

4. Externally Aided Projects & Grants - The Authority, in addition to the projects funded out of capital

funds, is implementing various Externally Aided Projects (EAPs). These projects are funded by

multilateral agencies like the World Bank (WB), the Asian Development Bank (ADB) and Japan Bank

for International Cooperation (JBIC). These agencies provide funds to Government of India (GOI)

under the respective loan agreements signed by them with GOI, which in turn gets passed on to the

Authority in the ratio of 80:20 as grant and loan in the case of WB and ADB and 100% grant in the case

of JBIC. During the current as well as previous year no grant or loan towards execution of Externally

Aided Projects (EAP) has been received from the Government of India.

5. PIU wise details of cumulative expenditure incurred on the EAPs as on 31.03.2017 are as under:

A) Projects funded by World Bank Loan

(Loan No. 3470 IN, TNHP – Loan No. 4559 IN, GTRIP – Loan No.4622 IN, ABP - Loan No. 4719 IN

and LMNHP – Loan No.4764 IN)

Gorakhpur 2349.50 7.71 2357.21

Lucknow 1191.12 32.20 1223.32

Muzaffarpur 1348.41 49.82 1398.23

Kanpur 1508.84 0.23 1509.07

Allahabad 2037.42 3.71 2041.13

Varanasi 1341.33 3.88 1345.21

Dhanbad 1385.33 4.63 1389.96

Agra 1207.64 12.68 1220.32

Total 12369.59 114.86 12484.45

PIU Project Expenditure Advances Total

SCHEDULE - 19

(Rs. in crore)


50

B). Projects funded by Asian Development Bank Loan

1274 IND Gurgaon 388.47 0.00 388.47

1274 IND Vijayawada 438.51 0.00 438.51

1274 IND Durgapur 504.72 0.00 504.72

1747 IND Surat Expressway 1352.53 6.49 1359.02

1839 IND Chitradurga 1139.05 0.00 1139.05

1944 IND Gandhidham 1316.32 2.08 1318.40

1944 IND Rajkot 1042.01 19.75 1061.76

2029 IND Shivpuri 725.72 2.26 727.98

2029 IND Jhansi 1197.95 - 1197.95

2029 IND Chittorgarh (EW) 1359.60 1.35 1360.95

2029 IND Kota 1222.23 0.04 1222.27

2154 IND Anantpur 1386.26 0.07 1386.33

2154 IND Sagar 1085.60 0.10 1085.70

2154 IND Narsingpur 1043.29 0.00 1043.29

Total 14202.26 32.14 14234.40

Loan No. 1747 in respect of Surat Manor Toll-way Project (SMTP) has been extended to NHAI

directly by ADB.

C). Projects funded by Japan Bank for International Cooperation Loan

ID-P 91 Allahabad (Naini) 299.07 0.29 299.36

ID-P 92 Vijayawada 314.33 0.00 314.33

ID-P 100 Bhubaneshwar 148.35 0.77 149.12

ID-P 101 Ghaziabad 168.15 0.00 168.15

Total 929.90 1.06 930.96

6. Loans - A Loan of USD 180.00 million was sanctioned from Asian Development Bank (ADB) for

execution of Surat – Manor project on NH-8. Against this USD 149.48 million was finally disbursed.

There is an outstanding balance of Rs 642.33 crores (USD 98.41 million @ Rs 65.27) as on

31.03.2017 and the same has been included under ‘Borrowings’. Interest charges amounting to Rs

14.25 crore on loan (previous year Rs 11.00 crore which pertains to post construction period) has

been paid during the year. Up to 31.03.2010, it was shown as reduction from toll revenue payable to

GOI, since the interest payment on the loan was to be met out of the toll collection. From 01.04.2010

this is being shown as deduction from additional budgetary support (plough-back of toll remittance).

Provision for guarantee fee amounting to Rs 1.60 crore (previous year Rs. 1.76 crore) in respect of

Government of India guarantee has also been made in the accounts.

7. Toll Remittances & Plough Back - The GoI has decided that from 1.04.2010 onwards, the toll revenue,

shared revenue and negative grant collected by NHAI should be deposited in the Consolidated Fund of

India and additional budgetary provisions would be provided for expenditure from the Consolidated

Fund of India (CFI) in line with the amount deposited by NHAI in CFI. During 2016-17 NHAI has

deposited a total amount of Rs.7077.52 crore (toll revenue Rs. 4476.72 crore, shared revenue Rs.

1858.70 crore, negative grant Rs.742.10 crore) in Consolidated Fund of India as per the direction of

Loan No. PIU Project Advances Total

Loan No. PIU Project Advances Total

Expenditure

Expenditure

(Rs. in crores)

(Rs. in crores)


51

Ministry. Ministry, during 2016-17 has released Rs. 7500.00 crore (previous year Rs. 6500.00 crore )

to NHAI against Plough back of toll revenue through Permanent Bridge Fee Fund (PBFF) to meet the

expenditure on development, operation and maintenance of National Highways, toll collection

activities and repayment of loans etc.

8. Capital Gains Tax Exemption Bonds - As mandated under the Union Budget 2016-17, the Authority

has issued Capital Gains Tax Exemption Bonds under Section 54-EC of the Income Tax Act, 1961 for

an amount of Rs. 5572.74 crore during the year (previous year Rs. 4281.17 crore).

Cumulative expenses on issue of Bonds amounts to Rs 83.00 crores up to 31.03.2017 (up to previous

year Rs 72.17 crores).

Cumulative interest on 54 EC bond up to 31.03.2017 amounting to Rs 5597.65 crore (up to previous

year Rs 4900.74 crore) has been transferred to “Assets held on behalf of GoI” (Sch-5) after adjusting

grant received for servicing of bonds and interest thereon.

9. Tax Free Bonds – Authority has so far raised Rs. 34000 crores through tax free secured, redeemable,

non-convertible bonds (2011-12 Rs. 10000 crore, 2013-14 Rs.5000 crores 2015-16 Rs. 19000

crore). During FY 2016-17, accumulated premium of Rs. 7.49 crore have been transferred to Capital

Reserve.

10. Taxable Bonds- During F.Y. 2016-17, Authority has raised Rs. 27545.00 crore by issuing taxable bonds.

All these bonds are secured against first pari passu charge on property situated at Ahmedabad along

with the first charge on fixed assets of NHAI, being highway project comprising of all superstructure

including highways lightings, road barriers and divider, bridges, culverts and all other superstructures

constructed on National Highways except assets under Surat Manor Toll-way project). Central

Government has issued a no objection certificate for this. Name and contact details of debenture

trustee is as under

SBICAP TRUSTEE COMPANY LIMITEDthKhetan Bhavan, 5 Floor, 198, J.T. Road, Churchgate, Mumbai – 400020

Tel: +91-22-4302 5555, Fax: +91-22-4302 5500

Email: [email protected]

Website: www.sbicaptrustee.com

As on 31.03.2017, No investor complaint was pending for redressal.

11. Assets held on behalf of Government of India (GoI)

As an executing agency of Government of India, the entire project expenditure, as per Significant

Accounting Policy-7, has been shown as Assets held on behalf of GoI (Completed & Ongoing).

12. Provision for Gratuity and Leave Salary - Provision for accrued liability for Gratuity and Leave

encashment as per Gratuity Act and NHAI rules to the tune of Rs. 41.12 crore (last year Rs. 36.81

crore ) as on 31.03.2017 has been made in the books. FDR of Rs. 36.81 crore, representing last year’s

accrual, is proposed to be increased to Rs. 41.12 crore on maturity.

13. Land - Title of the land on which highways are constructed is with Government of India. Cost of land

acquired by NHAI in respect of ongoing and completed projects is reflected under Assets held on

behalf of GoI.

During 2016-17, Authority has introduced Central CALA account system for payment of land

compensation (refer Significant Accounting Policy 4). Majority of old CALA accounts under old system

have been closed by transferring the balance to Central CALA account. Undisbursed balances lying in

the remaining bank accounts and Central CALA account have been accounted for through a contra

entry in schedule 7 & 8.


52

14. Income Tax exemption - NHAI has been granted Income-tax exemption under section 10(23C) (iv) of

the Income Tax Act, 1961 on continuous basis vide Order No. DGIT(E)/10(23C)(iv)/2009, dated

13th February, 2009 issued by Director General of Income Tax (Exemptions) granting exemption for

AY 2008-09 and onwards. Accordingly provision for Income- tax has not been made as in the previous

years.

