Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of
GAIL (India) Limited (''the Company''), which comprise the balance sheet
as at 31st March 2015, 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 there under.
We conducted our audit in accordance with the Standards on Auditing
specified under Section l43(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 controls 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''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 31st March 2015 and its profit and its cash flows for the year ended
on that date.
Emphasis of Matter
We draw attention to the following matters in Notes to Financial
Statement-
1. Note No; - 43 regarding sharing of under recoveries on sensitive
petroleum products up to 30.09.2014.
2. Note No; - 45 regarding various provisional transportation tariff
orders issued by Petroleum and Natural Gas Regulatory Board (PNGRB),
these orders have been contested by the company at Appellate Tribunal
for Electricity (APTEL) and adjustment if any will be recognized as and
when matter is finally decided.
3. Note No;- 46 & 47 regarding debit notes raised by ONGC in respect
of Non-APM prices for C-Series gas and differential tariff of Uran
Tombay pipeline of ONGC and corresponding debit notes raised by GAIL on
its customers.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2015 (the
Order) issued by the Central Government of India in terms of
sub-section (II) of section 143 of the Act, we give in the Annexure A
statement on the matters specified in the paragraph 3 and 4 of the
Order, to the extent applicable.
2. As required by C&AG of India through supplementary directions dated
19.10.2014 issued under Sectionl43(5) of the Companies Act 2013, on the
basis of written representation received from the management, we give
our report on the matter specified in the Annexure B attached.
3. As required by Sectionl43(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) On the basis of the written representations received from the
directors as on 31st March 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March
2015frombeingappointed as a director in terms of Section 164(2) of the
Act; and
(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
32(l)(a),33 and 55 to the financial statements;
ii. the Company did not have any long-term contracts including
derivative contracts for which there were any material foresee able
losses; and
iii. there has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
The Annexure referred to in para 1 to Report on Other legal and
Regulatory Requirement of the auditor''s report to the shareholders of
GAIL (India) Limited for the year ended March 31,2015. We report that:
(i) (a) The company has generally maintained proper records showing
full particulars including quantitative details and situation of fixed
assets.
(b) According to the information and explanation given to us, there is
a regular programme of verification of fixed assets by the management,
which in our opinion is reasonable having regard to the size of the
company and the nature of its assets. Fixed assets have been physically
verified by the management during the year and as per the report, no
material discrepancies were noticed on such verification.
(ii) (a) The inventories have been physically verified at reasonable
intervals by the Management, except the stores & spares lying with
Engineers India Ltd. and other contractors. We have been explained that
the stock of gas at the end of the year has been taken with reference
to reading of Turbine Flow Meter/Gas Chromatograph installed at
Terminals, Stock of LPG/Pentane/SBP Solvent are determined with
reference to Tank Level Gauge measurement which are converted into
tonnage by measurement of density and applying correction factor for
temperature. LPG vapors volume is converted to tonnage by standard
formulae.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory
followed by the Management are reasonable and adequate in relation to
the size of the Company and nature of its business.
(c) In our opinion and according to the information given to us the
company is maintaining proper records of inventory and no material
discrepancy was noticed on physical verification of inventory.
(iii) According to the information given to us the company has not
granted any loans, secured or unsecured to the companies, firms or
other parties covered in the register maintained under section 189 of
the Companies Act.
(iv) According to information and explanations given to us, there are
generally adequate internal control systems commensurate with the size
of the company and nature of its business for the purchase of inventory
and fixed assets and for the sale of goods and services.
(v) The company has not accepted any deposits from the public during
the year covered under section 73 or any other relevant provision of
the Companies Act,2013.
(vi) We have broadly reviewed the costing records being maintained by
the Company pursuant to the order made by the Central Government for
the maintenance of Cost records under sub-section (l) of Section 148 of
The Companies Act 2013 and we are of the opinion that prima facie the
prescribed accounts and records have been maintained.
