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Coal India

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« Mar 14
Auditor's Report (Coal India) Year End : Mar '15
We have audited the accompanying standalone financial statements of
 Coal India Limited (the Company), which comprise the Balance Sheet
 as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow
 Statement for the year then ended, and a summary of the significant
 accounting policies and other explanatory information. These financial
 statements include figures in respect of Head Quarter (HQ) Kolkata,
 North Eastern Coalfields (NEC) and GM''s office at New Delhi and
 Marketing office, Kolkata.
 
 2. Management''s Responsibility for the Standalone Financial
 Statements
 
 The Company''s Board of Directors is responsible for the matters
 stated in Section 134(5) of the Companies Act, 2013 (the Act) with
 respect to the preparation of these standalone financial statements
 that give a true and fair view of the financial position, financial
 performance and cash flows of the Company in accordance with the
 accounting principles generally accepted in India, including the
 Accounting Standards specified under Section 133 of the Act, read with
 Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility
 also includes maintenance of adequate accounting records in accordance
 with the provisions of the Act for safeguarding the assets of the
 Company and for preventing and detecting frauds and other
 irregularities; selection and application of appropriate accounting
 policies; making judgments and estimates that are reasonable and
 prudent; and design, implementation and maintenance of adequate
 internal financial controls, that were operating effectively for
 ensuring the accuracy and completeness of the accounting records,
 relevant to the preparation and presentation of the financial
 statements that give a true and fair view and are free from material
 misstatement, whether due to fraud or error.
 
 3. Auditor''s Responsibility
 
 Our responsibility is to express an opinion on these standalone
 financial statements based on our audit.
 
 We have taken into account the provisions of the Act, the accounting
 and
 
 auditing standards and matters which are required to be included in the
 audit report under the provisions of the Act and the Rules made there
 under.
 
 We conducted our audit in accordance with the Standards on Auditing
 specified under Section 143(10) of the Act. Those Standards require
 that we comply with ethical requirements and plan and perform the audit
 to obtain reasonable assurance about whether the financial statements
 are free from material misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and the disclosures in the financial statements. The
 procedures selected depend on the auditor''s judgment, including the
 assessment of the risks of material misstatement of the financial
 statements, whether due to fraud or error.
 
 In making those risk assessments, the auditor considers internal
 financial control relevant to the Company''s preparation of the
 financial statements that give a true and fair view in order to design
 audit procedures that are appropriate in the circumstances, but not for
 the purpose of expressing an opinion on whether the Company has in
 place an adequate internal financial control system over financial
 reporting and the operating effectiveness of such controls. An audit
 also includes evaluating the appropriateness of the accounting policies
 used and the reasonableness of the accounting estimates made by the
 Company, as well as evaluating the overall presentation of the
 financial statements.
 
 We believe that the audit evidence we have obtained is sufficient and
 appropriate to provide a basis for our audit opinion on the standalone
 financial statements.
 
 Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the aforesaid standalone financial statements
 give the information required by the Act in the manner so required and
 give a true and fair view in conformity with the accounting principles
 generally accepted in India, of the state of affairs of the Company as
 at 31st March, 2015, and its profit and its cash flows for the year
 ended on that date.
 
 Emphasis of Matters
 
 We draw attention to the following notes:-
 
 (a) Note No. 10A (2) regarding non-provision against fixed assets in
 Dankuni Coal Complex leased to South Eastern Coalfields Limited (SECL)
 for lease rent of Re.1 per annum. In opinion of the management the
 nominal income earning is a temporary policy matter and actual worth of
 the assets including land is much higher than the book value and hence
 no provision is called for.
 
 This is a statement of fact referring to the notes on accounts no 10A
 (2) only.
 
 As mentioned by the Audit, referring to the relevant note, the
 recoverable value (actual worth), of the assets of Dankuni Coal Complex
 (given on operating lease to SECL, a 100% subsidiary of CIL on a
 nominal rent) is considered much higher than its WDV. Hence no
 provision as per AS-28 (Accounting Standard on Impairment) or otherwise
 is required.
 