15. Loans and Advances to Chairman/Members - During the year no loan/advance was granted to

Chairman/ Members.

Debts/Loans/Advance due from Chairman/Members - Nil

Maximum amount due from Chairman/Members

at any time during the year - Nil

16. Investments in Subsidiaries & Associate Companies :-

Subsidiary Companies 1165.40

Associate Companies 147.30

Total 1312.70

The Board of Ahmedabad-Vadodara Ex. way Co. Ltd. (AVEXCL), Moradabad Toll Road Co .Ltd.

(MTRCL) and Cochin Port Road Company Limited (CPRCL) have approved the winding up of respective

companies. Petition for winding up is proposed to be filed with National Company Law Tribunal (NCLT)

under the provisions of the Companies Act, 2013 after Statutory Audit for the F.Y. 2016-17.

Out of eleven SPV companies associated with NHAI, nine are incurring losses. Investments of NHAI in

the loss making SPV companies have been valued by professional valuers. On the basis of Valuer’s

report, provision for diminution in the value of investment for Rs. 312.85 crore, Rs. 32.36 crore & Rs.

57.90 crore in respect of AVEXCL, MTRCL & CPRCL respectively have been made in the books.

Toll plough back received from Central Government against the amount remitted by subsidiaries to

CFI is passed on to the subsidiaries concerned. During 2016-17 an amount of Rs. 44.78 crore has

been passed on to the subsidiaries on this account.

On the request of Moradabad Toll Road Company Limited (MTRCL), Authority has waived off the

interest for FY 2011-12 onwards on the loan given to it. Following is the details of loan and advances in

the nature of loan to subsidiaries as on 31.03.2017-

Ahmedadabad-Vadodara Ex. way Co. Ltd. 5.23 -

Mumbai-JNP Port Road Co. Ltd. - -

Mormugao Port Road Co. Ltd. 66.41 -

Visakhapatnam Port Road Co. Ltd. 38.50 -

Calcutta-Haldia Port Road Co. Ltd. 438.61 -

Chennai-Ennore Port Road Co. Ltd. 35.93 -

Cochin Port Road Co. Ltd. 188.38 -

Tuticorin Port Road Co. Ltd. 199.97 -

Paradeep Port Road Co. Ltd. 596.14 -

New Manglore Port Road Co. Ltd. 355.67 -

Moradabad Toll Road Co. Ltd. 48.03

Total 1972.87 -

Investment Amount (Rs.in Crores )

Name of Subsidiary Loans (Rs.) crore Advances (Rs.) crore


53

17. Deposits, Loans & Advances

a) Eastern Peripheral Expressway - Against a deposit of Rs. 800.25 crore, Authority has spent

Rs. 3990.03 crore on Eastern Peripheral Expressway thus the recoverable stands at Rs. 3189.78

crore.

b) Recoverable from MoRTH- Authority, on the basis of direction received from MoRTH, is making

payments for some of the NHDP phase-IV project, which are under the direct control of MoRTH. Up to

31st March, 2016, Rs. 1921.52 crore was paid by Authority and was shown under “Assets held on

behalf of GoI” (earlier CWIP). During 2016-17, this expenditure has been reduced from CWIP and

transferred to Current Assets under the head “Recoverable from MoRTH”. Accumulated amount of

such recoverable as on 31st March, 2017, is Rs. 3378.82 crore.

18. Deferred Premium - Interest due on deferred premiums are accounted for on cash basis at the time of

receipt as per provisions of Article 28.2 of Model Concession Agreement.

19. BOT Annuity Projects - Under the BOT (Annuity) contracts, fixed half-yearly annuities over a period of

12 to 18 years from the dates of completion of the projects amounting to Rs.59127.70 crores are

required to be paid by the Authority. Out of this, an amount of Rs. 19838.72 crores has been paid till

31.03.2017 (up to previous year Rs. 16057.58 crores), which has been included in Assets held on

behalf of GoI.

20. Forged BG - During 2012-13 a fraudulent withdrawal of Rs. 1.06 crore from one of the bank accounts

of Competent Authority Land Acquisition (CALA) was detected under PIU-Chandigarh. Out of this, a

sum of Rs. 18.45 lacs has been recovered by police and lying with the court as ‘case property’.

Further, with the intervention of Court, compensation to the tune of Rs. 27.00 lacs has been paid to

one of the land holders for whom this compensation was meant for. As per the minutes of meetings

dated 22.04.2014 Punjab Government has to pay the remaining amount of compensation.

21. Depreciation - Depreciation wherever applicable has been charged as per significant accounting policies.

22. Agency Charges - As explained in Significant Accounting Policies of NHAI, agency charges is

recognized notionally at the following rates on the value of various projects executed w.e.f. 1st April,

2008.

(a) 1% on all capital works projects, including on the total expenditure on EPC, BOT (Toll), BOT

(Annuity) and SPV projects

(b) 9% on the expenditure on maintenance of highways directly done by NHAI;

(c) 2% on the expenditure on maintenance of highways carried out through the State Public Works

Departments.

All administrative expenditure, after setting off the receipts is charged to capital-work-in-progress

within the overall ceiling of Agency Charges.

Memorandum Account of Agency Charges

Agency charges - Opening balance as on 01.04.2017 1877.91

Add: Agency charges for the FY 2016-17 576.36

Total 2454.27

Less: Net Administrative expenses for the year transferred to schedule-5 278.72

Agency Charges: Balance as on 31.03.2017 2175.55

Particulars Amount (Rs. in cr.)


54

23. Members’ Responsibility - With respect to the Members’ Responsibility Statement, it is hereby

confirmed that:

(a) Accounting Standards, related to the area of operations of the Authority, have generally been

followed, only exception being AS-15 (Employee Benefits), AS-17 (Segment Reporting) and AS-

21 (Consolidated Financial Statements).

(b) The Members’ have selected such accounting policies and applied them consistently and made

adjustments and estimates that are reasonable and prudent so as to give true and fair view of the

state of affairs of the Authority at the end of the year;

(c) The Members’ have taken proper and sufficient care for the maintenance of adequate accounting

records in accordance with section 34(2)(g) of the NHAI Act, 1988 for safeguard of the assets of

the Authority and for preventing and detecting fraud and other irregularities.

(d) The Members’ have prepared the annual accounts of the Authority on a “going concern” basis.

(e) No income/fund of NHAI for the year ended 31st March 2017 has been used or applied directly or

indirectly for the benefit of Board Members, their relatives and entities in which Board Members

or their relatives have substantial interest.

(f) All receipts of NHAI viz. Funds received from the Ministry, Market borrowings through issue of

NHAI Tax free Bonds, Taxable Bonds, NHAI Capital Gain Tax Exemption Bonds under Section 54-

EC, interest on surplus funds etc. are credited in the National Highways Authority of India Funds

and all expenditure is met out of this Fund as per the provisions of Article 18 of NHAI Act, 1988.

As such, no separate Account is maintained for utilization of NHAI Bond proceeds.

24. Finalization of Accounts in Current Format-

Pending the approval of revised format of accounts by MORTH in consultation with C&AG, existing

format of accounts has been used for FY-2016-17.

25. Previous year’s figures have been regrouped and rearranged, wherever necessary to make them

comparable with current year figures.

26. Contingent Liability - Contingent Liability not acknowledged as debt:

(i) There are 125 Arbitration and 100 court cases involving Rs. 42074.63 crore and Euro 262181.00

pending against Authority. Authority has also filed 38 Arbitration and 21 Court cases against

contractors/concessionaires involving Rs.12000.49 crore and $ 71205.00. Authority has also

given bank guarantee to the tune of Rs. 70.51 crore and has deposited of Rs. 790.87 crore in the

form of FDRs as per various court orders. In respect of other claims/legal cases, the liability is

not ascertainable at present.

(ii) Authority has so far issued Letters of Credits to the tune of Rs. 619.48 crore for payment of

annuities.

(iii) The total cost of EPC contracts remaining to be executed as on 31.3.2017 is Rs. 44378.65 crore.




55


NEW DELHI - 110 075

This has been approved by Member (F), as per the powers delegated by the Board of Authority while

approving the annual accounts 2016-17

Name of

Document

Page

No.

Name of Row Present

Content



CORRIGENDUM TO THE ANNUAL ACCOUNTS 2016-17

Number -II

(Issued in response to audit Half Margin no. 11)


Number-1-

Amount Rs. in Lakhs


Name of Document

Schedule

No.

Page no.

Policy no.