(vii) (a) According to the records of the company and information and
explanation given to us, the company has generally been regular in
depositing undisputed statutory dues including Provident fund,
Employees'' State Insurance, Income tax. Sales tax. Wealth tax, Service
Tax, duty of custom, duty of excise, value added tax, cess and any
other statutory dues with the appropriate authorities. According to
the information and explanation given to us, no undisputed amounts
payable in respect of Provident fund, employees'' State Insurance,
Income tax. Sales tax. Service Tax, duty of custom, duty of excise,
value added tax, cess and any other statutory dues were in arrear at
the year-end for a period of more than six months from the date they
became payable.
(b) As certified by the Management on which we have relied upon, the
dues of Income tax or sales tax or wealth tax or service tax or duty of
custom or duty of excise or value added tax or cess which have not been
deposited on account of disputes and the forum where the dispute is
pending, are given below:
List of Cases of Unpaid Disputed Demand under various Statutes as on
31.03.2015
(Rs.in Crore)
SI. Statute Subject Matter of Dispute Amount Period of
No. (2014-15) Dispute
1. Entry Tax (a) Demand of Entry Tax on 189.24 1999-00 to
Natural Gas in U.P. 2009-10
(b) Demand of Entry Tax on 5.18 2002-03 to
Natural Gas in Rajasthan 2005-06
(c) Demand of Entry Tax on 2008-09,
2011-12 &
Natural Gas in Madhya
Pradesh 6.28 2012-13
2 Sales
Tax & (a) Non-acceptance of
declaration 0.37 1995-96 &
1996-97
VAT form for concessional
sales tax
(b) Sales Tax demand as per
assessment order 4.24 2005-06 &
2006-07
(c) VAT demand as per
assessment order 35.78 2010-11
(d) CST demand on Transmission
charges 1.91 2006-07
(e) VAT demand on transfer
of material 6.28 2011-12
(f) Demand of CST on account of 1.44 2011-12 &
2012-13
disallowance of LPG
absorption credit notes
(g) Demand of VAT on account of 107.58 2010-11 &
2012-13
disallowance of input
tax credit
(h) Demand of VAT on account of 18.2 2005-06
disallowance of LPG subsidy
(i) Demand of VAT on sale of 123.06 2007-08
Natural Gas to
Electricity Co.
(j) Demand of VAT on
bandwidth charges 2.58 2008-09
Statute Status - Forum
Entry Tax Allahabad High Court, Trade tax Tribunal &
Additional Commissioner (Appeals)
Dy. Commissioner (Appeals), Ajmer
Tribunal, Bhopal & Additional Commissioner
(Appeals), Gwalior
Sales Tax & VAT Tribunal, Bhopal
Additional Commissioner (Appeals), Noida
Additional Commissioner (Appeals), Noida
Commercial Tax Officer, Nagapattinam
Additional Commissioner (Appeals), Gwalior
Additional Commissioner (Appeals), Gwalior
Additional Commissioner (Appeals), Gwalior &
Joint Commissioner (Appeals), Mumbai
Joint Commissioner (Appeals), Mumbai
Joint Commissioner (Appeals), Mumbai
Joint Commissioner (Appeals), Mumbai
SI. Statute Subject Matter of Dispute Amount Period of
No. (2014-15) Dispute
(k) Demand of VAT on sale
of LPG for 38.6 2007-08,2008-09
domestic use & 2010-11
(l) Demand of VAT on spurline
charges 4.23 2011-12
(m) Demand of GVAT & CST
on account 37.72 2006-2007
of disallowance of LPG
subsidy discount
(n) Penalty for delay in
payment of sales tax 0.6 2003-2004
(o) Demand of VAT on account
of rate change 0.49 Oct 2011 to
Dec 2011
(p) Demand of C5T on account
of disallowance of LPG
subsidy discount 49.38 2005-06
(q) Demand for treating CST
sale as local sale 0.15 2003-2004
(r) Sales Tax demand 0.2 1998-1999