 (b) Note No. 11 and 18, dealing with an aggregate investments of Rs.
 8926.42 Crores and loans & advances of Rs. 578.55 Crores (Current Account
 Debit Balances) in its 100%subsidiaries namely, Bharat Coking Coal
 Limited (BCCL) and Eastern Coalfields Limited (ECL) have come out of
 Board for Industrial & Financial Reconstruction (BIFR). These
 subsidiaries are turning around and have started earning profits. In
 the view of changing circumstances, the management is of the opinion
 that no writing down or provisioning is required against the erosion in
 the value of assets.
 
 This is a statement of fact referring to the notes on accounts only .
 
 Eastern Coalfields Limited (ECL) & Bharat Coking Coal Limited (BCCL)
 are 100% subsidiary of Coal India Limited. BCCL had come out of BIFR
 during FY 2012-13. ECL has also come out of BIFR from Jan 2015.  Both
 the companies are earning profits consistently from last few years.
 Hence, the diminution in value of investment is not considered as
 permanent in nature and therefore following the provisions of AS 13
 (accounting Standard on Investments), no writing down or provision is
 required.  Current account debit balances under loans & advances are
 also on the same analogy considered to be recoverable and hence no
 provision is required.
 
 (c) Note 34(i) (c) & (d), Contingent Liability of the accompanying
 financial statements, which describes the uncertainty related to the
 outcome of the lawsuits filed and demands raised against the Company by
 various parties and Government authorities;
 
 This being a statement of fact calls for no comments separately.
 
 (d) Note 34(xvii), regarding non consideration of effects of The Mines
 and Minerals (Development and Regulations) Amendment Act,2015 in the
 books of accounts as on March 31,2015 in absence of notification of
 rules by the Central or State government under the said act.
 
 This is a statement of fact referring to the notes on accounts no
 34(xvii) only.
 
 As mentioned by the Audit, referring to the relevant note, the effects
 of The Mines and Minerals (Development and Regulations) Amendment
 Act,2015 have not been considered in the books of accounts as the rules
 have not been notified yet by the Central or State government under the
 said act.
 
 (e) Pending write off action of certain account balances against which
 full provision has been made in the books of accounts;
 
 Noted, action is being taken to initiate write off.
 
 (f) Balances under Long Term Loans and advances of Rs. 134.78 Crores,
 Trade Receivables of Rs. 9.76 Crores, Other Current assets of Rs. 199.82
 Crores, Trade Payables of Rs. 2.28 Crores and Other Current Liabilities
 of Rs. 235.14 Crores, have not been confirmed. Consequential impact on
 confirmation/ reconciliation of such balances, if any is not
 ascertainable.
 
 Trade receivables are periodically reconciled on regular basis. In
 respect of trade payables & other current Liabilities, system for
 obtaining confirmation is there, although in most of the cases response
 from the creditors are not received.  However, efforts will be taken to
 increase the coverage area.
 
 (g) The Independent Directors have not been appointed in the Board of
 the Company as per the provisions of Section 149(1) of the Companies
 Act, 2013.
 
 The matter has been taken up with Ministry of Coal, Govt. of India
 which is the appointing authority of Independent Directors .
 
 Our opinion is not qualified in respect of above matters.
 
 Report on Other Legal and Regulatory Requirements
 
 1. As required under Section 143(5) of the Companies Act, 2013, we give
 in the Annexure I, a Statement on the Directions issued by the
 Comptroller and Auditor General of India after complying the Suggested
 methodology of Audit, the action taken thereon and its impact on the
 accounts and financial statements of the company.
 
 2. As required by the Companies (Auditor''s Report) Order, 2015
 (the Order) issued by the Central Government of India in terms of
 sub-section (11) of Section 143 of the Act, we give in the Annexure II,
 a statement on the matters specified in paragraphs 3 and 4 of the
 Order.
 
 3. As required by Section 143 (3) of the Act, we report that:
 
 (a) We have sought and obtained all the information and explanations
 which to the best of our knowledge and belief were necessary for the
 purpose of our audit.
 
 (b) In our opinion, proper books of account as required by law have
 been kept by the company so far as it appears from our examination of
 those books.
 
 (c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
 Flow Statement dealt with by this Report are in agreement with the
 books of account.
 
