Mar 31, 2023
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of GAIL (India) Limited (hereinafter referred to as "the Company"), which comprise of the Standalone Balance Sheet as at March 31, 2023, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").
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 Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards ("Ind AS") prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, its profit including other comprehensive income, changes in equity, and its cash flows for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors'' Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
1. We draw attention to Note No. 32 (III) to the standalone financial statements regarding, various final transportation tariff orders issued by Petroleum and Natural Gas Regulatory Board (PNGRB), which have been contested by the company at Appellate Tribunal for Electricity (APTEL) and also certain customers have challenged these orders of PNGRB in Court of Law. Adjustment if any will be recognized as and when matter is finally decided.
2. We draw attention to Note No. 29 (I) (a) (iii) to the standalone financial statements regarding CESTAT order confirming the demand for the differential amount by the Central Excise Department in the matter pertaining to classification of ''Naphtha'' manufactured by the Company, of '' 3,391 crores including applicable penalty and interest thereon. Considering the merits of the case, Company has filed an appeal before the Hon''ble Supreme Court. Based on the legal opinion obtained, the Company does not foresee any probable outflow in the matter and accordingly has disclosed the same under contingent liability.
3. We draw attention to Note No. 29 (I) (a) (iii) to the standalone financial statements regarding, regarding demand by customs authorities amounting to '' 934.01 crore including penalty and interest, on account of Special Additional Duty (SAD) and Custom Duty on differential quantity, while finalizing provisionally assessed Bill of Entries in respect of import of LNG by Company during September 2017 to March 2022 at Dabhol Port, Ratnagiri. Considering the merits of the case, the Company is in process of filing an appeal before the Commissioner (Appeals) Pune. Further based on the exemption notification 51/2017 dated 30.06.2017, clarification provided by Central Board of Indirect Taxes and Customs (CBIC) and practice being followed at other Custom Port i.e. Dahej & Hazira, the Company is confident of favorable outcome in the matter and accordingly has disclosed the same under contingent liability
4. We draw attention to Note no 68 to the standalone financial statements regarding depreciation on Natural Gas/LPG Transmission Pipelines considering useful life 30 years and residual value 5%. During the year the company has sought an opinion of the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI) on the residual value of Natural Gas/LPG Transmission Pipelines for which opinion is awaited.
Our opinion is not modified in respect of matters mentioned in above paragraphs.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
Sr. No. Key audit matter |
How our audit addressed the Key Audit Matter |
1 Recognition and measurement of revenues in view of adoption of ind as 115 "Revenue from contracts with Customers" |
Principal Audit Procedures We assessed the Company''s process to identify the impact of adoption of the revenue accounting standard and checked the appropriateness of accounting policy. Our audit approach consisted testing of design and operating effectiveness of the internal controls as follows: |
Sr. No. |
Key Audit Matter |
How our audit addressed the Key audit matter |
|
We identified above as Key Audit Matter as the |
1. |
Evaluated the design of internal controls relating to implementation |
|
application of the revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations, determination |
2. |
of the revenue accounting standard, wherever applicable. Selected a sample of continuing and new contracts, and tested |
|
of transaction price of the identified performance |
the operating effectiveness of the internal control, relating |
||
obligations, the appropriateness of the basis used |
to identification of the distinct performance obligations and |
||
to measure revenue recognized over a period. Additionally, revenue accounting standard contains |
determination of transaction price. We carried out a combination of procedures involving enquiry and observation, re-performance |
||
disclosures which involves collation of information in |
and inspection of evidence in respect of operation of these controls. |
||
respect of disaggregated revenue and periods over |
3. |
Tested the relevant information technology systems'' access and |
|
which the remaining performance obligations will be |
change management controls relating to contracts and related |
||
satisfied subsequent to the balance sheet date. |
information used in recording and disclosing revenue in accordance |
||
Refer notes 21 and 38 to the standalone financial |
with the revenue accounting standard. |
||
statements. |
Selected a sample of continuing and new contracts and performed the following substantive procedures: |
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1. |
Read, analyzed and identified the distinct performance obligations in these contracts. |
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2. |
Compared these performance obligations with that identified and recorded by the Company. |
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3. |
Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. |
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2 |
Evaluation of uncertain tax positions and |
We |
have applied the following audit procedures in this |
contingent liabilities |
regard: |
||
The company operates in multiple jurisdictions and is |
1. |
Obtained an understanding of key tax matters and other contingent |
|
subject to periodic challenges by local tax authorities and other regulatory authorities such as PNGRB on a |
liabilities. |
||
range of matters during the normal course of business |
2. |
Read and analyzed the key correspondences, external legal |
|
including indirect tax matters. We have identified |
opinions/ consultations obtained by the company |
||
above as Key Audit Matter as these involve significant |
3. |
Evaluated and challenged key assumptions made by the company in |
|
judgment to determine the possible outcome of |
estimating the current and deferred tax balances |
||
material uncertain tax positions and contingent liabilities including matters under dispute, consequently having an impact on related accounting and disclosures. Refer note 29 (I) to the standalone financial statements. |
4. |
Assessed and challenged the company''s estimate of the possible outcome of the disputed cases by considering legal precedence and other judicial rulings |
|
5. |
Assessed and tested the presentation and disclosures relating to uncertain tax positions and contingent liabilities |
||
3 |
Derivative transaction and accounting of hedge |
We have applied the following audit procedures in this regard: |
|
transactions |
1. |
Obtained an understanding of management''s controls over |
|
We have identified above as Key Audit Matter as hedge accounting has resulted into significant impact on financial statements coupled with complexity of its accounting, calculations and complex/numerous |
2. |
recording of derivative transactions and application of hedge accounting. Tested the accuracy and completeness of derivative transactions. |
|
assumptions taken for establishing hedge relationship. |
3. |
We have relied on the valuation report evaluating the appropriateness |
|
Mark to market gain / loss pertaining to these derivative |
of the valuation methodologies applied and tested on sample basis |
||
contracts are recognized in other comprehensive |
the valuation of the derivative financial instruments. |
||
income. |
4. |
Validated that the derivative financial instruments qualify for |
|
Refer note 56 to the standalone financial statements. |
hedge accounting and tested accuracy of hedge effectiveness and ineffectiveness on sample basis. |
||
4 |
Technical parameters and voluminous transactions |
We have applied the following audit procedures in this regard: |
|
of natural gas trading and transmission captured to measure Revenue and inventory through |
1. |
We have performed test of controls, assisted by our IT specialists, |
|
integrated system and complexities involved |
over the accuracy and completeness of the quantity captured via IT |
||
therein. |
system through to the accounting software. |
Sr. No. Key Audit Matter |
How our audit addressed the Key audit matter |
We have identified above as Key Audit Matter because 2. determination of the quantity of Natural Gas sold and in stock through gas-pipelines involves use of various technical aspects of the natural gas such as pressure, temperature etc. captured from the measuring devices 3. installed on the gas pipelines. We were informed that the methodology is standard and used industry-wide. This increases the complexity of validating quantity of Natural Gas sold and stock in pipeline as at March 31, 2023. |