(s) Revised Sales Tax demand
as per 2.59 2003-04
assessment order
3 Customs, (a) LPG valuation Dispute 18.72 Jan 2001 to
Feb 2005
Excise
and
Service
Tax (b) Dispute on Pentane
Classification 106.7 Aug.2005 to
Jul2009
(c) Dispute on MFO
Classification 75.33 July 2004 to
Mar 2011
(d) Demand of duty under
Rule 6(3) of CCR, 13.8 2008-2009
2004 for credit taken
on input services & 2009-2010
(e) Demand of Service Tax on 733.28 Oct. 2006 to
Marketing Margin Mar 2013
(f) Demand of Service Tax on
deputation 37.17 Oct. 2006 to
of employees to JVs &
Govt. Deptt. June 2012
(g) Demand of differential
service 0.11 Oct.2006 to
tax based on service
tax returns March 2007
(h) Demand raised by
denying Cenvat 9.01 Aug.2005 to
& service tax credit
taken at Hazira March 2012
(i) Demand raised by denying
Cenvat 0.20 2008-09 &
Dec. 2010
credit taken on input
services to March 2011
(j) Demand of CVD on
purchase of 0.07 March 2006
SAP software
SUB-TOTAL 1630.49
4 Income Tax (a) Unpaid demand 76.75 AY-2012-13
(b) Demand of TDS 3.1 AY-2008-09 to
AY-2015-16
5 Other taxes Notified Area tax &
GIDC tax on 3.98 1998-99 to
Aug 2005
revised value (incl.
interest) & 1998-99 to
Dec 2009
TOTAL 1714.32
Statute Status - Forum
Joint Commissioner (Appeals), Mumbai
Additional Commissioner (Appeals), Etawah
Tribunal, Gujarat
Joint Commissioner (Appeals), Mumbai
Joint Commissioner, Trichy
High Court, Gwalior
Assam Revenue board
Mumbai Tribunal
Joint Commissioner (Appeals), Vadodara
Customs Excise and
Service Tax CESTAT Mumbai
CESTAT Ahmedabad
CESTAT Ahmedabad
CESTAT Kolkata
CESTAT Delhi
CESTAT Delhi
Commissioner (Appeals), Vadodara
CESTAT Ahmedabad &CESTAT Delhi
CESTAT Delhi & Commissioner (Appeals), Kanpur
CESTAT Delhi
Income Tax CIT (Appeals)
ITO (TDS)
Other Taxes Ahmedabad High Court
(b) According to the information and explanation given to us there is
no amount which was required to be transferred to the investor
education and protection fund in accordance with relevant provisions of
The Companies Act 1956 (l of 1956) and rules made thereunder.
(viii) The company does not have accumulated losses at the end of the
financial year and it has not incurred cash losses in the current and
immediately preceding financial year.
(ix) Based on our audit procedure and according to the information and
explanations given to us by the management, we are of the opinion that
the company has not defaulted in repayment of dues to a financial
institution, bank and debenture holders.
(x) In our opinion and according to information and explanation given
to us, company has given guarantees for loans taken by its subsidiaries
from bank and financial institutions. The terms and other conditions,
in our opinion, are not prima facie prejudicial to the interest of the
company.
(xi) On the basis of review of utilization of funds pertaining to term
loans on overall basis and related information as made available to us,
the term loans taken by the company have been utilized for the purposes
for which these are obtained.
(xii) According the information and explanation given to us no fraud on
or by the company has been noticed or reported during the year under
review.
For S.K.Mittal & Co. For G.S Mathur & Co.
Chartered Accountants Chartered Accountants
Firm No.:001135N Firm No.:08744N
(M.K.Juneja) (Rajiv Kumar Wadhawan)
(Partner) (Partner)
Membership No.:013117 Membership No.:091007
Place: New Delhi
Dated: 27th May, 2015 |
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