 (d) In our opinion, the aforesaid standalone financial statements
 comply with the Accounting Standards specified under Section 133 of the
 Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
 
 (e) On the basis of written representations received from the directors
 as on March 31,2015, and taken on record by the Board of Directors,
 none of the directors is disqualified as on March 31,2015 from being
 appointed as director under sub- section (2) of Section 164 of the
 Companies Act.
 
 (f) With respect to the other matters to be included in the Auditor''s
 Report in accordance with Rule 11 of the Companies (Audit and Auditors)
 Rules, 2014, in our opinion and to the best of our information and
 according to the explanations given to us:
 
 i. The Company has disclosed the impact of pending litigations on its
 financial position in its financial statements.[Refer Note No.34(i)(c
 )&(d)]
 
 ii. The Company did not have any long-term contracts including
 derivative contracts for which there were any material foreseeable
 losses.
 
 iii. There were no amounts which were required to be transferred to the
 Investor Education and Protection Fund by the Company.
 
 ANNEXURE II TO THE AUDITORS'' REPORT (Referred to in Paragraph 2 of
 Other Legal and Regulatory requirements of our Audit Report)
 
 i) In respect of Fixed Assets:
 
 a) The Company has maintained proper records showing full particulars
 including quantitative details and situation of its fixed assets.
 However certain details as regards to purchase orders reference, date
 of commissioning and location, identification and codifications of
 fixed assets are absent in some cases.
 
 These are related to old items of fixed assets which are fully
 depreciated.
 
 b) The Fixed assets located at Head quarter, North Eastern Coalfields,
 the production unit of the Company and offices at New Delhi and Kolkata
 Marketing office have been physically verified substantially by the
 management periodically.  Discrepancies noticed on such verification
 were not material are pending for reconciliation and adjustment in the
 accounts.
 
 This being a statement of fact calls for no comments separately.
 Necessary adjustments for discrepancies, if required after
 reconciliation, will be made in the accounts.
 
 ii) In respect of Inventories:
 
 a) The Physical verification of inventories at North Eastern Coalfields
 has been conducted at reasonable intervals during the year by the
 management.
 
 The inventories have been measured on the basis of volumetric system.
 
 This being a statement of fact calls for no comments separately.
 
 b) In our opinion, the procedures and frequency of physical
 verification of inventories followed by the management are reasonable
 and adequate in relation to the size of the Company and nature of its
 business.
 
 This being a statement of fact calls for no comments separately.
 
 c) On the basis of our examination of inventory records, in our
 opinion, the Company is maintaining proper records of its inventories
 and no material discrepancies were noticed on physical verification.
 
 This being a statement of fact calls for no comments separately.
 
 iii) According to the information and explanation given to us, the
 Company has not granted any loans, secured or unsecured to companies,
 firms or other parties covered in the register maintained under Section
 189 of the Companies Act, 2013. Hence provisions to Para 3 (iii)(a) and
 (b) of the said order are not applicable.
 
 This being a statement of fact calls for no comments separately.
 
 iv) In our opinion and according to the information and explanations
 given to us, there are in general, adequate internal control systems
 commensurate with the size of the Company and the nature of its
 business for the purchase of inventory and fixed assets and for the
 sale of goods and services. During the course of our audit, no major
 weakness in internal control has been noticed except in the following
 cases where the Internal control mechanism needs to be further
 strengthened:-
 
 a) Identification and Codification of fixed assets with respect to
 their current locations at different units
 
 b) The control over maintenance of records related to payment of salary
 and wages at certain units;
 
 c) Non receipt of confirmations of outstanding balances from customers,
 suppliers and contractors and reconciliation of balances in case of
 difference if any;
 
 Noted, action is being taken to further strengthen the same.
 
 Noted, action is being taken to further strengthen the same.
 
 Noted, action is being taken to further strengthen the same.
 
 v) According to the information and explanations given to us, the
 Company has not accepted any deposits from the public within the
 meaning of directives issued by the Reserve Bank of India and
 provisions of Sections 73 to 76 or any other relevant provisions of the
 Companies Act, 2013 and the rules framed there under.
 
 vi) The maintenance of Cost records has been prescribed by the Central
 Government under section 148(1) of the Companies Act, 2013 in respect
 of Mining activities of the Company. We have broadly reviewed the
 records and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained. However, we have
 not made any detailed examination of the records.
 