We have obtained management representation that the IT system applies a standard methodology to capture the quantity of Natural Gas for the purpose of Revenue and inventory measurement. We have verified valuation of closing Inventories by applying various aspects made available to us by the management such as conversion factors, meter reading etc. |
Refer notes 10 and 21 to the standalone financial statements. |
|
5 Evaluation of the recoverable amounts of We investments in and advances to certain subsidiaries 1 The Company''s evaluation of the recoverable amounts of investments in and advances to certain subsidiaries involves comparison of their recoverable value and the carrying amount. Management determines 2. the recoverable amount based on management''s estimates of future cash flows. Significant judgements are required to determine the aforesaid assumptions 3. used in the discounted cash flow models. Due to the uncertainty of forecasting and discounting future cash flows, being inherently subjective, the level of management''s judgement involved and the significance of the Company''s investment as at March 31,2023, we 4. have considered this as a key audit matter. Refer notes 5 and 7 to the standalone financial 5 statements. |
have applied the following audit procedures in this regard: We have carried out assessment of forecasts of future cash flows prepared by the management, evaluating the assumptions and comparing the estimates to externally available industry, economic and financial data. Assessed the reasonableness of the key business assumptions such as revenue growth and EBIDTA margins, by understanding the management''s plan and performing retrospective testing. We have evaluated the Company''s valuation methodology in determining the fair value of the investment. In making this assessment, we also assessed the professional competence, objectivity and capabilities of the valuation specialist engaged by the management. Assessed the reasonableness of the key assumptions adopted in the cash flow forecasts with the assistance of our internal valuation experts. We have carried out discussions with management on the performance of the Company''s investments as compared to previous year in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable. |
6. |
Evaluated management''s sensitivity analysis around the key assumptions. |
6 Provision for Performance Related Pay We |
have applied the following audit procedures in this regard: |
The provision for performance related pay for financial 1. year 2022-23 is made based on Department of Public enterprises guidelines (DPE). The rating factors are yet to be approved by Board of directors. 2. |
We have reviewed the circular issued by DPE and verified the computations shared by the management for FY 2022-23 to satisfy that the methodology as prescribed in the circular have been followed and the provision made is reasonable. We have verified the self-evaluation report of GAIL''s Memorandum of Understanding (MOU) for the FY 2021-22 where ratings have been approved by the Board of Directors to determine reasonability of assumptions used for FY 2022-23. |
3. |
We have also obtained MOU ratings communicated by DPE for FY 2021-22 mentioning scores and rating of the Company. |
information other than the Standalone Financial Statements and auditors'' Report Thereon The Company''s Board of Directors is responsible for the preparation of other information. The other information includes the Director''s Report, Corporate Governance Report, Business Responsibility and Sustainability Report and Management Discussion and Analysis, but does not include the Standalone Financial Statements and our report thereon. The Director''s Report, Corporate Governance Report, Business Responsibility and Sustainability Report and Management Discussion and Analysis is expected to be made available to us after the date of this auditors'' report. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. |
In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available to us and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit, or otherwise appears to be materially misstated. When we read such other information as and when made available to us and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of management and those charged with Governance for the Standalone Financial Statements The Company''s Board of Directors is responsible for the matters stated in section 134(5) of 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 including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company''s financial reporting process.
Auditors'' Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management and Board of Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
1. We draw attention to the Note no. 45 (II) (c ) to the standalone financial statements regarding inclusion of proportionate share in Jointly Controlled Operations in the standalone financial statements of the Company. The total proportionate share includes Assets of '' 1,533.68 crores, Liabilities of '' 195.46 crores, Expenditure of '' 688.34 crores, Income of '' 1,182.78 crores along with the elements making up the Cash Flow Statement and related disclosures. The aforesaid amounts have been included based on the unaudited statements of these entities. Management is of view that this will not have a material impact on the Company''s financial statements.
Our opinion is not modified in respect of above matter.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditors'' Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of Section 143(11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanation given to us, we give in "Annexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.
2. As required by Comptroller and Auditor General of India through directions/sub-directions 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 -Bâ 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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including the Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows 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 Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended;
(e) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of Section 164 of the Act are not applicable to the Company, being a Government Company;
(f) We are enclosing herewith a report in "Annexure-Câ for our opinion on adequacy of internal financial controls system in place in the Company and the operating effectiveness of such controls;
(g) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of Section 197 of the Companies Act, 2013, are not applicable to the Company, being a Government Company; and
(h) With respect to the other matters to be included in the Auditors'' 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 standalone financial statements - Refer Note 29(l)(a)to the standalone financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any and to the extent ascertainable, 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.
iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(b) The Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e) contain any material misstatement.
v. (a) The final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with Section 123 of the Act as applicable.
(b) The company has declared Interim dividend during the year. The same is paid by the Company in accordance with Section 123 of the Act as applicable.
vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log)facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.
Mar 31, 2022
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of GAIL (India) Limited (hereinafter referred to as "the Company"), which comprise of the Standalone Balance Sheet as at 31st March, 2022, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").
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 Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards ("Ind AS") prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2022, its profit including other comprehensive income, changes in equity, and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors'' Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
1. We draw attention to Note No. 33 (c) to the standalone financial statements regarding, various final transportation tariff orders issued by Petroleum and Natural Gas Regulatory Board (PNGRB), which have been contested by the Company at Appellate Tribunal for Electricity (APTEL) and also certain customers have challenged these orders of PNGRB in Court of Law. Adjustment if any will be recognized as and when matter is finally decided.
2. We draw attention to Note No. 29 (I) (a) (iii) to the standalone financial statements regarding CESTAT order confirming the demand for the differential amount by the Central Excise Department in the matter pertaining to classification of ''Naphtha'' manufactured by the Company, of '' 3,266 crore including applicable penalty and interest thereon. Considering the merits of the case, Company has filed an appeal before the Hon''ble Supreme Court. Based on the legal opinion obtained, the Company does not foresee any probable outflow in the matter and accordingly has disclosed the same under contingent liability.
