GAIL India
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| Auditor's Report (GAIL India) | Year End : Mar '16 |
We have audited the accompanying standalone financial statements of
GAIL (India) Limited (''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 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 of 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 Section143(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 Matter
We draw attention to the following matters in Notes to Financial
Statement:-
1. Note No: 42(c) -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.
2. Note No: 47 - in respect of stating the investment in a joint
venture entity at book value whereas net worth of the entity has been
eroded and management has considered the diminution in value of
investment as non- permanent.
3. Note No: - 51-in respect of revenue recognition during the year for
ship or pay charges where the customer has disputed the claim of the
company and final outcome is uncertain, 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, 2016 (the
Or der) 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
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 directions/sub-directions
dated 11.12.2015 and 29.04.2016 and issued under Section 143(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 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) On the basis of the written representations received from the
directors as on 31 March 2016 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March 2016
from being appointed as a director in terms of Section 164 (2) of the
Act.
(f) We are enclosing herewith a report in Annexure C for our opinion
on adequacy of internal financial controls system in place in the
company and the operating effectiveness of such controls; and
(g) 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 33(1)(a)
and 34 to the financial statements;
ii. the Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
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
Referred to in paragraph 1 to Report on Other legal and regulatory
requirements of the Independent Auditors'' Report of even date to the
members of GAIL (INDIA) LIMITED on the financial statements for the
year ended March 31, 2016.
i(a) As informed to us the company has generally maintained proper
records showing full particulars, including quantitative details and
situation of fixed assets.
(b) According to information and explanation given to us there is a
regular programme of physical verification of these fixed assets by the
management which in our opinion is reasonable having regard to the size
of the company and nature of its assets. As informed to us no material
discrepancies were noticed on such verification.
(c) As informed to us and as verified by us during the course of our
audit the title deeds of immovable properties are held in name of the
company except for the cases as disclosed in Note no 45(b) & (c).
ii. As informed to us physical verification of inventory has been
conducted at reasonable intervals by the management except the store
and spares lying with Engineers India Limited 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. As informed to us no material
discrepancies were noticed on physical verification of inventory.
iii. As informed to us the company has granted unsecured loans to
companies covered in the register maintained under section189 of the
Companies Act 2013. In respect of such loans:
a) As informed to us and as verified by us the terms and conditions of
grant of such loans are not prejudicial to the interest of the company,
(b) Repayment of the principal amount and payment of interest on such
loans have been stipulated. However repayment of principal and payment
of interest has not been regular in one of the loan given to
Bhagyanagar Gas Limited. Please refer Note No.50 to the financial
statements in this regard.
(c) As informed to us, no amount of loan is overdue as at end of the
year for a period more than ninety days.
iv. According to the information and explanations given to us, the
company has complied with the provisions of Section 185 and 186 of
Companies Act 2013 in respect of loans/investment/guarantee/security
granted during the year.
v. The company has not accepted any deposits, in terms of the
directives issued by the Reserve Bank of India and the provisions of
sections 73 to 76 or any other relevant provisions of the Companies Act
2013 and the rules framed there under.
vi. In respect of business activities of the company maintenance of
cost records has been specified by the Central Government under
sub-section (l) of section 148 of the Companies Act 2013 read with
rules framed thereunder and in our opinion, prima facie, prescribed
accounts and records have been made and maintained by the company,
vii. a) According to 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, service tax, duty of
customs, duty of excise, value added tax, cess and any other statutory
dues with the appropriate authorities. According to information and
explanation given to us there are no outstanding statutory dues as
referred above as at the last day of the financial year under audit 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 sale 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 dispute and the forum where the dispute is pending are given
below:
List of Cases of Unpaid Disputed Demand under various Statutes as on
31.03.2016
( Rs. in Crores)
Sl. Statute Subject Matter
of Dispute Amount Period of
Dispute Status - Forum
No. (2015-16)
1 Entry Tax (a) Demand of
Entry Tax on
Natural 203.00 1999-00 to
