Report on the Financial Statements
We have audited the accompanying financial statements of GAIL(India)
Limited, which comprise the Balance Sheet as at March 31,2013, and the
Statement of Profit and Loss and Cash Flow Statement for the year then
ended, and a summary of significant accounting policies and other
explanatory information.
Management''s 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 (the Act). 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.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the 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 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 control relevant to the Company''s 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.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the 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:
a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013
b) In the case of the Statement of Profit and Loss, of the profit for
the '' year ended on that date; and
c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order) 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 paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a) 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;
b) In our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books
c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account
d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and
Cash Flow Statement comply with the Accounting Standards referred to in
subsection(3C) of section 211 of the Companies Act, 1956;
e) Being a government Company, pursuant to the Notification No. GSR
829 (E) dated 21st October 2003 issued by Department of Company
Affairs, provisions of clause (g) of sub-section (1) of Section 274 of
the Companies Act, 1956, are not applicable to the company.
f) 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 has 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
The Annexure referred to in the auditor''s report to the shareholders of
GAIL (India) Limited for the year ended March 31, 2013. 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 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 no material discrepancies were noticed
on such verification.
In our opinion, there was no substantial disposal of fixed assets
during the year.
(ii) 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 vap our volume is converted to tonnage by standard
formulae.
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.
According to the information and explanations given to us, no material
discrepancies have been noticed on physical verification of inventories
as compared to the books and records.
(iii) (a) The Company has granted loans to its one subsidiary company
(None of the Directors individually or collectively hold more than two
per cent of the paid-up share capital). The Company has maintained the
register under section 301 of the Companies Act, 1956, inter-alia, in
which the name of said one subsidiary is also entered. The maximum
amount involved during the year for Rs. 57.32crores and year-end
balance of loan was Rs.55.60crores.
(b) In our opinion, the rate of interest and other terms and conditions
of such loans are not, prima facie, prejudicial to the interest of the
company.
(c) The party has repaid the principal amounts as stipulated and has
also been regular in the payment of interest to the company.
(d) There is no overdue amount in excess of Rs. 1 lakh in respect of
loans granted to companies, firms or other parties listed in the
register maintained under section 301 of the Companies Act, 1956.
(e) The company had not taken loan from companies covered in the
register maintained under section 301 of the Companies Act, 1956.
(iv) In our opinion, and according to information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business for the purchase of inventory, fixed assets and for the sale
of goods and services.
(v) On the basis of our examination of books of accounts, and as per
information and explanation given to us, the company has not made any
transactions in respect of any party during the financial year that
needs to be entered in the register pursuant to the section 301 of the
Companies Act, 1956.
(vi) The company has not accepted any deposits from the public during
the year covered under section 58A and 58AA or any other relevant
provision of the Companies Act, 1956.
(vii) In our opinion, the company''s internal audit system is
commensurate with its size and nature of its activities.
(viii) We have broadly reviewed the books of Accounts maintained by the
Company pursuant to the order made by the Central Government for the
maintenance of Cost records under Section 209(1)(d) of the Companies
Act, 1956 and we are of the opinion that prima facie the prescribed
accounts and records have been maintained.
(ix) (a) According to the records of the company, the company is
generally regular in depositing undisputed statutory dues including
Provident fund, Investor Education and Protection Fund, Employees''
State Insurance, Sales tax, Wealth tax, Service Tax, Custom duty,
Excise duty, 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 Sales tax, Service Tax,
Custom duty, Excise duty and other statutory dues were outstanding at
the year-end for a period of more than six months from the date they
become payable.