Our opinion is not modified in respect of matters mentioned in above paragraphs.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
Sr. No. Key Audit Matter |
How our audit addressed the Key Audit Matter |
|
1 Recognition and measurement of revenues in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" We identified above as Key Audit Matter as the application of the revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used to measure revenue recognized over a period. Additionally, revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. Refer notes 21 and 40 to the standalone financial statements. |
Principal Audit Procedures We assessed the Company''s process to identify the impact of adoption of the revenue accounting standard and checked the appropriateness of accounting policy. Our audit approach consisted testing of design and operating effectiveness of the internal controls as follows: 1. Evaluated the design of internal controls relating to implementation of the revenue accounting standard, wherever applicable. 2. Selected a sample of continuing and new contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation, re-performance and inspection of evidence in respect of operation of these controls. 3. Tested the relevant information technology systems'' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the revenue accounting standard. |
Sr. No. |
Key Audit Matter |
How our audit addressed the Key Audit Matter |
|
Selected a sample of continuing and new contracts and performed the following substantive procedures: |
|||
1. |
Read, analyzed and identified the distinct performance obligations in these contracts. |
||
2. |
Compared these performance obligations with that identified and recorded by the Company. |
||
3. |
Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. |
||
2 |
Evaluation of uncertain tax positions and |
We |
have applied the following audit procedures in this |
contingent liabilities |
regard: |
||
The Company operates in multiple jurisdictions and is |
1. |
Obtained an understanding of key tax matters and other contingent |
|
subject to periodic challenges by local tax authorities and other regulatory authorities such as PNGRB on a |
liabilities. |
||
range of matters during the normal course of business |
2. |
Read and analyzed the key correspondences, external legal |
|
including indirect tax matters We have identified |
opinions/ consultations obtained by the Company |
||
above as Key Audit Matter as these involve significant |
3. |
Evaluated and challenged key assumptions made by the Company |
|
judgment to determine the possible outcome of |
in estimating the current and deferred tax balances |
||
material uncertain tax positions and contingent liabilities including matters under dispute, consequently having an impact on related accounting and disclosures. Refer note 29 (I) to the standalone financial statements. |
4. |
Assessed and challenged the Company''s estimate of the possible outcome of the disputed cases by considering legal precedence and other judicial rulings |
|
5. |
Assessed and tested the presentation and disclosures relating to uncertain tax positions and contingent liabilities |
||
3 |
Derivative transaction and accounting of hedge |
We have applied the following audit procedures in this regard: |
|
transactions |
1. |
Obtained an understanding of management''s controls over |
|
We have identified above as Key Audit Matter as hedge accounting has resulted into significant impact on financial statements coupled with complexity of its accounting, calculations and complex/numerous |
2. |
recording of derivative transactions and application of hedge accounting. Tested the accuracy and completeness of derivative transactions. |
|
assumptions taken for establishing hedge relationship. |
3. |
We have relied on the valuation report evaluating the appropriateness |
|
Mark to market gain / loss pertaining to these derivative |
of the valuation methodologies applied and tested on sample basis |
||
contracts are recognized in other comprehensive |
the valuation of the derivative financial instruments. |
||
income. |
4. |
Validated that the derivative financial instruments qualify for |
|
Refer note 58 to the standalone financial statements. |
hedge accounting and tested accuracy of hedge effectiveness and ineffectiveness on sample basis. |
||
Technical parameters and voluminous transactions |
We have applied the following audit procedures in this regard: |
||
of Natural gas trading and transmission captured |
We have performed test of controls, assisted by our IT specialists, |
||
4 |
to measure Revenue and Inventory through |
1. |
|
integrated system and complexities involved |
over the accuracy and completeness of the quantity captured via IT |
||
therein. |
system through to the accounting software. |
||
We have identified above as Key Audit Matter because |
2. |
We have obtained management representation that the IT system |
|
determination of the quantity of Natural Gas sold and |
applies a standard methodology to capture the quantity of Natural |
||
in stock through gas-pipelines involves use of various |
Gas for the purpose of Revenue and inventory measurement. |
||
technical aspects of the natural gas such as pressure, |
3. |
We have verified valuation of closing Inventories by applying |
|
temperature etc. captured from the measuring devices |
various aspects made available to us by the management such as |
||
installed on the gas pipelines. We were informed that the methodology is standard and used industry-wide. This increases the complexity of validating quantity of Natural Gas sold and stock in pipeline as at 31st March, 2022. |
conversion factors, meter reading etc. |
||
Refer notes 10 and 21 to the standalone financial |
|||
statements. |
Sr. No. |
Key Audit Matter |
How our audit addressed the Key Audit Matter |
|
5 |
Evaluation of the recoverable amounts of investments in and advances to certain subsidiaries The Company''s evaluation of the recoverable amounts of investments in and advances to certain subsidiaries involves comparison of their recoverable value and the carrying amount. Management determines the recoverable amount based on management''s estimates of future cash flows. Significant judgements are required to determine the aforesaid assumptions used in the discounted cash flow models. Due to the uncertainty of forecasting and discounting future cash flows, being inherently subjective, the level of management''s judgement involved and the significance of the Company''s investment as at 31st March, 2022, we have considered this as a key audit matter. Refer notes 5 and 7 to the standalone financial statements. |
We have applied the following audit procedures in this regard: 1. We have carried out assessment of forecasts of future cash flows prepared by the management, evaluating the assumptions and comparing the estimates to externally available industry, economic and financial data. 2. Assessed the reasonableness of the key business assumptions such as revenue growth and EBITDA margins, by understanding the management''s plan and performing retrospective testing. 3. We have evaluated the Company''s valuation methodology in determining the fair value of the investment. In making this assessment, we also assessed the professional competence, objectivity and capabilities of the valuation specialist engaged by the management. 4. Assessed the reasonableness of the key assumptions adopted in the cash flow forecasts with the assistance of our internal valuation experts. |
|
5. |
We have carried out discussions with management on the performance of the Company''s investments as compared to previous year in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable. |
||
6. |
Evaluated management''s sensitivity analysis around the key assumptions. |
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6 |
Provision for Performance Related Pay |
We have applied the following audit procedures in this regard: |
|
The provision for performance related pay for financial year 2021-22 is made based on Department of Public enterprises guidelines (DPE). The rating factors are yet to be approved by Board of Directors. |
1. |
We have reviewed the circular issued by DPE and verified the computations shared by the management for FY 2021-22 to satisfy that the methodology as prescribed in the circular have been followed and the provision made is reasonable. |
|
2. |
We have verified the self-evaluation report of GAIL''s Memorandum of Understanding (MOU) for the FY 2020-21 where ratings have been approved by the Board of Directors to determine reasonability of assumptions used for FY 2021-22. |
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3. |
We have also obtained MOU ratings communicated by DPE for FY 2020-21 mentioning scores and rating of the Company. |
Information Other than the Standalone Financial Statements and Auditors'' Report Thereon
The Company''s Board of Directors is responsible for the preparation of other information. The other information includes the Director''s Report, Corporate Governance Report, Business Responsibility Report and Management Discussion and Analysis of Annual Report, but does not include the Standalone Financial Statements and our report thereon. The Director''s Report, Corporate Governance Report, Business Responsibility Report and Management Discussion and Analysis of Annual Report is expected to be made available to us after the date of this auditors'' report.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available to us and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit, or otherwise appears to be materially misstated.
When we read such other information as and when made available to us and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of 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 including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company''s financial reporting process.
Auditors'' Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management and Board of Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other Matters
1. We draw attention to the Note no. 47(B)(iii) to the standalone financial statements regarding inclusion of proportionate share in Jointly Controlled Operations in the standalone financial statements of the Company. The total proportionate share includes Assets of ''1,324.74 crore, Liabilities of ''107.89 crore, Expenditure of ''515.23 crore, Income of ''834.07 crore along with the elements making up the Cash Flow Statement and related disclosures. The aforesaid amounts have been included based on the unaudited statements of these entities. Management is of view that this will not have a material impact on the Company''s financial statements.
Our opinion is not modified in respect of above matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors'' Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of Section 143(11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanation given to us, we give in "Annexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.
2. As required by Comptroller and Auditor General of India through directions/sub-directions 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-Bâ 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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including the Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows 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 Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended;
(e) Pursuant to the Notification No. GSR 463(E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of Section 164 of the Act are not applicable to the Company, being a Government Company;
(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;
(g) Pursuant to the Notification No. GSR 463(E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of Section 197 of the Companies Act, 2013, are not applicable to the Company, being a Government Company; and
(h) With respect to the other matters to be included in the Auditors'' 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 standalone financial statements - Refer Note 29(l)(a)to the standalone financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any and to the extent ascertainable, 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.
iv. (a) The Management has represented that, to
the best of its knowledge and belief, no funds have been advanced or loaned or
invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner.
v. whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(b) The Management has represented, that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e) contain any material misstatement.
vi. (a) The Company has declared Interim dividend
two times during the year. The same is paid by the Company in accordance with Section 123 of the Act.