2009- Allahabad High
Court, Trade Tax
Tribunal &
Gas in U.P 10 Joint Commissioner
(b) Demand of
Entry Tax on
Natural 2002-03
to 2005-
Gas in
Rajasthan 5.59 06 Dy. Commissioner
(Appeals), Ajmer
(c) Demand of
Entry Tax on
Natural 2008-09,
2011-12
Gas in Madhya
Pradesh 5.38 &
2012-13 Tribunal, Bhopal
2 Sales Tax & (a) Non-
acceptance of
declaration 0.38
VAT form for
concessional
sales tax 1995-96
&
1996-97 Tribunal, Bhopal
(b) Demand of
VAT on account
of 31.88 2005-06,
2006-07 Joint
Commissioner
(Appeals), Mumbai
disallowance
of Credit Note & 2009-10
(c) VAT demand
on inter unit 5.52 2011-12 Tribunal, Bhopal
(d) Demand of
CST on account
of
disallowance of
LPG absorption 1.39 2011-12
&
2012-13 Tribunal, Bhopal
credit notes
List of Cases of Unpaid Disputed Demand under various Statutes as on
31.03.2016
(Rs.in crores)
Sl. Statute Subject Matter
of Dispute Amount Period of
Dispute Status - Forum
No. (2015-16)
2 Sales
Tax & Demand of VAT
on account of
(e) 2.77 2010-11 Joint Commissioner
(Appeals), Mumbai
VAT disallowance
of input tax
credit
Demand of VAT
on account of
(f) 14.92 2005-06 Joint Commissioner
(Appeals), Mumbai
disallowance
of LPG subsidy
Demand of VAT
on sale of
Natural
(g) Gas to Power
Companies 129.54 2007-08 Joint Commissioner
(Appeals), Mumbai
Demand of VAT
on bandwidth
(h) 2.71 2008-09 Joint Commissioner
(Appeals), Mumbai
charges
(i) Demand of
VAT on High
Sea Sale 28.59 2011-12 Joint Commissioner
(Appeals), Mumbai
Demand of VAT
on sale of LPG
by 2006-07 to
(j) treating it
as non domestic 56.59 2011-12 Joint Commissioner
(Appeals), Mumbai
(k) Penalty for
delay in payment
of 0.60 2003-2004 High Court, Mumbai
sales tax
Demand of VAT
on account of Oct 2011
to Dec
(l) 0.54 Joint
Commissioner,
Trichy
rate change 2011
Demand of CST
on account of
(m) disallowance
of LPG subsidy 51.84 2005-06 High Court,
Gwalior
discount
Demand for
treating CST
sale as
(n) 0.15 2003-2004 High Court,
Guwahati
local sale
(o) Revised
Sales Tax demand
as per 2.76 2003-04 Joint
Commissioner
(Appeals),
Vadodara
assessment
order
3 Customs, Jan 2001
to Feb
(a) LPG
valuation Dispute 19.64 CESTAT Mumbai
Excise
and 2005
Service
Tax Aug.2005
to Dec
(b) Dispute on
Pentane
Classification 99.4 2006 &
Oct 2007 CESTAT Ahmedabad
to July
2009
(c) Dispute on MFO
Classification 79.77 July
2004 to CESTAT Ahmedabad
March
2011
Demand of duty
under Rule 6(3) April
2008 to
(d) of CCR, 2004
for credit taken on 14.71 March
2010 CESTAT Kolkata
input services
Demand of Service
Tax on Oct. 2006
to Mar
(e) 965.85 CESTAT Delhi
Marketing Margin 2014
Demand of Service
Tax on Oct 2006
(f) deputation of
employees to JVs 41.20 2012 to
June CESTAT Delhi
& Govt. Deptt.
Demand of
differential
service Oct.2006
to March
(g) 0.13 CESTAT Ahmedabad
tax based on
service tax
returns 2007
Demand raised
by denying Aug 2005
to Sept
(h) Cenvat &
service tax
credit taken 9.30 CESTAT Ahmedabad
at Hazira 2009
Demand raised
by denying 2008-09
& Dec
(i) Cenvat credit
taken on input 0.22 CESTAT Delhi &
CESTAT Allahabad
2010 to
March 2011
services
Demand raised in
respect of 2008-09 to
(j) 0.14 Commissioner
(Appeals), Delhi
service tax on
import of service 2011-12
Demand of CVD on
purchase of
(k) 0.07 March
2006 CESTAT Delhi
SAP software
SUB-TOTAL 1774.73
Sl.
No Statute Subject Matter
of Dispute Amount Period of
Dispute Status - Forum
(a) Unpaid demand 6.23 AY-
1999-00 CIT (Appeals)
4 Income
Tax AY
2008 09
to AY ITO(TDS)
(b) Demand of TDS 3.10 - 2016-17
Notified Area
Tax & GIDC
Tax on 1998-99
to 2005-
4.16 06 &
1985-86
to Ahmedabad High
Court
revised value
(incl. interest)
5 Other
taxes 2009-10
TOTAL 1788.22
viii. Based on our audit procedures and in accordance with the
information and explanations given to us by the management the company
has not defaulted in repayment of dues to a bank or government or bonds
holders.
ix. The company has not raised any money during the year by way of
initial public offer or further public offer (including debt
instrument). As informed to us the company has not raised any money by
way of term loans during the year.
x. According to the information and explanation given to us there has
been no fraud noticed or reported during the year on the company or by
the company by its officers or employees.
xi. In our opinion the managerial remuneration paid/provided during
the year is in accordance with the requisite approvals mandated by the
provisions of Section 197 read with Schedule V of Companies Act 2013.
xii. The company is not a nidhi company and therefore clause 3(xii) of
the Order related to such companies is not applicable to the Company.
xiii. According to the information and explanation given to us all
transactions with the related parties are in compliance with sections
177 and 188 of Companies Act, 2013 where applicable and the details
have been disclosed in the Financial Statements as required by the
applicable accounting standards.
xiv The company has not made any preferential allotment or private
placement of shares or fully or partly convertible debentures during
the year under review.
xv. As informed to us, during the year the company has not entered
into any non-cash transactions with any of its directors or persons
connected with the directors.
xvi. The company is not required to get registered under section 45-IA
of Reserve Bank of India Act 1934.
For O. P.Bagla & Co. For G.S Mathur & Co.
Chartered Accountants Chartered Accountants
Firm No.: 000018N Firm No.: 08744N
(Rakesh Kumar) (Rajiv Kumar Wadhawan)
(Partner) (Partner)
Membership No.:087537 Membership No.:091007
Place: New Delhi
Dated: 25th May, 2016 |
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