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Gujarat State Petronet | Auditor's Report > Oil Drilling And Exploration > Auditor's Report from Gujarat State Petronet - BSE: 532702, NSE: GSPL
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Gujarat State Petronet

BSE: 532702|NSE: GSPL|ISIN: INE246F01010|SECTOR: Oil Drilling And Exploration
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Auditor's Report (Gujarat State Petronet) Year End : Mar '18

INDEPENDENT AUDITOR’S REPORT

To,

The Members

Gujarat State Petronet Limited Gandhinagar

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Gujarat State Petronet Limited (‘the Company’), which comprise the balance sheet as at 31st March, 2018, the statement of profit and loss, including other comprehensive income, and the cash flow statement and the statement of changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred as “the standalone Ind AS financial Statements”).

Management’s Responsibility for the Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Accounting Principles Generally Accepted in India (Indian GAAPs), including the Indian Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 Ind AS 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 and the order issued under section 143(11) of the Act, 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 standalone Ind AS financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS 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 standalone Ind AS 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 Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including Ind AS, of the financial position of the Company as at 31st March, 2018, its financial performance including other comprehensive income, its cash flows and changes in equity for the year ended on that date.

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 order.

2. 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 including other comprehensive income, cash flow Statement and the statement of changes in equity dealt with by this Report are in agreement with the books of account;

d) In our opinion, the aforesaid Standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015;

e) As the Company is a Government Company in terms of notification number: G.S.R. 463(E) Dated 5th June, 2015, issued by Ministry of Corporate Affairs the sub section (2) of section 164 of the Act is not applicable.

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 separate report in “Annexure B”; 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 30 to the financial statements.

ii) The Company has made provisions as at 31st March, 2018, as required under the applicable law or Indian Accounting Standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

3. As required by section 143 (5) of the Act, we give in “Annexure C”, A statement on matters specified by the Comptroller and Auditor

— General of India for the Company.

The Annexure referred to in Independent Auditors’ Report to the members of the Company on the Standalone Ind AS financial statements for the year ended 31st March 2018, we report that:

1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) The Company has a regular programme of physical verification of its Property, Plant and Equipment in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

2. (a) The management has conducted the physical verification of inventory at reasonable intervals.

(b) The discrepancies noticed on physical verification of the inventory as compared to books records which has been properly dealt with in the books of account were not material.

3. 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 (‘the Act’). Therefore, the provisions of Clause 3 (a) (b) and (c) of the said order are not applicable to the company.

4. According to the information and explanations given to us, the Company has granted Corporate Guarantees of '' 6500.00 Lakhs in respect of its two joint venture namely GSPL India Gasnet Limited and GSPL India Transco Limited.

5. The Company has not accepted any deposits from the Public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

6. We have broadly reviewed the books of accounts maintained by the company pursuant to the order made by the Central Government of India for the maintenance of cost records under section (1) of section 148 of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records have been maintained. We have not, however, carried out a detailed examination of the records to ascertain whether they are accurate or complete.

7. (a) According to the information and explanations given to us and on the basis of our examination of the records of the

Company, amounts deducted/ accrued in the books of account in respect of undisputed Statutory dues including Provident fund, income-tax, value added tax, duty of customs, service tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues were in arrears as at 31st March 2018 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, particulars of dues on, income tax, duties of excise and service tax as at 31st March 2018 which have not been deposited on account of dispute are as follows :

Nature of Statute

Nature of Dues

Amount ('' in Lakhs)

Period to which the amount Relates

Forum where the dispute is pending.

The Income Tax Act, 1961

Interest on TDS

14.16

2009-10

The honourable high court of Gujarat.

Assessment

Disallowances

6.75

2013-14

CIT (Appeals)

The Finance Act, 1994

Denial of Cenvat Credit

735.04

2005-08, 2008-09 & 2010-11

Supreme Court.

Denial of Cenvat Credit

14,414.99

2005-08, 2008-09 & 2010-11

Gujarat High Court

Nature of Statute

Nature of Dues

Amount ('' in Lakhs)

Period to which the amount Relates

Forum where the dispute is pending.

The Finance Act, 1994

Liability of Company under reverse charge mechanism

101.91

2002-03,

2003-04,

2004-05 & 2006-11

Custom Excise & Service Tax Appellate Tribunal.

Denial of Cenvat Credit

9,468.15

2009-10

2010-11 2011-12 2012-13

Custom Excise & Service Tax Appellate Tribunal.