(b) As stated in note 14 (ii) to the financial statements, the Board of Directors of the Company has proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with Section 123 of the Act to the extent it applies to declaration of dividend.
For Gandhi Minocha & Co. For A.R. & Co.
Chartered Accountants Chartered Accountants
Firm Registration No: 00458N Firm Registration No: 002744C
Sd/- Sd/-
Bhupinder Singh Pawan K Goel
Partner Partner
Membership No. 092867 Membership No. 072209
UDIN 22092867AJRZVK8364 UDIN: 22072209AJVWAB8348
Place: New Delhi Date: 27th May, 2022
Mar 31, 2021
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of GAIL (India) Limited (hereinafter referred to as "the Company"), which comprise of the Standalone Balance Sheet as at March 31, 2021, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").
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 Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards ("Ind AS") prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, its profit including other comprehensive income, changes in equity, and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors'' Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Emphasis of Matter
1. We draw attention to Note No. 33 (c) to the standalone financial statements regarding, various final transportation tariff orders issued by Petroleum and Natural Gas Regulatory Board (PNGRB), which have been contested by the Company at Appellate Tribunal for Electricity (APTEL)
and also certain customers have challenged these orders of PNGRB in Court of Law. Adjustment if any will be recognized as and when matter is finally decided.
2. We draw attention to Note No. 29 (I) (a) (iii) to the standalone financial statements regarding CESTAT order confirming the demand for the differential amount by the Central Excise Department in the matter pertaining to classification of ''Naphtha'' manufactured by the Company, of X 3,139.92 crores including applicable penalty and interest thereon. Considering the merits of the case, Company has filed an appeal before the Hon''ble Supreme Court. Based on the legal opinion obtained, the Company does not foresee any probable outflow in the matter and accordingly has disclosed the same under contingent liability.
3. We draw attention to Note No. 52 (b)(iii) to the standalone financial results regarding corporate guarantees given by the Company on behalf of US subsidiary (X 535.41 crores against guarantee fees towards meeting its obligation) and its Step down subsidiary (? 7,274.74 crores for furtherance of Company business). In this regard, the Company is of the view that provision of Ind AS 109 is not applicable. However, the Company has sought opinion from Expert Advisory Committee (EAC) constituted by The Institute of Chartered Accountants of India dated June9, 2021.
4. We draw attention to Note No. 30 to the standalone financial statements regarding the impact of COVID -19 pandemic on the Company. The impact of pandemic in future period cannot be ascertained as on date. However, the Management is of view that there will be no significant impact on the continuity of operations of the business on long term basis/ on useful life of the assets/on financial position, etc.
Our opinion is not modified in respect of matters mentioned in above paragraphs.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
Sr. No. |
Key Audit Matter |
How our audit addressed the Key Audit Matter |
1 |
Recognition and measurement of revenues in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" We identified above as Key Audit Matter as the application of the revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used to measure revenue recognized over a period. Additionally, revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. Refer notes 1.10, 21 and 38 to the standalone financial statements. |
Principal Audit Procedures We assessed the Company''s process to identify the impact of adoption of the revenue accounting standard and checked the appropriateness of accounting policy. Our audit approach consisted testing of design and operating effectiveness of the internal controls as follows: 1. Evaluated the design of internal controls relating to implementation of the revenue accounting standard, wherever applicable. 2. Selected a sample of continuing and new contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation, re-performance and inspection of evidence in respect of operation of these controls. 3. Tested the relevant information technology systems'' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the revenue accounting standard. Selected a sample of continuing and new contracts and performed the following substantive procedures: 1. Read, analyzed and identified the distinct performance obligations in these contracts. 2. Compared these performance obligationswith that identified and recorded by the Company. 3. Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. |
I Sr. No. |
Key Audit Matter |
How our audit addressed the Key Audit Matter |
2 |
Evaluation of uncertain tax positions and contingent liabilities The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities and other regulatory authorities such as PNGRB on a range of matters during the normal course of business including indirect tax matters. We have identified above as Key Audit Matter as these involve significant judgment to determine the possible outcome of material uncertain tax positions and contingent liabilities including matters under dispute, consequently having an impact on related accounting and disclosures. Refer note 29 (1) to the standalone financial statements. |
We have applied the following audit procedures in this regard: 1. Obtained an understanding of key tax matters and other contingent liabilities. 2. Read and analyzed the key correspondences, external legal opinions/ consultations obtained by the Company 3. Evaluated and challenged key assumptions made by the Company in estimating the current and deferred tax balances 4. Assessed and challenged the Company''s estimate of the possible outcome of the disputed cases by considering legal precedence and other judicial rulings 5. Assessed and tested the presentation and disclosures relating to uncertain tax positions and contingent liabilities |
3 |
Derivative transaction and accounting of hedge transactions We have identified above as Key Audit Matter as hedge accounting has resulted into significant impact on financial statements coupled with complexity of its accounting, calculations and complex/numerous assumptions taken for establishing hedge relationship. Mark to market gain/ loss pertaining to these derivative contracts are recognized in other comprehensive income. Refer note 58 to the standalone financial statements. |
We have applied the following audit procedures in this regard: 1. Obtained an understanding of management''s controls over recording of derivative transactions and application of hedge accounting. 2. Tested the accuracy and completeness of derivative transactions. 3. We have relied on the valuation report evaluating the appropriateness of the valuation methodologies applied and tested on sample basis the valuation of the derivative financial instruments. 4. Validated that the derivative financial instruments qualifies for hedge accounting and tested accuracy of hedge effectiveness and ineffectiveness on sample basis. |
4 |
Technical parameters and voluminous transactions of Natural gas trading and transmission captured to measure Revenue and Inventory through integrated system and complexities involved therein. We have identified above as Key Audit Matter because determination of the quantity of Natural Gas sold and in stock through gas-pipelines involves use of various technical aspects of the natural gas such as pressure, temperature etc. captured from the measuring devices installed on the gas pipelines. We were informed that the methodology is standard and used industry-wide. This increases the complexity of validating quantity of Natural Gas sold and stock in pipeline as at March 31,2021. Refer notes 1.9, 1.10, 10 and 21 to the standalone financial statements. |
We have applied the following audit procedures in this regard: 1. We have performed test of controls, assisted by our IT specialists, over the accuracy and completeness of the quantity captured via IT system through to the accounting software. 2. We have obtained management representation that the IT system applies a standard methodology to capture the quantity of Natural Gas for the purpose of Revenue and inventory measurement. 3. We have verified valuation of closing Inventories by applying various aspects made available to us by the management such as conversion factors, meter reading etc. |
5 |
Evaluation of the recoverable amounts of investments in and advances to certain subsidiaries The Company''s evaluation of the recoverable amounts of investments in and advances to certain subsidiaries involves comparison of their recoverable value and the carrying amount. Management determines the recoverable amount based on management''s estimates of future cash flows. Significant judgements are required to determine the aforesaid assumptions used in the discounted cash flow models. Due to the uncertainty of forecasting and discounting future cash flows, being inherently subjective, the level of management''s judgement involved and the significance of the Company''s investment as at March 31, 2021, we have considered this as a key audit matter. Refer notes 1.23, 5 and 7 to the standalone financial statements. |
We have applied the following audit procedures in this regard: 1. We have carried out assessment of forecasts of future cash flows prepared by the management, evaluating the assumptions and comparing the estimates to externally available industry, economicand financial data. 2. Assessed the reasonableness of the key business assumptions such as revenue growth and EBIDTA margins, by understanding the management''s plan and performing retrospective testing. 3. We have evaluated the Company''s valuation methodology in determining the fair value of the investment. In making this assessment, we also assessed the professional competence, objectivity and capabilities of the valuation specialist engaged by the management. 4. Assessed the reasonableness of the key assumptions adopted in the cash flow forecasts with the assistance of our internal valuation experts. 5. We have carried out discussions with management on the performance of the Company''s investments as compared to previous year in order to evaluate whether the inputsand assumptions used in the cash flow forecasts were suitable. 6. Evaluated management''s sensitivity analysis around the key assumptions. |
6 |
Provision for Performance Related Pay The provision for performance related pay for financial year 2020-21 is made based on Department of Public enterprises guidelines (DPE). The rating factors are yet to be approved by Board of directors. |
We have applied the following audit procedures in this regard: 1. We have reviewed the circular issued by DPE and verified the computations shared by the management for FY 2020-21 to satisfy that the methodology as prescribed in the circular have been followed and the provision made is reasonable. 2. We have verified the self-evaluation report of GAIL''s Memorandum of Understanding (MOU) for the FY 2019-20 where ratings have been approved by the Board of Directors to determine reasonability of assumptions used for FY 2020-21. 3. We have also obtained MOU ratings communicated by DPE for FY 2019-20 mentioning scores and rating of the Company. |
The Company''s Board of Directors is responsible for the preparation of other information. The other information includes the Director''s Report, Corporate Governance Report, Business Responsibility Report and Management Discussion and Analysis of Annual Report, but does not include the Standalone Financial Statementsand our report thereon. The Director''s Report, Corporate Governance Report, Business Responsibility Report and Management Discussion and Analysis of Annual Report is expected to be made available to us after the date of this auditors'' report.
Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available to us and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit, or otherwise appears to be materially misstated.
When we read such other information as and when made available to us and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of 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 including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company''s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management and Board of Directors use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
1. We draw attention to the Note no. 45(B)(iii) to the standalone financial statements regarding inclusion of proportionate share in Jointly Controlled Operations in the standalone financial statements of the Company. The total proportionate share includes Assets of X 1,058.45 crore, Liabilities of X 112.72 crores, Expenditure of X 467.12 crore, Income of X 841.62 crore along with the elements making up the Cash Flow Statement and related disclosures. The aforesaid amounts have been included based on the unaudited statements of these entities. Management is of view that this will not have a material impact on the Company''s financial statements.
Our opinion is not modified in respect of above matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors'' Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of Section 143(11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanation given to us, we give in "Annexure A", a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.
2. As required by Comptroller and Auditor General of India through directions/sub-directions 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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including the Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows 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 Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended;
(e) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of Section 164 of the Act are not applicable to the Company, being a Government Company;
(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;
(g) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of Section 197 of the Companies Act, 2013, are not applicable to the Company, being a Government Company; and
(h) With respect to the other matters to be included in the Auditors'' 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 standalone financial statements - Refer Note 29(l)(a) to the standalone financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any and to the extent ascertainable, 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.
For ASA & Associates LLP |
For A.R. & Co. |
Chartered Accountants |
Chartered Accountants |
Firm Registration No.: 009571N/N500006 |
Firm Registration No.: 002744C |
Parveen Kumar |
Pawan K Goel |
Partner |
Partner |
Membership No.: 088810 |
Membership No.:072209 |
UDIN: 21088810AAAACA7668 |
UDIN: 21072209AAAABR2599 |
Place: New Delhi |
|
Dated: 09âhJune, 2021 |
Mar 31, 2019
Report on the Audit of the Standalone Ind AS Financial Statements Opinion
We have audited the accompanying standalone Ind AS financial statements of GAIL (India) Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity, the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013 (âthe Actâ) 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 March 31, 2019, its profit including other comprehensive income, changes in equity, and i ts cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditorsâ Responsibilities for the Audit of the Standalone Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (âICAIâ) together with the ethical requirements that are relevant to our audit of the standalone Ind AS financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to the following matters in the Notes to the financial statements:
1. Note No: 33 (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 also certain customers have challenged these orders of PNGRB in Court of Law. Adjustment if any will be recognized as and when matter is finally decided.
2. Note no. 56 - pending opinion of Expert Advisory Committee (EAC) of ICAI with respect to applicability of provisions of Ind-AS 109 (Financial instruments) for accounting of embedded derivative in certain contracts entered into by the Company through international competitive bidding, the Company has not considered such transaction as embedded derivatives. Any adjustment if any will be recognized as and when the EAC opinion is received.
3. Note no. 29 (I) (a) (iii) - regarding CESTAT order confirming the demand for the differential amount by the Central Excise Department in the matter pertaining to classification of âNaphthaâ manufactured by the Company, of Rs. 2,888.72 crore including applicable penalty and interest thereon. Considering the merits of the case, Company has filed an appeal before the Honâble Supreme Court. Based on the legal opinion obtained, the Company does not foresee any probable outflow in the matter and accordingly has disclosed the same under contingent liability.
4. Note No. 48 (ii) - regardiing subsequent investment of Rs. 143.01 crore in equity and Rs. 252 crore in preference shares of a joint venture Company, Konkan LNG Private Limited (âKLPLâ) as approved by Board of Directors of the Company towards construction of Breakwater and other business requirements of KLPL. Investment in KLPL of Rs. 139.75 crore stood fully impaired in view of accumulated losses and eroded net-worth upto March 31, 2018. In order to assess impact of further infusion of capital as aforesaid, the Company has during the year carried out fresh impairment study of KLPL which projects positive future cash flows after commencement of operation of breakwater and accordingly a sum of Rs. 2.18 crore has been reversed from the aforesaid Impairment provision.