In place of

Read

Significant Accounting

Policies 2016-17

18

14

6.2

Capital Work

in Progress

Assets held on behalf of

Government of India

Name of

Column

Corrected

Content

Schedule -5 5 Net Block Add: Interest on Taxable Bonds 4,82,447.38 0.00

SUB TOTAL:II 1,81,27,849.85 1,76,45,402.50

GRAND TOTAL (I)+(II) 1,81,31,890.48 1,76,49,443.14

As at

31.03.2016


Number -III


Name of Document- Cash Flow Statement, Page No. - 3

Sl. Name of Row Name of Column

No. CURRENT YEARRs. in Lakhs

Present Figure Corrected Figure

B Cash flow from investing activities:

Increase/Decrease in investment 30,693.88 9,617.00

Net cash used in investing activities 36,54,294.06 36,94,604.95

Net increase/(decrease) in cash and cash equivalents (A+B+C) 2,03,911.43 1,63,600.54

Closing cash and cash equivalents 8,77,991.14 8,37,680.26




56

NATIONAL HIGHWAYS AUTHORITY OF INDIAAUDIT REPORT OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA

ON THE ACCOUNTS OF NATIONAL HIGHWAYS AUTHORITY OF INDIA FOR

THE YEAR ENDED 31 MARCH 2017 AND REPLY THERETO

AUDIT REPORT MANAGEMENT REPLY

AUDIT REPORT OF THE COMPTROLLER AND AUDITOR

GENERAL OF INDIA ON THE ACCOUNTS OF NATIONAL

HIGHWAYS AUTHORITY OF INDIA FOR THE YEAR

ENDED 31 MARCH 2017

We have audited the attached Balance Sheet of the

National Highways Authority of India (NHAI) as at

31 March 2017 and the Profit and Loss Account for the

year ended on that date under section 23 of the National

Highways Authority of India Act, 1988 (NHAI Act 1988)

and Rule 6(5) of National Highways Authority of India

(Budget, Accounts, Audit, Investment of Funds and

Powers to Enter Premises) Rules 1990 as amended from

time to time. These financial statements include the

accounts of 163 units {138 Project Implementation Units

(PIUs), 23 Regional Offices and one World Bank Technical

Assistance loan and the accounts of NHAI Headquarters}.

Preparation of these financial statements is the

responsibility of the Management. Our responsibility is to

express an opinion on these financial statements based

on our audit.

We have conducted our audit in accordance with the

auditing standards generally accepted in India. These

standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial

statements are free from material misstatements. An

audit includes examining on a test basis, evidence

supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the

accounting principles used and significant estimates

made by management, as well as evaluating the overall

presentation of financial statements. We believe that our

audit provides a reasonable basis for our opinion.

Based on our audit, we report that:

i. The Balance Sheet and Profit and Loss Account dealt

with by this report have not been drawn up in the format

approved by the Government of India under Section 34

(2)(g) of NHAI Act, 1988 and Rule 6(1)(b) of NHAI Rules

1990, as amended from time to time.

i. Format of accounts was prescribed by

C&AG in the year 1992. NHAI, is following this

format since inception.

In the subsequent years some requirement

based minor changes in the format have been


57


ii. Proper books of accounts and other relevant records

have not been maintained by the Authority, in so far as it

appears from our examination of such books as

enumerated below:

(a) ‘Assets held on behalf of Government of India

(completed & ongoing)’ shown under Fixed Assets

represent the amount spent on various National Highways

or any stretch thereof vested in, or entrusted to, by

Government of India (GoI) to the NHAI, some of which are

completed and others were in progress at different

stages. These assets are developed by NHAI and the

ownership of these National Highways or any stretch

thereof vested in, or entrusted to, by GoI to NHAI, vests

with GoI only. Since the assets owned by entity are only

depicted as the entity’s Fixed Assets in its Balance Sheet,

depiction of assets belonging to GoI in the books of NHAI

as ‘Assets held on behalf of GoI (completed & ongoing)’

under Fixed Assets is incorrect. GoI has entrusted these

National Highways or any stretch thereof to NHAI for

development & maintenance purposes and funds

required for these purposes are provided by GoI. Due to

disclosure of ‘Assets held on behalf of GoI (completed &

ongoing)’ under Fixed Assets, Fixed Assets of NHAI are

overstated Rs.2,17,726.57 crore.

(b) The entire amount of borrowing cost of Rs.4068.16

crore for the year 2016-17 has been booked under ‘Assets

held on behalf of GoI’. This includes borrowing cost in

respect of completed projects and quantification of the

same is not possible in the absence of non-maintenance

of project-wise details with respect to ongoing and

completed projects. Inclusion of borrowing cost on

completed projects is in contravention of generally

accepted accounting principles. As NHAI has not been

maintaining records in respect of project-wise utilization

of borrowed funds, correctness of the total borrowing

costs allocated to completed and ongoing projects till

date also could not be verified in Audit.

made to comply with the audit observations or

to accommodate changes in accounting

policies.

ii. All accounting records as required under

law has been kept.

(a) Presentation of highway projects

developed by NHAI under “Assets held on

behalf of GoI” is as per the decision taken in the

meeting of senior officials of C&AG, MoRTH

and NHAI held on 09.06.2016. Minutes of this

meeting was circulated by the office of C&AG

vide letter no. R S / 4-2 / 2014-15 / NHAI / A /

AC / Vol.II /310 dated 13.07.2016. This

presentation is further supported by Significant

Accounting Policy (SAP) no. 7 (Schedule 18)

and subsequent disclosure in Notes on

Accounts no. 11 (Schedule 19).

The Revised format of accounts proposed by

NHAI and recommended by MoRTH is under

consideration of C&AG and shall be adopted,

upon its approval.

An extensive proposal for approval of revised

format of Accounts in consultation with C&AG

is under consideration of MoRTH.

(b) Accounting Policy 6.2 refers to the

treatment of project specific borrowings. NHAI

has only one project specific borrowing i. e.

ADB loan for Surat –Manor project and it has

been dealt with as per this accounting policy.

Rest of the borrowings are not project specific

therefore do not fall under the preview of this

policy.

Up till now, the entire NHDP was treated as one

programme and accordingly the entire

borrowing cost, for the purpose of presentation,

was being included in “Assets held on behalf of

Government of India”, without actually

debiting the project expenditure with

borrowing cost.


58


(c) (i) NHAI has capitalized the entire amount of Rs.

278.72 crore of 'Net establishment expenses for the

year’. As per generally accepted accounting principles,

the expenditure of revenue nature cannot be booked to

completed projects and should have been depicted in the

Profit and Loss Account. In the absence of project-wise

details of such expenditure, Audit was unable to

comment on the impact of such incorrect accounting on

the accounts of NHAI.

(ii) The accounting treatment for ‘diminution in the value

of the investment’ amounting to Rs. 403.11 crore has not

been done correctly in the accounts of NHAI. The amount

of ‘Investments’ in Schedule 6 was required to be reduced

by the amount of ‘Provision for diminution in the value of

investments’ of Rs. 403.11 crore and the ‘Profit & Loss

Account’ was required to be debited by the same amount.

In actual, the Management has reduced the amount of

‘Investments’ in Schedule 6 by Rs. 403.11 crore correctly,

however, after, debiting the amount of Rs. 403.11 crore in

the P&L Account the amount has been shown as

transferred to ‘Capital – Schedule 1’. Thus the effect of

the accounting entry in the P&L Account has been

nullified. This has resulted in understatement of Net

Establishment Expenses as well as ‘Capital’ each by an

amount of Rs. 403.11 crore.

(d) (i) ‘Assets held on behalf of GoI includes Rs.

10086.56 crore (excluding cost of land amounting to Rs.

539.83 crore) incurred by NHAI on 19 road projects. NHAI

did not hold these projects as on 31.03.2017 as these

were handed over along with tolling rights, to various

concessionaires for upgradation to 4/6-lanes of the roads

on BOT basis. However, no adjustment has been made in

the accounts for the above amount of Rs. 10086.56 crore.

It is further submitted that based on the

deliberations between the officials of C&AG,

MoRTH and NHAI, proposal for amendments in

various provision of “The National Highways

Authority of India (Budget, Accounts, Audit,

Investment of Funds and Powers to Enter

Premises) Rules, 1990” including treatment of

borrowing cost has already been submitted to

MoRTH. After approval of the proposal, same

will be implemented.