(b) As certified by the Management on which we have relied upon, the
dues of Excise Duty, Custom Duty, Entry Tax, Sales Tax and other Taxes
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
31.03.2013
(Rs. In Crores)
SI. Statute Subject Matter of Dispute Amount
No. (2012-13)
1 Entry Tax (a) Demand of Entry Tax on
Natural Gas in U.P. 159.17
(b) Demand of Entry Tax on Natural Gas 0.82
in Rajasthan
(c) Demand of Entry Tax on Natural Gas in 26.00
Madhya Pradesh
2 Sales Tax (a) Non-acceptance of declaration form for 0.61
concessional sales tax
(b) Sales Tax demand as per assessment order 3.66
of 2005-06 and 2006-07
(c) CST demand on Transmission charges 0.70
(d) Demand of GVAT & CST on account of 81.18
disallowance of LPG subsidy discount
and treating LPG as non-domestic
(e) Interest for delay for sales
tax assessment 0.51
(f) Demand of VAT on account of rate change 0.29
(g) Demand of MP VAT & CST Disallowance of
credit note for LPG subsidy discount 207.97
(h) Demand for treating CST sale as
local sale 0.15
(i) Sales Tax demand 0.20
(j) Revised Sales Tax demand as per
assessment order of 2003-04 1.05
3 Excise & (a) LPG valuation Dispute 16.88
Service
Tax
(b) Dispute on Pentane Classification 99.63
(c) Dispute on MFO Classification 66.45
(d) Demand of duty under Rule 6(3) of CCR, 11.97
2004 for credit taken on input services
(e) Demand of differential service
tax based on 0.19
returns for the period from Oct 06
to Mar 07
(f) Demand raised denying refund claim 0.47
allowed to GAIL for service tax on
compression charges
(g) Demand raised by denying Cenvat & 10.29
service tax credit taken at Hazira
(h) Demand raised by denying Cenvat credit 0.22
taken on input services
SUB-TOTAL 688.41
4 Income Unpaid demands including interest 68.58
Tax
5 Other Notified Area tax & GIDC tax on revised 3.63
taxes value (incl. interest)
TOTAL 760.62
Statute Period of Dispute Status - Forum
Entry Tax 1999-00 to 2009-10 Allahabad High Court, Trade tax
Tribunal & Additional / Joint
Commissioner (Appeals)
2005-06 Dy. Commissioner (Appeals), Ajmer
2008-09, High Court, Gwalior & Tribunal,
2009-10 & 2010-11 Bhopal
Sales Tax 1995-96 & 1996-97 Additional Commissioner (Appeals),
Commerical Tax, Gwalior
2005-06 & 2006-07 Additional Commissioner (Appeals)
Noida
2005-06 to 2009-10 AP High Court
2006-2007 Joint Commissioner (Appeals)
2003-2004 Dy. Commissioner, Sales Tax, Mumbai
Oct 2011 to Dec 2011 Joint Commissioner, Trichy
2008-09 to 2010-11 High Court, Gwalior
2003-2004 High Court, Guwahati
1998-1999 Mumbai Tribunal
2003-04 Joint Commissioner (Appeals),
Baroda
Excise &
Service Tax Jan 2001 to
Feb 2005 CESTAT Mumbai
Mar. 2000 to CESTAT New Delhi & CESTAT
Feb 2002 & Aug.2005 Ahmedabad
to Jul 2009
July 2004 to
March 2011 CESTAT Ahmedabad
2008-2009 & CESTAT Kolkata
2009-2010
Oct.2006 to
March 2007 CESTAT Ahmedabad
Sep.2007 CESTAT Ahmedabad
May 2005 to
March 2011 CESTAT Ahmedabad
Jan. 2006 to
Oct. 2009 & Commissioner (Appeals),
Guwahati &
Dec. 2010 to
March 2011 CESTAT Delhi
Income Tax AY-2003-04, 2004-05, CIT (Appeals)
2006-07, 2007-08
& 2010-11
Other taxes 1985-86 to 2008-09 Ahmedabad High Court
(x) The company has no accumulated losses at the end of the financial
year and it has not incurred any cash losses in the current and
immediately preceding financial year.
(xi) Based on our audit procedure and on the information and
explanations given 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.
(xii) In our opinion, the company has granted loans and advances on the
basis of security by way of pledge of shares, debentures and other
securities. In our opinion, the company has maintained adequate
documents and records in respect of such loans.
(xiii) The company is not a chit fund, nidhi, mutual benefit fund or a
society. Accordingly, clause 4(xiii) of the order not applicable.
(xiv) According to the information and explanation given to us, the
company is not dealing or trading in shares, securities, debentures and
other investments. Accordingly, clause 4 (xiv) of the order is not
applicable.
(xv) The 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.
(xvi) On the basis of review of utilization of funds pertaining to term
loans on overall basis and related information as made to us, the term
loans taken by the company have been utilized for the purposes for
which they are obtained.
(xvii) According to the information and explanation given to us,
company has not utilized short-term loan for long-term investment
during the year.
(xviii)The company has not made any preferential allotment of shares to
parties or companies covered in the register maintained under section
301 of the Companies Act, 1956.
(xix) The Company has not issued any debentures during the year.
(xx) During the year no money has been raised by public issues.
(xxi) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
year.
For M.L.Puri& Co. For Rasool Singhal & Co.
Chartered Accountants Chartered Accountants
Firm No.: 002312N Firm No.: 500015N
(Navin Bansal) (Sandeep Gupta)
(Partner) (Partner)
Membership No.:91922 Membership No.:413890
Place : New Delhi
Dated : May 28, 2013 |
-8.5 (-1.95%)