Our opinion is not modified in respect of above matters.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements of the current period. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report
Sr. No. |
Key Audit Matter |
Audit Response on Key Audit Matters |
1 |
Accuracy of recognition, measurement, presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 âRevenue from Contracts with Customersâ The application of the new revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used to measure revenue recognized over a period. Additionally, new revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. Refer notes 1.9,21 and 37. |
Principal Audit Procedures We assessed the Companyâs process to identify the impact of adoption of the new revenue accounting standard and checked the appropriateness of accounting policy. Our audit approach consisted testing of the design and operating effectiveness of the internal controls as follows: 1. Evaluated the design of internal controls relating to implementation of the new revenue accounting standard, wherever applicable. 2. Selected a sample of continuing and new contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation, re-performance and inspection of evidence in respect of operation of these controls. 3. Tested the relevant information technology systemsâ access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard. Selected a sample of continuing and new contracts and performed the following substantive procedures: 1. Read, analyzed and identified the distinct performance obligations in these contracts. 2. Compared these performance obligations with that identified and recorded by the Company. 3. Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. |
2 |
Evaluation of uncertain tax positions and contingent liabilities The Company has material uncertain tax positions and contingent liabilities including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. It includes order of CESTAT confirming the demand for the differential amount by the Central Excise Department in the matter pertaining to classification of âNaphthaâ manufactured by GAIL, of Rs. 2,888.72 crore including applicable penalty and interest thereon. Considering the merits of the case, Company has filed an appeal before the Honâble Supreme Court. Based on the legal opinion obtained, the Company does not foresee any probable outflow in the matter and accordingly has disclosed the same under contingent liability. Refer note 29 (I) (a) (iii) |
We have applied the following audit procedures in this regard: 1. Obtained details of completed tax assessments and demands for the year ended March 31, 2019 from management. 2. We have obtained the opinion from independent expert to support the managementâs judgement about the probable outcome in this regard. 3. We also obtained the opinion from legal team and representation taken from the management. 4. We assessed the appropriate disclosures in the financials. 5. We considered the effect of new information in respect of uncertain tax positions as at April 1, 2018 to evaluate whether any change was required to managementâs position on these uncertainties. 6. Referring to point no 3 of Emphasis of Matter Paragraph in this audit report for disputes with Central Excise Department as it is fundamental to the users of the financial statements. |
Sr. No. |
Key Audit Matter |
Audit Response on Key Audit Matters |
3. |
Derivative transaction and accounting of hedge accounting The hedge accounting has resulted into significant impact on financial statements coupled with complexity of its accounting, calculations and complex/numerous assumptions taken for establishing hedge relationship. Mark to market gain / loss pertaining to these derivative contracts are recognized in the other comprehensive income. Refer note 58 |
We have applied the following audit procedures in this regard: 1. Understanding managementâs controls over the recording of derivative transactions and the application of hedge accounting, 2. Testing the accuracy and completeness of derivative transactions. 3. We have relied on the valuation report evaluating the appropriateness of the valuation methodologies applied and testing on sample basis the valuation of the derivative financial instruments. 4. Validated that the derivative financial instruments qualified for hedge accounting and tested accuracy of hedge effectiveness and ineffectiveness on sample basis. |
4. |
Technical parameters and voluminous transactions of Natural gas trading and transmission captured to measure Revenue and Inventory through integrated system and complexities involved therein. Revenue from sale of Natural Gas amounted to Rs. 61,501.94 crore and Closing inventory of Rs. 843.54 crore for the year ended 31 March 2019. The determination of the quantity of Natural Gas sold and in stock through gas-pipelines involves use of various technical aspects of the natural gas such as pressure, temperature etc. captured from the measuring devices installed on the gas pipelines. We were informed that the methodology is standard and used industry-wide. This increases the complexity around the validating of quantity of Natural Gas sold and in stock in pipeline. Refer notes 1.8, 1.9, 10 and 21. |
We have applied the following audit procedures in this regard: 1. We performed test of controls, assisted by our IT specialists, over the accuracy and completeness of the quantity captured via IT system through to the accounting software. 2. We have obtained the management representation that the IT system applies the standard methodology to capture the quantity of Natural Gas for the purpose of Revenue and inventory measurement. 3. We have carried out the audit procedures for verification of valuation of closing Inventories by applying the various aspects made available to us by the management such as conversion factors, meter reading etc. |
5. |
Gratuity Pursuant to implementation of Pay Revision Directions, the Company has evaluated impact of increase in gratuity ceiling from Rs. 10 Lakh to Rs. 20 Lakh and has considered the incremental amount of Rs. 150.51 crore as recoverable from the respective fund as on March 31, 2018 by reversing the impact taken in Statement of Profit & Loss account in financial year 2016-17. During the year, vide directive of DPE dated July 10, 2018 clarified that gratuity under DPE guidelines dated August 3, 2017, is subject to affordability of the CPSE concerned effective for the period from January 1, 2017 till March 28, 2018, where pay has been revised with effect from January 1, 2017. Accordingly, the Board of Directors has approved to fund the contribution along with interest and accordingly, a sum of Rs. 182.58 crore has been charged to Statement of Profit and Loss. Refer note 40 (b) |
We have applied the following audit procedures in this regard: 1. Obtained the copy of the notifications 2. Obtained the approval of the board and management representation letter for the same. 3. We have verified the accuracy of the amount charged. |
6 |
Impairment of Investment of Rs.173.62 crores in an overseas subsidiary. Gail Global(USA) Inc. (GGUI): Refer to note 48 (iv) -GGUI is a wholly owned subsidiary of the Company and has during the year sold certain producting property assets which has resulted reduction in profit to the extent of Rs. 173.62 crore being impairment provision in Standalone Financial Statements of the Company consequent to the erosion of net worth of GGUI as at last reporting dated December 31, 2018. The Company has evaluated fair value through an independent valuer which has resulted in impairment of investment of Rs.173.62 crore. The impact of impairment has been affected in financial statements as at end of the year. |
We have applied the following audit procedures in this regard: 1. Obtained valuation report of GGUI by the Independent Valuer considering the financial aspect as on date. 2. Obtained and verified the audited financial statements as on December 31, 2018 3. Obtained the management representation letter for the same. |
7. |
Accounting of corporate guarantees in line with the requirements of Ind AS 109 - â âFinancial Instrumentsâ Refer to note No. 38 - regarding matter pertaining to the accounting in line with the requirements of Ind AS 109 - âFinancial Instrumentsâ, of the fair value of the corporate guarantees given by the Company on behalf of its subsidiaries. In response to the opinion provided by the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India, the Company has sought further clarification. Pending clarification from the EAC, no accounting entry has been passed in respect of these corporate guarantees. Management have confirmed that impact, if any will not be material to the financial statements. |
We have applied the following audit procedures in this regard: 1. Obtained the confirmation from the management that the EAC opinion is yet to be received as of date. 2. Obtained the management representation letter that the impact of the same, if any will not be material |
Information Other than the Standalone Ind AS Financial Statements and Auditorsâ Report Thereon
The Companyâs Board of Directors is responsible for the preparation of other information. The other information comprises the Directorâs report, Corporate Governance report, Business Responsibility report and Management Discussion and Analysis of Annual report, but does not include the Standalone Ind AS Financial Statements and our report thereon. The Directors report, Corporate Governance report, Business Responsibility report and Management Discussion and Analysis of Annual report is expected to be made available to us after the date of this auditorsâ report.
Our opinion on the Standalone Ind AS Financial Statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS Financial Statements, our responsibility is to read the other information identified above when it becomes available to us and, in doing so, consider whether the other information is materially inconsistent with the Standalone Ind AS Financial Statements or our knowledge obtained during the course of our audit, or otherwise appears to be materially misstated.
When we read such other information as and when made available to us and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Standalone Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection anc 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are also responsible for overseeing the Companyâs financial reporting process.
Auditorsâ Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorsâ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of managementâs use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorsâ report to the related disclosures in the standalone Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditorsâ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditorsâ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other Matters
We draw attention to the following matters in the Notes to the financial statements:
I. Note no. 45(B)(iii)- regarding inclusion of proportionate share in Jointly Controlled Operations in the standalone financial statements of the Company. The total proportionate share includes Assets of Rs. 1567.9I crore, Liabilities of Rs. 430.75 crore, Expenditure of Rs. 365.48 crore, Income of Rs. 639.35 crore along with the elements making up the Cash Flow Statement and related disclosures. The aforesaid amounts have been included based on the unaudited statements of these entities. Management is of view that this will not have a material impact on the Companyâs financial statements.
Our opinion is not modified in respect of above matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorsâ Report) Orcler, 2016 (âthe Orderâ), issued by the Central Government of India in terms of Section 143(11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanation given to us, we give in âAnnexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.