(c) (i) This is being done since inceptions and

in line with Accounting Policy no. 7 (c) “Assets

held on behalf of Government of India” which

inter alia provides that Cost of “Assets held on

behalf of Government of India” includes Net

establishment expenditure after setting off the

income.

(ii) The diminution in the value of investments

in respect of three SPVs, in which NHAI has

invested through equity shares, is not NHAI’s

loss. These SPVs are continuously suffering

losses and the value of investments are

required to be reduced suitably. This is not a

regular activity of NHAI. The diminution of

value investments is not a part o f

establishment expenses. Hence, it is treated

separately by directly reducing it from the

capital of NHAI.

(d) (i) Awarding a stretch under BOT/PPP to

any private Concessionaire does not involve

transfer of ownership to them and the

ownership still remains with GoI. In such cases

the right to develop the stretch with

tolling/annuity payment mode are transferred

to the concessionaire for development. The

project related costs prior to handing over the


59


This has resulted in overstatement of ‘Assets held on

behalf of GoI’ by Rs. 10086.56 crore.

(ii) Four projects {viz. Karur to Kangeyam Section of NH-

67, Barasat-Krishnagar Section of NH-34, Mehrauli-

Gurgaon road from Andheria More to Delhi-Haryana

Border on NH-236 and Km 9.400 to Km 22.300 of

Hyderabad-Bangalore section of North-South Corridor

(NS-23) held by NHAI on behalf of GoI}, were transferred

to State Governments. Though NHAI did not hold these

projects as on 31.03.2017, no adjustment has been

made in the accounts and cost incurred on these projects

amounting to Rs. 1297.41 crore by NHAI on behalf of GoI

has been shown under ‘Assets held on behalf of GoI’

which is factually incorrect. Non-adjustment of this

expenditure has resulted in overstatement of ‘Assets held

on behalf of GoI’ by Rs. 1297.41 crore.

iii. Apart from the significant matters stated above, other

observations are placed as Annexure – I and II to Audit

Report. Further, details of information/records still to be

received from NHAI are given in Annexure-III to the Audit

Report.

iv. In our opinion and to the best of our information and

according to the explanations given to us, the said

financial statements read together with the Accounting

Policies and Notes on Accounts, and subject to the

significant matters stated above and other matters

mentioned in Annexure-I, II and III to this Audit Report,

gives a true and fair view in conformity with accounting

principles generally accepted in India;

(a) In so far as it relates to the Balance Sheet, of the state

of affairs of the Authority as at 31 March 2017.

(b) In so far as it relates to the Profit and Loss Account, of

the excess of expenditure over income transferred to

Assets held on behalf of GoI for the year ended on that

date.

assets are very much in the books of NHAI.

Ownership of such assets are still with GOI and

is not transferred to concessionaire.

(ii) NHAI has suggested accounting treatment

of cost of projects in case of transfer of projects

from NHAI to state government and vise-versa.

The proposal is under consideration of MoRTH.

Therefore, these transfers have not been

reflected in the books.

iii. No comments.

iv. (a) and (b) No Comments.


Place: New Delhi Dated: 10.01.2018 Sd/-

Member (Finance)Sd/-

Chairman


60


Annexure-I to Audit Report

(A) BALANCE SHEET


(1) Shareholders’ Fund


Capital-Net off Toll Collection, Negative Grant etc. up to

31.03.2010: Rs.6183.56 crore

The above amount represents Current Liability towards

‘Net of Toll Receipts, Maintenance Expenditure over Grant

etc. payable to GoI up to 31.03.2010’ which the NHAI has

transferred during the year 2012-13 to Capital Account

u/s 17 of the NHAI Act 1988 without obtaining approval

of the Ministry of Finance and Ministry of Road Transport

and Highways. The issue was also raised on the accounts

for the years 2012-13, 2013-14, 2014-15 and 2015-16.

NHAI has taken up the matter in March 2014 for obtaining

approval of Ministry of Road Transport and Highways

(MoRTH)/Ministry of Finance (MoF). However, the

specific approval/consent of Government of India (GoI)

on the same is not yet received. Thus, this fact should

have been disclosed in the Notes on Accounts.


As per Significant Accounting Policy no. 7 (i)(a) “ Assets

held on behalf of GoI includes interest earned on

unutilized capital, on advances/loans granted to the

contractors / consultants and receipts from ongoing

projects is shown under capital reserve”. As per generally

accepted accounting principles, the amount of interest

earned on unutilized capital is not the revenue of NHAI

hence should have been shown as payable to Government

of India, therefore the accounting policy 7(i)(a) needed to

be revisited.

Annexure-I to Audit Report

(A) BALANCE SHEET


(1) Shareholders’ Fund


Capital-Net off Toll Collection, Negative

Grant etc. up to 31.03.2010: Rs.6183.56 crore

Rs 6183.56 crores was already spent on the

projects, before the accounting issue was

taken up by CAG. There were only two options

available with NHAI i.e either to get the

reimbursement of the entire project expenses

equivalent to same amount and deposit into

the CFI or to make an accounting entry treating

the same as “Assets held on behalf of

Government of India” and the amount of

expenditure thus made as Capital provided by

GoI. In either of the case, it would have

increased capital and “Assets held on behalf of

Government of India” to the extent of amount

spent.

NHAI decided to regularize the expenses

through an accounting entry, with due approval

of the Board of Authority. The decision was also

accepted by MoRTH, and was sent to MoF for

concurrence.

Ministry of Finance has raised certain queries

which is replied by NHAI, after which no further

query from MoF received. Hence, the case may

be construed to be consented by MoF.


As per Accounting Policy of NHAI -

(a) Interest earned on unutilized capitals, on

advances/ loans granted to contractors/

consultants and

(b) Receipts from ongoing projects being

capital in nature

are deducted from the total cost to arrive at the

value of “Assets held on behalf of Government

of India”.

The detailed calculation is shown in schedule-

2 and 5.

This is consistently being followed since

beginning.


61


(2) Borrowings: Rs.75384.65 crore (Schedule-4)

(2.1) As per Rule 9-“Reserve Fund” of NHAI Rules, 1990,

every loan raised by NHAI not being a loan repayable

before expiration of one year from the date of the loan,

the Authority shall set apart a sum half yearly, out of its

income in the reserve fund, sufficient to liquidate the loan

within a period which shall not in any case exceed thirty

years. NHAI may apply the whole or any part of the sums

accumulated in the reserve fund in or towards the

discharge of the loan liabilities for the repayment of

which the fund has been established. Provided that

Authority pays into the fund each year, and accumulated

until the whole of the money borrowed is discharged, a

sum equivalent to the interest which would have been

produced by the reserve fund or the part of the reserve

funds so applied.

As on 31 March 2017, an amount of Rs.75384.65 crore

was shown as payable, towards the bond holders of

Capital Gain Tax Free Bonds-54EC (Rs.13197.32 crore),

Tax Fee Secured Redeemable Non-Convertible Bonds

(Rs.34000 crore), Taxable Bonds (Rs.27545 crore) and

Loan from ADB (Rs.642.33 crore). However, NHAI has not

created such reserve fund as contemplated in NHAI Rules.

This has resulted in non-adherence to the NHAI Rules

1990. A similar comment was included in the Audit

Report on the accounts of NHAI for year 2015-16,

however, Management did not take any corrective action.

(2.2) As per the commitment by way of ‘Statement by the

Members of the Board’ under the heading ‘Other

Regulatory and Statutory Disclosures’ in the prospectus

issued in connection with the public issue of

i. Tax Free Secured Redeemable Non-Convertible Bonds

of Rs. 10000 crore issued during 2011-12,

ii. Tax Free Secured Redeemable Non-convertible Bonds

of Rs. 5000 crore issued during 2013-14 and

iii. Tax Free Secured Redeemable Non-Convertible Bonds

of Rs. 19000 crore, issued during 2015-16 etc.

It was committed that:

(i) All monies received out of each tranche issue of the bonds

to the pubic shall be transferred to a separate bank account;

(2) Borrowings: Rs.75384.65 crore

(Schedule-4)

(2.1) The National Highways Authority of India

(Budget, Accounts, Audit, Investment of

Funds, and Powers to Enter Premises) Rules,

1990 provide-

“Every loan raised by NHAI not being a loan

repayable before expiration of one year from the

date of the loan, the Authority shall set apart a

sum half yearly, out of its income in the reserve

fund, sufficient to liquidate the loan within a

period which shall not in any case exceed thirty

years”.

