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Coal India
BSE: 533278|NSE: COALINDIA|ISIN: INE522F01014|SECTOR: Mining/Minerals
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Auditor's Report (Coal India) Year End : Mar '13
1.  Report on the Financial Statements
 
 We have audited the accompanying financial statements of COAL INDIA
 LIMITED which comprise the Balance Sheet as at 31st March, 2013, 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. These financial statements include figures in
 respect of HQ Kolkata, North Eastern Coalfields (NEC), CGMs office
 at Delhi and Kolkata Marketing Office.
 
 2.  Managements Responsibility for the Financial Statements
 
 Management is responsible for the preparation of these 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 Standards referred to in sub-section (3C) of section 211
 of the Companies Act, 1956. This responsibility includes the design,
 implementation and maintenance of internal control 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.  Auditors Responsibility
 
 Our responsibility is to express an opinion on these financial
 statements based on our audit. We conducted our audit in accordance
 with Standards on Auditing issued by the Institute of Chartered
 Accountants of India. 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 disclosures in the financial statements. The procedures
 selected depend on the Auditors judgement, including the assessment
 of the risks of material misstatement of the financial statements,
 whether due to fraud or error. In making those risks assessments the
 auditor considers internal control relevant to the Companys
 preparation and fair presentation of the financial statements in order
 to design audit procedures that are appropriate in the circumstances.
 An audit also includes evaluating the appropriateness of accounting
 policies used and the reasonableness of the accounting estimates made
 by management, 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.
 
 4.  Without qualifying our report, attention is drawn to :
 
 a) Notes No.11(1), 12(2) and 18 dealing with investments in and loans
 and advances (Short term/Long term, Current Account debit balances) to
 sick subsidiary of the company, that is, Eastern Coalfields Limited
 (ECL) which is under the Board of Industrial & Financial Reconstruction
 (BIFR). Revival plans have been approved by BIFR and vetted by the
 concerned ministry, On implementation of revival schemes the subsidiary
 is turning around and has started earning profits. In view of the
 changing circumstances, the management is of the opinion that no
 writing down or provisioning is required.
 
 b) Note No. 21(1) dealing with non-recognition of income of apex
 charges and interest from ECL, a sick subsidiary company and also Apex
 Charges of BCCL (subsidiary of CIL) has been waived off by CIL Board.
 BCCL is still having accumulated losses, interest on other loans and
 advances has been deferred.
 
 c) 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 Rs. 1 per annum. In the 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 as
 such no provision is called for.
 
 5.  Opinion
 
 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 Significant Accounting Policies and Additional Notes to Accounts
 as referred in Notes 33 and 34 respectively give the information
 required by the Companies Act, 1956 in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 (a) in the case of Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2013;
 
 (b) in the case the Statement of Profit & Loss, of the profit for the
 year ended on that date; and
 
 (c) in the Cash Flow Statement, of the Cash Flows for the year ended on
 that date.
 
 6.  Report on Other Legal and Regulatory Requirements
 
 (1) As required by the Companies (Auditors Report) Order, 2003, as
 amended, issued by the Central Government of India in terms of
 sub-section (4A) of section 227 of the Act, we give in the Annexure a
 statement on the matters specified in paragraph 4 and 5 of the Order.
 
 (2) As required by section 227(3) of the Act, we report that:
 
 - We have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit;
 
 - In our opinion proper books of accounts as required by law have
 been kept by the company so far as appears from our examination of
 those books.
 
 - The Balance Sheet, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 accounts.
 
 - In our opinion, the Balance Sheet, Statement of Profit and Loss and
 Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in sub-section (3c) of section 211 of
 the Companies Act,1956; and
 
 - In terms of Government of India, Department of Company Affairs
 Notification No.GSR 829(E) Dated 21st October,2003, Government
 Companies are exempted from the applicability of provisions of section
 274(1)(g) of the Companies Act,1956.
 
 - Since the Central Government has not issued any notification as to
 the rate at which the cess is to be paid under section 441A of the
 Companies Act,1956 nor had it issued any Rules under the said section,
 prescribing the manner in which such cess is to be paid, no cess is due
 and payable by the company.
 
 (Referred to in paragraph 6.1 of our report of even date).
 
 On the basis of checks carried out during the course of audit and as
 per information and explanations furnished to us and to the best of our
 knowledge and belief we report that:
 
 i.  (a) The company has maintained proper records showing full
 particulars including quantitative details and situation of Fixed
 Assets. However, certain details as regards purchase order reference;
 date of commissioning and locations, identification marks are absent
 there in some cases of old items.
 
 (b) Fixed Assets located at North Eastern Coalfields, the production
 unit of the company, has been physically verified by the management
 periodically in a phased manner and no material discrepancies have been
 noticed as confirmed by the Management. Verification of fixed assets
 located elsewhere was inadequate.
 
