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Coal India

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« Mar 15
Auditor's Report (Coal India) Year End : Mar '16
We have audited the accompanying standalone financial statements of
 Coal India Limited (hereinafter referred to as ''the Company''), which
 comprise the balance sheet as at 31 March 2016, the statement of profit
 and loss and the cash flow statement for the year then ended, and a
 summary of significant accounting policies and other explanatory
 information.
 
 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 and presentation 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.
 
 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 thereunder.
 
 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. An audit also includes evaluating the
 appropriateness of the accounting policies used and the reasonableness
 of the accounting estimates made by the Company''s Directors, 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 31 March 2016 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 10A (Para-1) which
 refers to title deeds for freehold land amounting Rs.6.38 Crores and
 for leasehold land amounting Rs.1.34 Crores have been verified by us
 and the same are held in the name of the company. Title deeds for
 freehold land for Rs.5.43 Crores are not available for our
 verification. Further, as per the details made available to us, title
 deeds for freehold land measuring 1072.97 hectares and leasehold land
 measuring 5558.23 hectares, for which no value is recorded in the books
 of accounts, are not available.
 
 b) Note 10A (Para-2) regarding non-provision for impairment against
 fixed assets written down value of which is Rs.11.76 Crores of Dankuni
 Coal Complex let out to South Eastern Coalfields Limited (SECL) for
 nominal lease rent of Re.1per annum under cancellable operating lease
 agreement. In the opinion of the management, the actual worth of the
 assets including land is much higher than the book value and hence no
 provision is called for.
 
 c) Note No.11 dealing with an aggregate investment of Rs. 8926.42
 Crores in its 100% subsidiary companies 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 provisioning is required against the erosion of Rs.2614.85
 Crores (PY: 4243.30 Crores) in the value of Investment as the same is
 of temporary nature.
 
 d) Note 34(1) (c) 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.
 
 e) Pending write off action of certain old account balances against
 which full provision has been made in the books of accounts.
 
 f) Balances under Long-term loans and advances of Rs.157.04 Crores,
 Short-term loans and advances Rs.0.39 Crores, Trade receivables of
 Rs.0.39Crores, Trade payables of Rs.1.51 Croresand Other current
 liabilities of Rs.207.48 Crores, have not been confirmed. Consequential
 impact on confirmation/ reconciliation/adjustment of such balances
 (which will not be material as per management), if any is not
 ascertainable.
 
 g) Required number of Independent Directors has not been appointed in
 the Board of the Company as per the provisions of Section 149(1) of the
 Companies Act, 2013.
 
 Our opinion is not qualified in respect of above matters.
 
 Report on Other Legal and Regulatory Requirements
 
 1) As required by the Companies (Auditor''s Report) Order, 2016 (the
 Order) issued by the Central Government of India in terms of
 sub-section (11) of section 143 of the Act, we give in the
 Annexure-A, a statement on the matters specified in the paragraph 3
 and 4 of the said order.
 
 2) As required under Section 143(5) of the Companies Act, 2013, we give
 in the Annexure-B, 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.
 
 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
 purposes 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) in pursuance to the Notification No. G.S.R 463(E) dated 05-06-2015
 issued by the Ministry of Corporate affairs, Section 164(2) of the
 Companies Act, 2013 pertaining to disqualification of Directors, is not
 applicable to the Government Company.
 
 f) with respect to the adequacy of the internal financial controls over
 financial reporting of the Company and the operating effectiveness of
 such controls, refer to our report in Annexure C and
 
 g) with respect to the other matters to be included in the Auditors''
 Report in accordance with Rule 11 of the Companies (Audit and Auditors)
 Rules, 2014, 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 34(1)(c )
 to the standalone financial statements;
 
 ii.  the Company did not have any long-term contracts including
 derivative contracts for which there were any material foreseable
 losses;
 
 iii.  therewere no amounts which were required to be transferred, to
 the Investor Education and Protection Fund by the Company.
 
 ANNEXURE-ATO THE INDEPENDENT AUDITOR''S REPORT
 
 (Referred to in Paragraph 1 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 fixed assets except for
 assets at Regional sales offices. Further certain details as regards to
 purchase orders reference, date of commissioning, location,
 identification and codifications etc. of some movable tangible assets
 needs to be updated.  Location details and area of freehold and
 leasehold land also needs to be updated in the fixed asset register and
 need to be reconciled with the revenue records maintained by the local
 authority.
 
 (b) The fixed assets located at Head quarter, North Eastern Coalfields,
 various Regional sales offices and other offices have been physically
 verified periodically as certified by the management. Discrepancies
 noticed on such verification were not material as per the management,
 pending for reconciliation and adjustment in the books of accounts. The
 process should be further improved by having well defined programme of
 physical verification to cover all the assets in phased manner.
 