As per the provisions of Rule 9, of NHAI Rules

1990, reserve is required to be created out of

income of Authority. NHAI being an executing

agency of Government of India, does not have

any source of income. In absence of any

income, it is not possible to create Reserve fund

by setting apart a sum on half yearly, for

liquidating the loans.

In view of above and on the basis of

deliberations between the officials of C&AG,

M o R T H a n d N H A I , a p r o p o s a l f o r

amendments/deletion in various provision of

“The National Highways Authority of India

(Budget, Accounts, Audit, Investment of Funds

and Powers to Enter Premises) Rules, 1990”,

including deletion of Rule-9, has been

submitted to MoRTH. The proposal is under

consideration of MoRTH and will be

implemented after approval.

(2.2) There is some difference between the

provisions of Prospectus and NHAI Act 1988.

The prospectus provides that utilized and

unutilized monies are to be shown under

separate heads in the balance sheet, whereas

the NHAI Act 1988 provides that Authority will

have a common fund called National Highways

Authority of India Fund to which all receipts

including borrowed funds will be credited.

In view of the provisions of NHAI Act 1988, it

was decided to stick to the provisions of the Act.

Accordingly no separate disclosure was made

in the balance sheet.


62


(ii) Details of all monies utilized out of each tranche

issue shall be disclosed under an appropriate separate

head in the Balance Sheet indicating the purpose for

which such monies were utilized;

(iii) Details of all unutilized monies out of each tranche

issue shall be disclosed under an appropriate separate

head in the Balance Sheet indicating the form in which

such unutilized monies have been invested.

However, the above commitment was not adhered to and

NHAI has only given a general disclosure vide Note No. 23

(f) of Notes on Accounts wherein it was mentioned that

‘All receipts of NHAI viz. Funds received from the Ministry,

Market borrowings through issue of NHAI Tax free Bonds,

Taxable Bonds, NHAI Capital Gains Tax Exemption Bonds

under Section 54-EC, interest on surplus funds etc. are

credited in the National Highways Authority of India

Funds and all expenditure is met out of this Fund as per

the provisions of Article 18 of NHAI Act, 1988. As such,

no separate Account is maintained for utilization of NHAI

Bond proceeds.’ Similar observations was included in the

Audit report on the annual accounts of NHAI for the years

2012-13, 2013-14, 2014-15 and 2015-16. However, no

corrective action has been taken by NHAI.


(1) Fixed Assets (Schedule 5) – Gross Block:

Rs.125.33 crore

(1.1) Land Freehold: Rs.0.74 crore

The above does not include Rs.1.52 crore being the cost

of Institutional Plot no. 20 at sector 32, Gurgaon

purchased by NHAI from Haryana Urban Development

Authority (HUDA) in 1997. The ownership and possession

of the same is with NHAI. NHAI has assured to investigate

the matter and to take corrective action after ascertaining

the facts.

(1.2) Assets held on behalf of Government of India

(completed & Ongoing): Rs. 217,726.57 crore (Schedule 5)

(1.2.1) Instead of deducting from the cost of the

respective projects, an amount of Rs.203.49 crore

received as income during the year from the projects

under construction. NHAI has added the amount of Rs.

203.49 crore to the cumulative amount of Rs. 887.29

crore received by NHAI as income over the past years,

from the projects under construction and deducted the

entire amount of Rs. 1090.78 crore from CWIP for

arriving at the amount of ‘Assets held on behalf of GoI’.


(1) Fixed Assets (Schedule 5) – Gross

Block: Rs.125.33 crore

(1.1) Land Freehold: Rs.0.74 crore

The plot of land (Plot no 20, Sector-32,

Gurgaon) was purchased from HUDA in Oct.

1997 for Rs. 1,51,83,806/- and the

expenditure was accounted for in the books of

PIU Gurgaon.

(1.2) Assets held on behalf of GoI less

Capital Reserve: Rs.1090.78 crore

1. Capital Receipts - Receipts from projects

during construction period, as per NHAI Policy,

is treated as capital receipts and is deducted

from the total cost of projects before arriving at

final cost. Accordingly, capital receipts of Rs.

203.49 crore for 2016-17 has been deducted

from CWIP for arriving at the value of “Assets

held on behalf of Government of India”.

2. Revenue Receipts - As per NHAI Policy


63


As per Generally Accepted Accounting Principles (GAAP),

no revenue/capital income can be deducted from capital

assets after commissioning / putting to use of an assets.

Thus, the financial statements of NHAI have been

prepared without following the GAAP and recognizing the

revenue income of NHAI in the accounts in line with the

Accounting Policy no. 11(iii). Similar audit observation

was issued during the audit of annual accounts of NHAI

for the years 2014-15 and 2015-16.

(1.2.2) The amount of Rs.7.49 crore received as

premium on issue of Tax-Free Bond during the years

2013-14 and 2015-16, was transferred by NHAI to

‘Capital Reserve’ during the year 2016-17 and the same

was deducted from ‘Assets held on behalf of GoI’ in

Schedule-5 ‘Fixed Assets’. Since the Tax Free Bonds were

issued by NHAI, premium received thereon should have

been shown under ‘Reserves & Surplus’. Deduction of

premium received on Tax-Free Bonds from Assets held on

Behalf of GoI has resulted in understatement of

‘Reserves & Surplus’ and ‘Assets held on behalf of GoI’

each by Rs.7.49 crore.

(1.3) Assets held on behalf of GoI less Interest on un-

utilized capital: Rs. 10297.76 crore

‘Fixed Assets – Assets held on behalf of GoI’ are shown

after deduction of Rs.172.09 crore of gross interest

accrued up to 31.03.2017 on the loan amount disbursed

to Special Purpose Vehicle (SPV) companies. This

accrued interest is in the nature of income and should

have been shown as income of the authority in Profit and

Loss Account. This has resulted in understatement of

‘Assets held on behalf of GoI’ and income for the year by

Rs.172.09 crore. Similar audit observation was also

made during the audit of annual accounts of NHAI for the

years 2014-15 and 2015-16.

(1.4) Assets held on behalf of GoI (completed &

ongoing): Rs. 2,17,726.57 crore

(1.4.1) Assets held on behalf of GoI is overstated by

Rs.1.28 crore due to accounting of compensation paid to

the concessionaire towards interest on loan availed by

them, for the period for which toll collection was

suspended as per the instruction of GoI. This has resulted

receipts from projects during construction

period is treated as other receipts from

maintenance of highways and is adjusted

against the excess of expenditure over

maintenance grant receipt under schedule 1 of

balance sheet.

Accordingly, the treatment of capital and

revenue receipts have been reflected in the

accounts. This is consistently being followed

for last many years.

(1.2.2) Up to 2015-16 premium received from

issue of Tax free bonds were shown under

Reserves & Surplus. In the year 2016-17, it was

transferred from Reserves & Surplus to Capital

Reserve. As per Significant Accounting Policy

7 (i) (b) capital reserve has been deducted from

Assets held on behalf of GoI.

(1.3) Assets held on behalf of GoI less Interest

on un-utilized capital: Rs. 10297.76 crore

This practice is being followed almost from the

inception of National Highways Authority of

India. Interest on unutilized Capital (which

includes interest on loans given to SPVs) is as

per Significant Accounting Policy 7(a) are

shown as part of “Assets held on behalf of

Government of India”. However, the C&AG

advice is taken care of in the proposal

submitted for amendment in NHAI Rules.

(1.4) Assets held on behalf of GoI

(completed & ongoing): Rs. 2,17,726.57

crore

Payment to M/s L&T Western Andhra

Toll ways Limited has been made as

compensation towards capital expenditure,

therefore this has been booked as expenditure


64


in understatement of Expenditure on toll collection

activities by the same amount.

(1.4.2) Assets held on behalf of GoI is understated by Rs.

3.59 crore being amount paid to various contractors for

activities viz. balance works, change of scope, relating to

the project. This has also resulted in overstatement of

Expenditure on / Advance for Maintenance of Highways/

Toll collection activities / by the same amount.

(1.4.3) ‘Assets held on behalf of GoI’ did not include cost

of construction of toll plaza at Jallandhar-Jammu section

amounting Rs. 5.77 crore. The amount of Rs. 5.77 crore

was booked as revenue expenditure. This resulted in

understatement of Assets held on behalf of GoI and

Capital by Rs. 5.77 crore. An identical comment was

issued in the Audit Report on the annual accounts of NHAI

for the year 2014-15 & 2015-16 also. No corrective action

has been taken.