2. As required by Comptroller and Auditor General of India through directions/sub-directions 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 âAnnexure -Bâ 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 (including the Other Comprehensive Income), the Statement of Changes in Equity 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 Ind AS financial statements comply with the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.;
(e) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of Section 164 of the Companies Act, 2013, are not applicable to the Company, being a Government Company.;
(f) We are enclosing herewith a report in âAnnexure - Câ for our opinion on adequacy of internal financial controls system in place in the Company and the operating effectiveness of such controls;
(g) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of Section 197 of the Companies Act, 2013, are not applicable to the Company, being a Government Company; and
(h) With respect to the other matters to be included in the Auditorsâ Report in accordance with Rule II 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 standalone Ind AS financial statements - Refer Note 29(l)(a) to the financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any and to the extent ascertainable, 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.
Referred to in paragraph I to âReport on Other legal and regulatory requirementsâ of the Independent Auditorsâ Report of even date to the members of GAIL (INDIA) LIMITED on the Standalone Ind AS Financial Statements forthe year ended March 31, 2019.
(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 follows.
Description of Asset |
No. of cases |
Area in Hectares |
Gross block as on 31.03.2019 (Rs. in Cr.) |
Net block as on 31.03.2019 (Rs. in Cr.) |
Land |
||||
- Freehold |
9 |
5.31 |
10.93 |
10.93 |
- Leasehold |
6 |
40.53 |
10.46 |
10.46 |
- Leasehold- stated at carrying value (classified as prepayment under non-financial assets) |
I |
20.96 |
4.59 |
4.59 |
(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 the third parties. 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 section 189 of the Companies Act 2013. In respect of such loans:
a) In our opinion and as informed to us the terms and conditions of the grant of such loans are not prejudicial to the Companyâs interest.
b) The schedule of repayment of principal and payment of interest has been stipulated and repayments or receipts of principal amounts and interest have been regular as per stipulations.
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) We have broadly reviewed the accounts and records maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost recorcls under sub-section (I) of Section 148 of the Companies Act, 2013 read with Companies (Cost Records & Audit) Rules, 2014 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made detailed examination of the records with a view to determine whether they are accurate and complete.
(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, employeesâ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess, Goods and Service Tax 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 or Goods and Service Tax which have not been deposited on account of dispute or deposited under protest and the forum where the dispute is pending are given below:
S. No. |
Name of Statute |
Nature of the Dues |
Period to which the amount relates |
Forum where the dispute is pending |
Gross disputed amount |
Amount deposited under protest/ appeal |
Amount not deposited |
I |
Entry Tax Act of respective States |
Entry Tax / Penalty / Interest |
2002-03 to 2004-05 |
Hon. High Court, Allahabad |
20.97 |
- |
20.97 |
1999-00 to 2009-10 |
Commercial Tax Tribunal, UP |
233.59 |
6.41 |
227.18 |
|||
2008-09 |
Additional Commissioner (Appeals) Noida, Commercial Taxes |
0.53 |
- |
0.53 |
|||
2015-16 |
Additional commissioner (Appeals) Gwalior, Commercial Taxes |
20.83 |
- |
20.83 |
|||
2002-03 to 2005-06 |
Dy. Commissioner (Appeals), Commercial Tax, Ajmer |
7.19 |
- |
7.19 |
|||
SUB-TOTAL |
283.11 |
6.41 |
276.70 |
||||
2 |
Central Sales Tax Act, 1956 and respective State Sales Tax / VAT Act |
CST / Sales Tax / VAT/ Penalty / Interest |
20II-12 |
Hon. Supreme Court |
10.77 |
3.24 |
7.53 |
2003-2004 |
Hon. High Court, Mumbai |
0.63 |
0.03 |
0.60 |
|||
2003-2004 |
Hon. High Court, Guwahati |
0.29 |
0.14 |
0.15 |
|||
2006-07 to 2010-II |
Sales Tax Tribunal Mumbai |
55.10 |
20.12 |
34.98 |
|||
2014-15 |
Sales Tax Tribunal, Ernakulam |
0.46 |
0.07 |
0.39 |
|||
Oct 20II to Dec 20II |
Joint Commissioner of Commercial Taxes, Trichy |
0.77 |
- |
0.77 |
|||
20II-12 to 2014-15 |
Joint Commissioner (Appeals), Sales Tax, Mumbai |
73.27 |
6.81 |
66.46 |
|||
2014-15 |
Joint Commissioner (Appeals), Sonepat |
4.88 |
- |
4.88 |
|||
2003-04, 2008-09, 2009-10, 2012-13 |
Joint Commissioner (Appeals), Commercial Tax, Vadodara |
93.77 |
82.98 |
10.79 |
|||
SUB-TOTAL |
239.94 |
113.39 |
126.55 |
S. No. |
Name of Statute |
Nature of the Dues |
Period to which the amount relates |
Forum where the dispute is pending |
Gross disputed amount |
Amount deposited under protest/ appeal |
Amount not deposited |
3. |
Central Excise Act 1944 |
Central Excise Duty / Interest / Penalty |
Jan 2008 to March 2012 |
Hon. Supreme Court |
2888.72 |
20 (in addition to that Bank guarantee of â132 crore has been submitted to the department) |
2868.72 |
Mar 2000 to Feb 2002, April 2002 to March 2003 & Nov 2004 to Feb 2005 |
Hon. Supreme Court |
58.16 |
58.16 |
||||
Aug 2006 to Feb 2014 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
10.29 |
- |
10.29 |
|||
Jan 200I to Feb 2005 |
Customs, Excise and Service Tax Appellate Tribunal, Mumbai |
21.06 |
- |
21.06 |
|||
April 2010 to March 20II |
Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad |
10.95 |
- |
10.95 |
|||
April 2008 to March 2010 & July 2010 to Nov 2010 |
Customs, Excise and Service Tax Appellate Tribunal, Kolkata |
102.74 |
0.66 |
102.08 |
|||
SUB-TOTAL |
3091.92 |
20.66 |
3071.26 |
||||
4 |
Finance Act 1994 (Service Tax) |
Service Tax / Interest / Penalty |
Apr 2009 to Mar 2014 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
6.36 |
0.42 |
5.94 |
Oct. 2006 to Mar 2007 |
Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad |
0.17 |
- |
0.17 |
|||
Jan 20II to Mar 2012 |
Customs, Excise and Service Tax Appellate Tribunal, Allahabad |
0.29 |
- |
0.29 |
|||
July 2010 to Nov 2010 |
Commissioner (Appeals), Delhi |
0.12 |
- |
0.12 |
|||
April 2014 to March 15 |
Commissioner (Appeals), Noida |
0.92 |
- |
0.92 |
|||
SUB-TOTAL |
7.86 |
0.42 |
7.44 |
||||
5 |
Customs Act, 1962 |
Customs Duty/ Interest / Penalty |
March 2006 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
0.53 |
0.46 |
0.07 |
March 2013 to July 2014 |
Commissioner of Customs, Excise and Service Tax, (Appeals), Ahmedabad |
7.78 |
7.78 |
- |
|||
SUB-TOTAL |
8.31 |
8.24 |
0.07 |
||||
6 |
Income Tax Act, 1961 |
Income Tax/ Penalty/ Interest |
A.Y. 2008-09 to A.Y. 2018-19 |
Jurisdictional Assessing Officer (TDS) |
I.02 |
- |
I.02 |
A.Y. 2013-14 & 2016-17 |
Commissioner Income Tax (Appeals)-22, New Delhi |
85.02 |
75.09 |
9.93 |
|||
A.Y. 1996-97 to AY 2012-13 & A.Y. 2014-15 to AY 2015-16 |
Income Tax Appellate Tribunal, Delhi |
2072.06 |
1350.38 |
721.68 |
|||
1997-98 & 1998-99 |
Hon. Supreme Court |
0.26 |
0.26 |
- |
|||
SUB-TOTAL |
2158.36 |
1425.73 |
732.63 |
||||
7 |
Gujarat Municipalities Act, 1963 |
Notified Area Tax / GIDC Tax / Interest |
1998-99 to 2005-06 & 1985-86 to 2009-10 |
Hon. High Court, Ahmedabad |
4.50 |
- |
4.50 |
SUB- TOTAL |
4.50 |
- |
4.50 |
||||
TOTAL |
5,794.00 |
1,574.85 |
4,219.15 |
(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 by way of initial public offer or further public offer or further public offer (including debt instrument). As informed to us, no term loans have been obtained during the year.