Denial of Cenvat Credit

3,692.00

2010-11

2012-13

2014-15

2015-16

2016-17

Commissioner/ Asst. Commissioner

Service tax on Liquidated damages

480.65

July 2012 to June 2017

Commissioner DGGI Ahmedabad

8. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and financial institutions. As per information and explanation and from verification of records, Company has not issued any debentures.

9. Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys by way of initial public offer or further public offer including debt instruments. The term loans were applied for the purposes for which those are raised.

10. Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during the year.

11. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not paid /provided for managerial remuneration.

12. The Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

13. According to the information and explanations given to us and based on our examination of the records given by the management of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Companies Act, 2013 where applicable and details of such transactions have been disclosed in the notes to the financial statements as required by under Indian Accounting Standard (AS) 24, Related Party Disclosures.

14. According to the information and explanations give 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. Accordingly, paragraph 3(xiv) of the order is not applicable to the company.

15. As informed, the provision of Section 197 managerial remuneration are not applicable to the Company, being a Government Company, in terms of MCA Notification No: G.S.R. 463 (E) dated 5th June, 2015.

16. The company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Gujarat State Petronet Limited (“the Company”) as of 31st March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended 31st March, 2018.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that:

(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

In the continuation of our Independent Audit Report on Standalone Ind AS financial Statements of Gujarat State Petronet Limited (“The Company”), dated 21st May 2018 & pursuant to directions under section 143 (5) Companies Act 2013 applicable for the year 2017-18.

1. Whether the company has clear title / lease deeds for freehold and leasehold respectively? If not please state the area of freehold and leasehold land for which title / lease deeds are not available?

As per information and explanation given to us, the Company has clear title / lease deeds for freehold and leasehold respectively.

2. Whether there are any cases of waiver / write off of debts / loans / interest / etc. If yes, the reason there for and the amount involved.

There are no such cases of waiver of debts / loan / interest etc.

3. Whether proper records are maintained for inventories lying with third parties & assets received as gift / grant (s) from the Govt. or other authorities.

Company does not own any inventory which is lying with third party. Further company has not received any asset as gift from Govt. or other authorities.

Sub-directions under section 143 (5) of Companies Act, 2013

1. Whether the Company has taken adequate measures to prevent encroachment of idle land owned by it. Whether any land of the Company is encroached, under litigation, not put to use or declared surplus? Details may be provided.

As per information and explanation given to us, the Company has taken adequate measures to prevent encroachment and there is no encroachment to the land owned by the company.

2. Whether the system in vogue for identification of projects to be taken up under Public Private Partnership is in line with the guideline / policies of the Government? Comment on deviation if any?

The Company does not have any project to be taken up under Public Private Partnership.

3. Whether system the monitoring the execution of works vis-a-vis the milestones stipulated in the agreement is in existence and the impact of cost escalation. If any, revenues/losses from contracts etc. have been properly accounted for in the books..

System for monitoring the execution of works vis-a-vis the milestones stipulated in the agreement is in existence and the impact of cost escalation, if any revenues/ losses from contracts etc., have been properly accounted for in the books.

4. Whether funds received/ receivable for specific schemes from central/ State agencies were properly accounted for/utilized? List the cases of deviations..

The Company does not have received/ receivable any fund for specific schemes from central/ State agencies.

5. Whether the bank guarantees have been revalidated in time?

Bank guarantees have been revalidated in a timely manner.

6. Comment on the confirmation of balances of trade receivables, trade payables, term deposits, bank accounts and cash obtained. Balance Confirmation has been received in respect of term deposits, bank accounts & Cash. Separate disclosure has been made for trade receivables & trade payables- kindly refer note 36 to notes to accounts.

7. The cost incurred on abandoned projects may be quantified and the amount actually written-off shall be mentioned.

During the year 2016-17 the Company has not abandoned any projects.

Trading under Service sector

(i) Whether the Company has an effective system for the recovery of dues in respect of its sales activities and the dues outstanding and recoveries there against have been properly recorded in the books of accounts?

Not Applicable

(ii) Whether the Company has an effective system for physical verification valuation of stock, treatment of non moving items and accounting the effect of shortage/excess noticed during physical verification?

Not Applicable

(iii) The effectiveness of the system followed in recovery of dues in respect of sales activities may be examined and reported.

Not Applicable

For, V.V. Patel & Co.

Chartered Accountants

Firm Regn. No. 118124W CA

Swapnil K. Bhatt

Place: Gandhinagar Partner

Date : 21st May, 2018 Membership No. 128864

Source : Dion Global Solutions Limited
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