(1.5) As per clause 16.3.2 of the Concession Agreement

for Muzaffarnagar to Haridwar project, all costs arising

out of change of scope order issued during construction

period shall be borne by the Concessionaire upto 0.25%

of the Total Project Cost (TPC) and any cost in excess of

the above ceiling shall be reimbursed by NHAI to the

concessionaire. However, instead of transferring only the

actual amount of Rs. 4.51 crore paid for change of scope

to Assets held on behalf of GoI, the amount of Rs. 1.88

crore required to be borne by the concessionaire was also

debited to Assets held on behalf of GoI and credited to

Capital Reserve. This has resulted in overstatement of

Capital Reserve as well as ‘Assets held on behalf of GoI’

each by Rs. 1.88 crore.

(2) Investment (Schedule-6): Rs. 909.59 crore

Shares issued to NHAI by New Mangalore Port Road

Company Limited (NMPRCL), a Special Purpose Vehicle

(SPV) of NHAI, vide Share Certificate dated 23rd March

2017 having distinctive numbers from 128610001 to

133580000, have not been shown as fully paid equity

shares the amount of investment of Rs.4.97 crore was

under Assets held on behalf of GoI.

(1.4.2) Cost of plantation along existing

highway has correctly been booked as revenue

expenditure. Whereas expenditure on

maintenance of highways/toll collection have

been booked under Expendi ture on

maintenance of highways/Expenditure on toll

collection activities.

(1.4.3) The cost of maintenance of highways is

met out of maintenance grant received from

GoI. As per Significant Accounting Policy sl. 8,

which provides as under -

“Expenditure on maintenance of highways and

toll collection activities, after setting of

maintenance grant received from GoI for

maintenance of highways is reduced from

plough-back of toll remittances and shown as

capital (Schedule-I) under additional

budgetary support-plough back of toll

remittance.”

(1.5) This entry was subsequently rectified.

(2) Investment (Schedule-6): Rs. 909.59

crore

Share certificates pertaining to investment of

Rs. 4.97 crore in New Mangalore Port Road

Company Limited (NMPRCL), was shown to audit.

Copy of share certificate was also submitted to

audit along with the reply of HM no. 44.


65


disclosed as Share Application money. Hence, the

disclosure is incorrect.

(3) Current Assets, Loans and Advances (Schedule 7):

Rs.41870.28 crore

(3.1) Deposits, Loans and Advances: Rs. 32,953.20

crore

(3.1.1) Claims Recoverable: Rs.2617.52 crore

(Schedule 7)

Above did not include an amount of Rs. 77.06 crore which

was recoverable as on 31 March 2017 from various

concessionaires/contractors as detailed below:

Sl. Particulars Amount No. Rs. crore

i Negative Grant (premium) of Rs. 52.67

crore and interest amounting to Rs. 4.22

crore thereon, recoverable from M/s IVRCL

Chengapalli Tollways Ltd in respect of

Chengapalli – Walayar stretch on NH-47

ii Toll Revenue of Rs. 1.23 crore and interest

of Rs. 0.04 crore thereon recoverable from

M/s Jhansi-Baran Pathways Pvt. Ltd. (OMT

Concessionaire).

iii Interest on delayed reimbursement of fee

paid by NHAI to the Independent

Consultant in respect of Gwalior-Shivpuri

section of NH-73, recoverable from

concessionaire (M/s Essel Gwalior-

Shivpuri Toll Roads Pvt. Ltd.)

iv Damages recoverable from the concessionaire

M/s Transstroy Obedullaganj Betul Tollways

Pvt. Ltd. at the contractual rate of 20

percent of the expenditure incurred by

NHAI on repair and maintenance of

Obedullaganj-Betul section of NH-69 at

the risk and cost of the concessionaire.

v Short remittance of concession fee by the

concessionaires viz. M/s Ayodhya Gorakhpur

SMS Tolls Pvt. Ltd. (Rs. 7.01 crore) and

M/s Gorakhpur Kasia Tollway Pvt. Ltd.

(Rs. 5.86 crore), in respect of NH-28.

vi Short remittance of toll by M/s Sri SAI

Enterprises Hyderabad

TOTAL

(3) Current Assets, Loans and Advances

(Schedule 7): Rs.41870.28 crore

(3.1) Deposits, Loans and Advances:

Rs. 32,953.20 crore

(3.1.1) Claims Recoverable: Rs.2617.52

crore (Schedule 7)

Reply to Sl. i to vi –

Suggestions made by CA&G is noted for

compliance.

56.89

1.27

0.12

4.95

12.87

0.96

77.06


66


Thus non-inclusion of the amount of Rs. 77.06 crore in

the ‘Claims Recoverable’ has resulted in understatement

of ‘Claims Recoverable’ as well as Current Liabilities

towards ‘Toll Receipts Payable to GoI’ each by Rs. 77.06

crore.

(3.2)Interest accrued and due on Competent Authority of

Land Acquisition (CALA) deposits: Rs.526.28 crore

This did not include an amount of Rs. 8.26 crore towards

interest earned on the CALA joint bank account by 2 PIUs

(viz. Indore Rs.5.33 crore, Kolkata Rs.2.93 crore) during

the year 2016-17. This resulted in understatement of

Interest accrued and due on CALA deposits and

overstatement of ‘Assets held on behalf of GoI’ being

accounted as net of interest on unutilized capital.




a) This did not include liabilities amounting to

Rs. 1809.78 crore as under: (Rs.in crore)

A Compensation payable for acquisition of 1461.80

land despite issue of 3D Notification /

3G award by CALA.

B Compensation payable to land losers 10.06

as per Arbitration award.

C Positive grant/Annuity payable to 217.43

concessionaires.

D Amounts payable to contractors/ 91.94

concessionaires /consultants in respect

of construction/supervision work done

(3.2) Interest accrued and due on

Competent Authority of Land Acquisition

(CALA) deposits: Rs.526.28 crore

Majority of CALA balances (78%) have been

reconciled since 31.03.2017. Reconciliation of

remaining account is under progress.




A. In majority of the cases provision for

payment was not made because

approval of Competent Authority, was not

received.

B. Pending approval of Competent Authority

(NHAI), no provision was made in the

books of accounts.

C. Payment o f pos i t i ve grants to

concessionaire is subject to fulfilment of

the provisions of Concession Agreement

and approval of Competent Authority. In

absence thereof, provision for payment is

not made.

D. Provisions for payments are subject to

following-

a) Work has been executed with due

approval,

b) there is no dispute regarding amount of

payment and

c) There is every likelihood of release of

payments in near future.

In absence of any of the above provision is

not made.


67


E Amounts payable in respect of O&M 14.97

Cost/Interest on the debt availed by the

concessionaires for the period for which

toll collection was under suspension

from 09.11.2016 to 02.12.2016 as

per the instructions of MoRTH.

F Amounts payable to GoI in respect of 0.09

Toll collected

G Amounts payable to GoI in respect of 5.33

interest received on amount deposited

with Supreme Court of India and Bank

H Amounts payable to Govt. Agencies/ 1.06

bodies/ concessionaire for utility shifting

I Amounts payable to the employees of 2.99

NHAI on implementation of 7th Central

Pay Commission

J Amounts refundable to contractor for 1.35

excess BG encashed / deduction made.

K Amounts payable to contractors for 2.76

maintenance work done.

Total 1809.78

This resulted in understatement of ‘Assets held on behalf

of GoI’ by Rs.1782.29 crore, Net Establishment

Expenditure by Rs. 17.73 crore, Personnel &

Administrative Expenses by Rs.2.99 crore, overstatement

of Capital by Rs.5.33 crore and ‘Cash & Bank’ by Rs.1.44

crore.

E. Provision is made in those cases only

w h e r e t h e c l a i m s u b m i t t e d b y

concessionaire has been approved by

Competent Authority NHAI but could not

be paid before the closure of financial

year.

F. PIU has noted the Audit observation for

compliance in respect of future

transactions.

G. The interest received from Supreme Court

of India for settlement of case between

NHAI vs. M/s Gammon India Ltd against

SLP has correctly been booked under

Interest on Unutilized Capital (Current

Year).

H. This payment was not approved by the

Competent Authority NHAI. Therefore,

provision for payment of Rs. 1.06 crore

was not required to be made.

I. At the time of finalization of accounts the

7th CPC report was not accepted by

NHAI, Board.

J. Excess amount of Rs. 1.35 crore received

from M/s Dilip Buildcon-Varadha Infra Ltd

(JV) towards encashment of BG vide

2017000050 dated 01.06.2017 has

already been released under intimation to

audit.