 (c) According to the information and explanations given to us and on
 the basis of our examination of the records of the Company, title deeds
 for freehold land amounting Rs.6.38 Crores and for leasehold land
 amounting Rs.1.34 Crores have been verified by us and the same are held
 in the name of the Company. Title deeds for freehold land for Rs.5.43
 Crores are not available for our verification. Further, as per the
 details made available to us, title deeds for freehold land measuring
 1072.97 hectares and leasehold land measuring 5558.23 hectares, for
 which no value is recorded in the books of accounts, are not available.
 
 (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.
 
 (b) The inventories have been measured on the basis of volumetric
 system.
 
 (c) 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.
 
 (iii) According to the information and explanation given to us, the
 Company has not granted any loans, secured or unsecured to companies,
 firms, Limited Liability Partnerships or other parties covered in the
 register maintained under section 189 of the Companies Act, 2013 as
 such paragraph 3(iii) of the Order is not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of section
 185 and 186 of the Act, with respect to the loans and investments made.
 
 (v) The Company has not accepted any deposits from the public.
 
 (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.
 
 (vii) (a) According to the information and explanations given to us and
 on the basis of our examination of books of accounts, the Company is
 generally regular in depositing the undisputed statutory dues including
 provident fund, income tax, sale tax, wealth Tax, duty of customs, duty
 of excise, value added tax, cess and any other statutory dues with the
 appropriate authorities except few cases of delay noticed in deposit of
 service tax. As informed to us, Employee''s state insurance is not
 applicable to the company.
 
 According to the information and explanations given to us, except dues
 of additional royalty of Rs.28,51,836/-as on March 31,2016 which have
 not been deposited for reason stated in Note- 34(17) of the
 accompanying financial statements , no other undisputed amounts payable
 in respect of provident fund, income tax, sales tax, wealth tax, duty
 of customs, duty of excise, service tax, value added tax, cess and
 other material statutory dues were in arrears as at 31 March 2016, for
 a period of more than six months from the date they became payable.
 
 (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:
 
 Name of the statute         Nature of      Amount      Period to which
                             dues          (in Rs.)     the amount 
                                                        relates
 
 Provincial Sales Tax Act    Sales Tax    3,86,234.13   FY:1989-90
 
 Provincial Sales Tax Act    Sales Tax    1,79,762.00   FY:1990-91
 
 Provincial Sales Tax Act    Sales Tax      48,441.00   FY:1990-91
 
 Provincial Sales Tax Act    Sales Tax    2,75,819.00   FY:1991-92
 
 Provincial Sales Tax Act    Trade Tax        9040.00   FY:1993-94
 
 Name of the Statute        Forum where dispute is pending 
 
 Provincial Sales Tax Act   Assessing officer
 
 Provincial Sales Tax Act   Additional Commissioner (Appeals)-3
 
 Provincial Sales Tax Act   Additional Commissioner (Appeals)-3
 
 Provincial Sales Tax Act   Additional Commissioner (Appeals)-3
 
 Provincial Sales Tax Act   Assessing officer
 
 (viii) The Company does not have any loans or borrowings from any
 financial institution, banks, government or debenture holders during
 the year as such paragraph 3(viii) of the Order is not applicable.
 
 (ix) The Company did not raise any money by way of initial public offer
 or further public offer (including debt instruments) and term loans
 during the year.
 
 (x) According to the information and explanations given to us, no
 material fraud by the Company or on the company by its officers or
 employees has been noticed or reported during the course of our audit.
 
 (xi) According to the information and explanations given to us and
 based on our examination of the records of the Company, the Company has
 paid/provided for managerial remuneration in accordance with the
 requisite approvals mandated by the provisions of section 197 read with
 Schedule V to the Act.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the Company is not a nidhi Company as such paragraph
 3(xii) of the Order is not applicable.
 
 (xiii) According to the information and explanations given to us and
 based on our examination of the records of the company, transactions
 with the related parties are in compliance with sections 177 and
 Section 188 of the Act where applicable and details of such
 transactions have been disclosed in the financial statements as
 required by the applicable accounting standards.
 
 (xiv) According to the information and explanations given to us and
 based on our examination of the records of the Company, the Company has
 not made any preferential allotment or private placement of shares or
 fully or partly convertible debentures during the year.
 
 (xv) According to the information and explanations given to us and
 based on our examination of the records of the Company, the Company has
 not entered into non-cash transactions with directors or persons
 connected with them as such paragraph 3(xv) of the Order is not
 applicable.
 
 (xvi) The Company is not required to be registered under section 45-IA
 of the Reserve Bank of India Act 1934.
 
 
 For CHATURVEDI & CO.  
 
 Chartered Accountants 
 
 Firm Regn. No.302137E
 
 S.C.Chaturvedi
 
 Partner 
 
 Mem.No.012705
 
 Place:Kolkata 
 
 Dated:May 28, 2016
Source : Dion Global Solutions Limited
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