 (c) No substantial part of fixed assets has been disposed of during the
 year, which has bearing on the going concern assumption.
 
 ii.  (a) Physical verification of inventory at North Eastern Coalfields
 has been conducted at reasonable intervals during the year by the
 management.
 
 However, inventory at Stock-yard of West Bengal Regional Sales Office
 has not been physically verified. The inventories being very old have
 been provided for.
 
 The inventories have been measured on the basis of volumetric system.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the management are reasonable and adequate in
 relation to the size of the company and the nature of its business.
 
 (c) The company has maintained proper records of inventory. No material
 discrepancies were noticed on physical verification.
 
 iii. (a) The company has not granted any loans, secured or unsecured to
 companies, firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956 except advances to its
 subsidiaries BCCL and ECL where interest has been deferred / waived. In
 other cases, clause 4 (iii) (b) to (d) of the Order are not applicable.
 
 (b) The company has not taken any loans, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956 except some surplus funds
 of the subsidiaries parked with this holding company where reasonable
 interest has been paid except two cases of Northern Coalfields Limited
 and Mahanadi Coalfields Limited where no interest has been paid as
 these funds were transferred to Eastern Coalfields Limited and Bharat
 Coking Coal Limited for specific purposes as interest free advance. The
 terms and conditions of these advances are not prejudicial to the
 interest of the company.
 
 iv.  There is an adequate internal control system 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 for certain old advances / receivable accounts
 where detail schedules are absent for a long time and the adjustments
 made there-against are basically effected on adhoc basis leading to the
 emergence of credit balances in some cases.
 
 v.  There are no contracts and arrangements as referred to in section
 301 of the Companies Act, 1956, particulars of which needs to be
 entered into a register maintained under section 301 of the said Act.
 Accordingly, clause 4 (v) (b) of the Order is not applicable.
 
 vi.  The company has not accepted any deposits from the public within
 the meaning of the provisions of Section 58A and 58AA or any other
 relevant provision of the Companies Act , 1956 and rules made there
 under,
 
 vii. The Company has an Internal Audit system commensurate with the
 size and nature of its business. But it requires substantial revamping
 in respect of timeliness and teeth of reporting together with risk
 based analysis of the inadequacies.
 
 viii.  The maintenance of cost records has been prescribed by the
 Central Government under section 209 (1) (d) of the Companies Act, 1956
 vide Notification dated 3rd June, 2011 in respect of mining activities
 of the company. We have checked the records and are prima facie of the
 opinion that the same are properly maintained.
 
 ix.  (a) The company is regular in depositing undisputed statutory dues
 including Provident Fund, Investors Education and Protection Fund,
 Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
 Duty, Cess and other statutory dues with the appropriate authorities.
 There were no undisputed arrears of statutory dues outstanding as on
 31.03.2013 for a period of more than six months from the date they
 became payable.
 
 (b) There are no dues of Sales Tax, Income Tax, Custom Duty, Wealth
 Tax, Excise Duty, Cess and Other Statutory dues which have not been
 deposited on account of any dispute.
 
 x.  The company does not have any accumulated losses at the end of
 financial year and has not incurred cash losses in the current
 financial year and in the immediately preceding financial year,
 
 xi.  The company has not defaulted in repayment of dues to Financial
 Institutions or Banks.
 
 xii. The company has not granted any loans or advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 xiii.  The company is not a Chit Fund or a Nidhi / Mutual Benefit Fund
 / Society,
 
 xiv. The company is not in the business of dealing or trading in
 shares. The company has investments in shares of its wholly owned
 subsidiaries, SPV Joint Venture and in Mutual Funds only and has
 maintained proper records of transactions and contracts in respect
 thereof and timely entries have been made therein. The company, in its
 own name, has held all these shares.
 
 xv.  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,
 
 xvi. No term loan has been availed during the year. However, the term
 loans availed by the company in earlier years had been utilized for the
 purposes for which the said loan had been taken.
 
 xvii.  The funds raised on short-term basis have not been used for
 long-term investments.
 
 xviii.  During the year under audit the company has not made any
 preferential allotment of shares.
 
 xix. The company has not issued any debentures during current or
 earlier year (s).
 
 xx.  The company has not made any Initial Public offering (IPO) of
 shares during the year as the same was carried out during the year
 2010-11.
 
 xxi. No fraud, on or by the company has been noticed or reported during
 the year.
 
 For De Chakraborty & Sen
 
 Chartered Accountants
 
 F.R. NO.303029E
 
 Raktim Kumar Chattopadhyay
 
 (Partner)
 
 Membership No. 052225
 
 Place: Kolkata
 
 Date: 20th May, 2013
Source : Dion Global Solutions Limited
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