K. At the time of finalization of PIU accounts

maintenance work done by contractor was

not approved by Competent Authority for

Payment therefor provision was not made.


68


b) Current Liabilities included a provision of Rs. 17.89

crore towards demand raised by CALA for acquisition of

Government land. Since payment is not required to be

made for acquisition of Government Land, no provision

was required to be made. This resulted in overstatement

of ‘Current Liabilities’ as well as ‘Assets held on behalf of

GoI’ each by an amount of Rs.17.89 crore.

(B) General

1) As provided under Section 23 of the NHAI Act 1988,

the format of annual statement of accounts of NHAI has

been duly prescribed by the Government of India in

consultation with C&AG of India. However, the following

deviations were noticed in the accounts prepared by the

Management when compared to the approved format of

accounts:

• The approved format provides that the surplus/deficit

in the P&L Account is to be carried to the Balance

Sheet under Reserves and Surplus. As against this,

NHAI without arriving the surplus/deficit, arrived the

‘Net Establishment Expenditure’ which is in the form

of deficit and the same was transferred to ‘Assets held

on behalf of GoI’ under ‘Fixed Assets'. The ‘Assets held

on behalf of GoI’ include both completed and ongoing

projects.

• As per Schedule 5 (Fixed Assets) of the prescribed

format, one of the sub-heads is ‘Roads & Bridges’.

However, this sub-head had been left blank in spite of

completed road projects. NHAI has not segregated the

cost of ongoing and completed projects and the same

are depicted at a consolidated figure of

Rs.2,17,726.57 crore (including cost of land of

Rs.80,616.20 crore and excluding, Fixed assets of

NHAI of Rs.40.63 crore) during the year under the

head ‘Assets held on behalf of GoI’.

NHAI disclosed the amount spent on various projects

(both completed and under execution) on behalf of GoI

as its executing agency as ‘Assets held on behalf of GoI’.

NHAI sought through MoRTH, a legal opinion from

Ministry of Law and Justice and Company Affairs

regarding ownership of highways, capitalization of

completed road stretches of National Highways and

depreciation thereof. The Solicitor General of India had

opined (January 2015) that NHAI is merely an executive

agency of the Central Government and ownership of the

NHs, road & bridges are vested with GoI and NHAI is not

the owner of stretches of NHs developed and maintained

by the NHAI. Further, the accounting treatment and

b) Provision has been created on the basis of

amount demanded by CALA therefore the

provision is in order and there is no

overstatement.

(B) General

1) The C&AG had conveyed approval of the

format of accounts vide their letter dated

22-06-1992. NHAI, since inception, is

following the format as approved by C&AG.

However in the subsequent years some

requirement based minor changes in the

format have been made mainly to comply with

audit observations or to accommodate

changes in accounting policies.

Present format was prescribed more than 25

years back, since then lots of changes have

taken place in the legal, regulatory, accounting

and policy front. Therefore, present format, to a

great extent, has become outdated. Proposal

for approval of revised format of accounts in

consultation with C&AG is under consideration

of MoRTH.

So far as showing the highway projects

developed by NHAI under “Assets held on

behalf of GoI” is concerned, this is as per the

decision taken in the meeting of senior officials

of C&AG, MoRTH and NHAI held on

09.06.2016. Minutes of this meeting was

circulated by the office of C&AG vide letter no.

R S / 4-2 / 2014-15 / NHAI / A / AC / Vol.II

/310 dated 13.07.2016.


69


disclosure given in its Financial Statements is in deviation

to the opinion given by the Expert Advisory Committee

(EAC) of the Institute of Chartered Accountants of India

which opined that if the NHAI is only acting only as an

executing agency on behalf of the Government and does

not exercise any control over the roads/highways and/or

future economic benefits out of such resources do not

accrue to the NHAI, then, NHs are not NHAI’s assets and

accordingly, recognizing these as its assets and

recognizing them as Capital work in progress/Assets

held on Behalf of Government of India in NHAI’s Balance

Sheet is not correct.

1.1 As per the Approved format of Accounts, the Grant-in-

aid received for Maintenance of Highways and

expenditure incurred thereon should be accounted for in

Profit and Loss Account. However, NHAI deviated from

this and has adjusted the Maintenance Grant and

Expenditure incurred on Maintenance of Highways

against Capital Account (Plough back of Toll Remittance,

etc.). During the year 2016-17, NHAI incurred

Rs.1071.96 crore as the total expenditure on

maintenance of highways (Rs.853.26 crore) and toll

collection activities (Rs.218.70 crore). Against this, the

MORTH released during the year, a grant of Rs.100 crore

for maintenance of highways. After adjusting Rs.23.56

crore of ‘Other Receipts from O & M of Highways’ during

the year 2016-17, the balance amount of Rs.948.40

crore, has been set off against the Shareholder’s fund.

Thus, this has resulted in understatement of Loss for the

year and Shareholder’s fund-Capital by Rs.948.40 crore.

Similar comment was included in the Audit Report on the

annual accounts of NHAI for the years 2012-13, 2013-

14, 2014-15 and 2015-16. However, no corrective action

has been taken by NHAI.

2) Significant Accounting Policies (Schedule 18)

A reference is invited to Accounting Policies No. 5 in

Schedule 18 - Significant Accounting Policies which inter

alia stated that “the funds borrowed under a) Capital

Gains Tax Exemption Bonds u/s 54 EC of Income Tax (IT)

Act, b) Tax free, secured, redeemable, non-convertible

bonds u/s 10 (15) (iv) (h) of IT Act and c) Taxable bonds

for tenure of 5/25/30 years are secured against a flat at

Ahmedabad, the highway projects and the

superstructures constructed on National Highways, for

which the NOC has been issued by the GoI”. Audit

observed that the above disclosure made in the

1.1 Present treatment of Grant received for

Maintenance of Highways and expenditure

incurred thereon is based on the Significant

Accounting Policy no. 8. This is being

practiced since inception.

Suggestions made by audit for accounting of

maintenance grant in the profit and loss

account has been accepted by five member

committee. Elaborate procedure for

accounting of grant received for maintenance

of highways and expenditure therefrom is

suggested in the proposed amendments to

NHAI Rules, 1990. This proposal is under

consideration of MoRTH.

2) Significant Accounting Policies

(Schedule 18)

The observation made by audit has been noted

for examination and compliance.


70


Accounting Policy No. 5 was misleading and deficient to

the extent that the NOC given by MoRTH was only for

superstructure constructed on National Highways.


3.1) Note No. 17

The above Note disclosed that against a deposit of

Rs.800.25 crore, NHAI has spent Rs.3990.03 crore thus

the recoverable stood at Rs.3189.78 crore.

However, as per the status report filed on 23rd March

2017 by MoRTH before the Honorable Supreme Court of

India, an amount of Rs. 937.92 crore was released to

NHAI by MoRTH and NHAI had an additional fund

requirement of Rs. 4962.08 crore from the central pool.

The discrepancy in the amount received by NHAI from

MoRTH required justification.

3.2) Notes no. 24

The Note states that “pending the approval of revised

format of accounts by MoRTH in consultation with C&AG,

existing format of accounts has been used for FY 2016-

17”. The above disclosure was deficient to the extent that

the existing format has been deviated by changing CWIP

in to ‘Assets held on behalf of GoI’.

3.3) Note no. 26

The above Note on Contingent Liabilities does not include

contingent liability of Rs.212.38 crore claimed by the

concessionaires/contractors and 83 no. of cases

pending for land acquisition which are under litigation.

3.4) Adequate disclosure of the following has not been

made in the Notes on Accounts which are silent as to the

following:

(a) Fact of non-availability of title deeds of 2.86 acres of

land located at Delhi – Gurgaon border RHS (KM 24.00)

and about one acre of land available near Hero Honda

Chowk in Gurgaon, possession of which rests with NHAI.

(b) As per the Cash Flow Statement, Closing cash and

cash equivalents were Rs. 8779.91 crore which consist of

i) Cash and cheques in hand/in transit – Rs. 1.15 crore, ii)

Balance with banks in Current Account – Rs. 8116.82

crore and iii) Balance with banks in FD Account – Rs.

258.83 crore totaling to Rs. 8376.80 crore only. Hence,

there is a difference of Rs. 403.11 crore.

4) Based on the information compiled by Audit in

respect of 42 projects (under 15 PIUs) it was noticed that


3.1) Note No. 17

NHAI will reconcile its receipts with MoRTH

data and sort out the differences.