 This being a statement of fact calls for no comments separately.
 
 vii) (a) According to the information and explanations given to us and
 on the basis of our examination of the books of accounts, the Company
 is regular in depositing the undisputed statutory dues including
 Provident fund, Income Tax, Sale tax, Wealth Tax, Service Tax, Duty of
 customs, Duty of Excise, Value added Tax, Cess and any other statutory
 dues with the appropriate authorities. There were no un-disputed
 statutory dues as at the end of the year concerned outstanding for a
 period of more than six months from the date they became payable. As
 informed to us, Employee State Insurance is not applicable to the
 Company.
 
 This being a statement of fact calls for no comments separately.
 
 (b) According to the information and explanations given to us, and as
 per the records of the Company examined by us, there are no dues of
 income tax, Duty of customs, Duty of excise, Cess and other statutory
 dues except following sales tax, which have not been deposited on
 account of any dispute are as under:-
 
 These cases are very old and pending before assessing officer /sales
 tax departmental appellate authority.  Pending verdict of these appeal
 cases, no deposit has been made.  However, these have been disclosed as
 contingent liability.
 
 Sl. Name of the Statute         Nature of            Amount
 No.                               dues               (In)
                                                      Rs.
 
 1  Provincial Sales Tax Act     Sales Tax           3,86,234.13
 
 2  Provincial Sales Tax Act     Sales Tax           1,79,762.00
 
 3  Provincial Sales Tax Act     Sales Tax             48,441.00
 
 4  Provincial Sales Tax Act     Sales Tax           2,75,819.00
 
 5  Provincial Sales Tax Act     Trade Tax               9040.00
 
 
 
 Name of the Statute              Period to        Forum where
                                  which the        pending
                                  amount
                                  relates
 
 Provincial Sales Tax Act         FY:1989-90       Assessing
                                                   officer
 
 Provincial Sales Tax Act         FY:1990-91       Additional
                                                   Commissioner
                                                   (Appeals)-3
 
 Provincial Sales Tax Act         FY:1990-91       Additional
                                                   Commissioner
                                                   (Appeals)-3
 
 Provincial Sales Tax Act         FY:1991-92       Additional
                                                   Commissioner
                                                   (Appeals)-3
 
 Provincial Sales Tax Act         FY:1993-94       Assessing
                                                   officer
 
 1(c) According to the information and explanations given to us, there
 is no amount required to be transferred to investor education and
 protection fund in accordance with the relevant provisions of the
 CompaniesAct,1956(1 of 1956) and rules made there under during the
 year.
 
 This being a statement of fact calls for no comments separately.
 
 viii) The Company does not have any accumulated losses at the end of
 the financial year and has not incurred cash losses in the current
 financial year as well as in the immediately preceding financial year.
 
 This being a statement of fact calls for no comments separately.
 
 ix) In our opinion and according to the information and explanations
 given to us, the Company has not taken any term loan from any financial
 institutions or banks or debenture holders.
 
 x) In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the company has given
 guarantees for loans taken by its subsidiaries from banks and financial
 institutions are not prima-facie prejudicial to the interest of the
 Company.
 
 This being a statement of fact calls for no comments separately.
 
 xi) As per the information and explanations given to us by the
 management and on the basis of the examination of the records, the
 Company has not taken any term loan during the year.
 
 This being a statement of fact calls for no comments separately.
 
 xii) To the best of our knowledge and belief and according to the
 information and explanations given to us, no frauds on or by the
 Company has been noticed by us during the year. However, according to
 the information and explanation given to us, a case of misappropriation
 of Company''s fund for personal gain had come to the notice of the
 management in earlier years, which is still under investigation by
 different agencies; the impact of such misappropriation cannot be
 ascertained at this stage.
 
 As stated by the Audit, the matter is under investigation by different
 agencies.
 
 
                                         For CHATURVEDI & CO.
 
                                        Chartered Accountants 
                                        Firm Regn. No.302137E 
                                               S.C.Chaturvedi
 
                                                      Partner
 
                                                Mem.No.012705
 
 Date : 28th May, 2015
 Place : Kolkata
Source : Dion Global Solutions Limited
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