3.2) Notes no. 24

As per the decision taken in the meeting of

senior officials of C&AG, MoRTH and NHAI held

on 09.06.2016 and Minutes of meeting

circulated by the office of C&AG. Highway

projects developed by NHAI have been shown

as ‘Assets held on behalf of GoI’.

3.3) Note no. 26

The comments of Audit is noted for compliance

in future.

3.4) Adequate disclosure of the following

has not been made in the Notes on Accounts

which are silent as to the following:

(a) The comments of Audit is noted for

compliance in future.

(b) It was due to some typographical error

which has been rectified. Refer Corrigendum

No. III.

4) Even after payment of compensation

mutation of land is sometimes delayed due to


71


out of 8152.414 hectares of land acquired till 2016-17,

for road projects, 3379.442 hectares of land (41.45 per

cent of total land acquired) was not mutated as on 31

March 2017. However, the fact regarding non-mutation

of land to the above extent was not disclosed in the Notes

on Account.

5) Gross Block and Net Block of Fixed Assets as on 31

March 2017 have been shown at Rs.12533.36 lakh &

Rs.4675.97 lakh respectively in the Balance Sheet which

includes Assets created out of Grant amounting to Rs.

612.58 lakh. As depreciation is not charged on Assets

created out of Grant, these Assets should have been

deducted from the Gross Block before charging

depreciation.

6) Corrections carried out at the instance of Audit

On the basis of observations of Audit, the Management

carried out corrections in the accounts to the extent of

Rs. 10.45 crore as detailed below:

variety of reasons. Suggestions made by Audit

would be examined once again and

appropriate decision will be taken at the time of

preparation of next balance sheet.

5) Suggestion made by audit shall be

examined and if found feasible, shall be

implemented in the next balance sheet.

6) Corrections carried out at the instance

of Audit

No comments.Sl. Particulars Inter Head Intra Head

No. Debit Credit Debit Credit

1 Assets 7.77 7.77

2 Liabilities 2.68 2.68

3 P&L A/c

Total 10.45 10.45

(Rs. in crore)


72


Annexure-II to Audit Report

1) Internal Audit System

Internal Audit of all 145 Units that existed on 1st

April 2016, comprising NHAI Headquarters, Regional

Offices and Project Implementation Units, was

outsourced to the firms of Chartered Accountants for the

year 2016-17. The Internal Audit Reports issued by the

Internal Auditor of NHAI Hqrs. did not include any

reference to the Action Taken by NHAI on the

observations included in the previous internal audit

reports.


Internal Control system needs to be strengthened in

view of the following:

a) In the books of accounts of NHAI Headquarters,

following amounts are lying un-reconciled for more than

9 years, as detailed below

These issues were raised on the accounts for the year

2013-14, 2014-15 and 2015-16, but NHAI did not take

any corrective action.

b) National Highways Fee (Determination of Rates and

Collection) Rules 2008, as amended in January 2011

stipulated that after recovery of the capital cost of the

public funded projects through user fee realized, fee

leviable would be reduced to 40 per cent of the user fee.

MoRTH issued (24 January 2013) guidelines on the

method of working out of capital cost. As per guidelines,

capital cost inter alia includes interest during

construction period (IDC). Further, NHAI was also

required to prepare the balance sheet and cash flow of

each project for each financial year from April 2013.

However, NHAI has not prepared any such project wise

balance sheet and cash flow statement.

Annexure-II to Audit Report

1) Internal Audit System

The comments of Audit is noted for



a) Examination of various ledger accounts of

NHAI HQ as well as all the field units as on

30.06.2017 has recently been carried out at

NHAI, HQ. Details of outstanding balances in

respect of various ledgers have been prepared

and sent to respective locations with direction

to verify the balances and expedite the

reconciliation and adjustments of outstanding

balances.

b) NHAI has not received any guidelines from

MoRTH for preparation of package wise

balance sheet & cash flow statement.

However, the proposal for preparation of

project wise accounting is under consideration

of NHAI Management.

Sl. Details/Heads of

No. account

(i) Advance against deposit work

for utility shifting, agency

charges, D&S charges for

RoBs, etc.,

(ii) Advances given to various

Government Departments

during the year 2003 to 2008

for maintenance of highway.

Amount

(Rs. in

crore)

22.29

100.03

Period

Reconciliation

pending for

more than 13

years

09-14 years

Reconciliation

pending for


73


Working out the capital cost and thus the reduction of

user fee to 40% would not be possible due to failures of

compliance with the guidelines issued by the MoRTH.


Management has not sent ‘Confirmation of Balance’

letters and got the balances confirmed both at Hqrs. and

PIUs. Hence, correctness of the balances mentioned in

the Financial Statements as regards i) Claims

recoverable: Rs.2617.52 crore ii) Recoverable from

Subsidiary Companies: Rs.1.79 crore and iii)

Recoverable on account of Expenditure on Eastern

Peripheral Expressways: Rs.3990.04 crore are subject to

confirmation by the above parties. Further, instances of

non-reconciliation of balances with Bank Accounts

(including CALA Bank Accounts) in four PIUs of NHAI

and non-receipt of balance confirmation in one PIU of

NHAI were noticed.

3) System of Physical Verification of Fixed Assets

Physical verification report of fixed assets at NHAI Head

Office was not furnished to Audit. In the absence of the

same the authenticity of fixed assets available could not

be ascertained by Audit.

4) System of Physical Verification of Inventory

There is no inventory.

5) Regularity in payment of Statutory Dues

No instances of delay in depositing TDS were noticed.


NHAI has a system of confirmation of bank

balances at the end of each financial year.

Accordingly, at the end of every financial year

bank balance confirmation certificates are

obtained from the banks in respect of all bank

accounts.

So far as balance confirmation in respect of

payables and receivables are concerned, The

suggestions made by audit is noted for


3) System of Physical Verification of

Fixed Assets

Majority of the units have done physical

verification of assets and submitted verification

report. Its implementation will further be

streamlined.

4) System of Physical Verification of

Inventory

No comments.

No comments.


74

In course of

audit various

documents/

information/reports

were requested by

audit.

Documents/

information/

Records which are

compiled in normal

course of working

and are readily

available were

provided to audit.

Some of the

documents/

information/reports

which are required

from concerned

Technical

Divisions/ ROs/

PIUs, such

information, as far

as possible, have

also been provided

to audit.

This, however, has

been noted for

future compliance.

Annexure - III

Information/records still to be received

Sl. Particulars Requisition Reminder Date

No. No. & Date

1 Status report of Legal and Arbitration

cases as on 31.03.2017.

2 Status report of pending files as on

31.03.2017 in respect of Change of

Scope of various projects.

3 Minutes of 3 CGM Committee Meeting

held up to 31.03.2017 for the years

2015-16 and 2016-17.

4 List of abandoned projects.

5 Claims received from different

concessionaires against NHAI up to

31st March 2017, for violation of ‘State

Support Agreements’ by different State

Governments.

6 Measurement books in respect of

‘Residential Complex for NHAI Staff’

and ‘Second Office Building of NHAI’ at

Dwarka in respect of payments made

for work certified and measured up to

31.03.2017.

7 Accounting policy no. 4 on Land

Acquisition inter alia states, “the

compensation for land acquisition as

determined by the Competent

Authority is paid to Land owners from a

separate joint bank account linked to

Central CALA account”. In this regard,

the date from which the old system was

dispensed with and this new policy has

been adopted along with the copy of

guidelines circulated in this respect.

8 Guidelines received, if any, from MoRTH

in respect of accountal and treatment

of penalties/damages etc. levied and

collected by NHAI.

01

04.08.17

01

04.08.17

01

04.08.17

06

13.09.17

06

13.09.17

07

14.09.17

08

15.09.17

08

15.09.17

14.09.17, 22.09.17,

25.09.17 & 27.09.17

14.09.17, 22.09.17,

25.09.17 & 27.09.17

14.09.17, 22.09.17,

25.09.17 & 27.09.17

22.09.17, 25.09.17

& 27.09.17

22.09.17, 25.09.17

& 27.09.17

22.09.17, 25.09.17

& 27.09.17

22.09.17, 25.09.17

& 27.09.17

22.09.17, 25.09.17

& 27.09.17

Vijayawada-Chilkaluripet section of NH-16

Jammu-Udhampur Section of NH-44


www.nhai.org

Desi

gned &

Printe

d b

y: delh

i@sp

anco

m.in