(x) According to the information and explanations given to us and as represented by the Management and based on our examination of the books and records of the Company and in accordance with generally accepted auditing practices in India, no case of frauds by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) As per notification no. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 is not applicable to the Government Companies. Accordingly, provisions of clause 3 (xi) of the Order are not applicable to the Company.
(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) In our opinion, the Company has complied with provisions of sections 177 and 188 of Companies Act, 2013 in respect of transactions with the related parties 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 Actâ1934.
Referred to in paragraph 2 to âReport on Other legal and regulatory requirementsâ of the Independent Auditorsâ Report of even date to the members of GAIL (INDIA) LIMITED on the financial statements for the year ended March 31, 2019.
Sl. No. |
Directions / Sub Directions |
Action taken |
Impact on financial statement |
I |
Whether the Company has system in place to process all the accounting transitions through IT system? If yes the implications of processing of accounting transaction outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated? |
The Company maintain its books of account on IT system, SAP, which is an ERP system. All accounting transactions are processed in accounts maintained on SAP. We did not notice any transaction which was processed outside of IT system. |
Nil |
2 |
Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest made by a lender due to Company inability to repay the loan? If yes, the financial impact may be stated? |
There are no such case. |
Nil |
3 |
Whether funds received/ receivable for specific schemes from central state agencies were properly accounted for/utilized as per its terms and conditions? List the cases of deviation. |
Refer to Note 54 regarding the grant received by the Company for the project Jagdishpur Haldia Bokaro Dhamra Pipeline Project (JHBDPL). According to the information and explanations given to us and as represented by the Management and based on our examination of the books and records of the Company, these have been used for the purposes for which these were given. We did not encounter any deviation. |
Nil |
4 |
Whether disclosure in Notes to Financial Statements/inclusion under contingent liabilities, of Corporate Guarantee issued by the parent Company to a bank for issuance of Performance Bank Guarantee on behalf of its subsidiaries/JVs/Associates etc. if any, has been made. |
Refer to Note no 29 (I)(b) the Company has disclosed the Corporate Guarantee issued to a bank for issuance of Performance Bank Guarantee on behalf of its subsidiaries. |
Nil |
Referred to in paragraph 3(f) to âReport on Other legal and regulatory requirementsâ of the Independent Auditorsâ Report of even date to the members of GAIL (INDIA) LIMITED on the standalone Ind AS financial statements for the year ended March 31, 2019.
Report on the Internal Financial Controls under Clause (i) of Sub section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of GAIL (INDIA) LIMITED (âthe Companyâ) as of March 31, 2019 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs 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. 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 Companyâs 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.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit ir accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) 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 auditorsâ 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 I/we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Companyâs 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 Companyâs 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 authorisations of management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companyâs 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 March 31, 2019, 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.
For O. P. Bagla & Co. LLP For ASA & Associates LLP
Chartered Accountants Chartered Accountants
Firm No.: 000018N/N50009I Firm No.: 009571N/N500006
Rakesh Kumar Parveen Kumar
Partner Partner
Membership No.: 087537 Membership No.: 088810
Place: New Delhi
Dated: 27th May, 2019
Mar 31, 2018
Independent Auditors'' Report
To the Members of GAIL (India) Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS financial statements of GAIL (India) Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information. 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 (âthe Act") with respect to the preparation of these Standalone Ind AS financial statements that give a true and fair view of the state of affairs(financial position), profit or loss (financial performance including other comprehensive income), cash fiows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with 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 Standalone Ind AS financial statements, that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
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 there under. We conducted our audit of the Standalone Ind AS financial statements 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 misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the 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 Ind AS financial statements.
We are also responsible to conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor''s report. However, future events or conditions may cause an entity to cease to continue as a going concern.
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 the Ind AS, of the state of affairs (financial position) of the Company as at 31st March 2018, and its profit (financial performance including other comprehensive income), its cash fiows and the changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the financial statements:
1. Note No: 36 (c) & (d)-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. 65 -regarding accounting of embedded derivative in certain contracts entered into by the company through international competitive bidding, for which the company is evaluating applicability of provisions of Ind-AS 109 (Financial instruments) and has referred the matter to the Expert Advisory Committee of Institute of Chartered Accountants of India for expert opinion in the matter.
Our opinion is not modified in respect of above matters.
Other Matters
We draw attention to the following matters in the Notes to the financial statements:
1. Note no. 51 (B) (iii), regarding inclusion of proportionate share in Jointly Controlled Operations in the standalone financial statements of the company. The total proportionate share includes Assets of Rs, 1,756.97 Crore, Liabilities of Rs,390.92 Crore, Expenditure of Rs, 430.55 Crore, Income of Rs, 632.97 Crore along with the elements making up the Cash Flow Statement and related disclosures. The aforesaid amounts have been included based on the unaudited statements of these entities. Management is of view that this will not have a material impact on the company''s financial statements.
Our opinion is not modified in respect of above matter.
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 in terms of Section 143(11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in "Annexure -A" a statement on the matters specified in paragraphs 3 and 4 of the said Order.
2. As required by Comptroller and Auditor General of India through directions/subdirections 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 (including the Other Comprehensive Income), the 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 prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.
(e) Being a Government Company pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of Section 164 of the Companies Act, 2013, are not applicable to the Company.
(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;
(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 Standalone Ind AS financial statements. Refer Note 30 (I)(a)to the financial statements.
ii. The Company has made provision, as required under the applicable law or Indian accounting standards, for material foreseeable losses, if any and to the extent ascertainable, 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.
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 Standalone Ind AS Financial Statements for the year ended 31st March 2018.
(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 follows.
Description of Asset |
No. of cases |
Area in Hectares |
Gross block as on 31.03.2018 ('' in Cr.) |
Net block as on 31.03.2018 ('' in Cr.) |
Land |
||||
- Freehold |
11 |
6.85 |
23.35 |
23.35 |
- Leasehold |
6 |
174.40 |
3.21 |
2.45 |
- Leasehold-stated at carrying value (classified as prepayment under non-financial assets) |
2 |
24.58 |
5.63 |
5.63 |
(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 the third parties. 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 section 189 of the Companies Act 2013. In respect of such loans:
a) As informed to us and as verified by us no loans have been granted during the year to any of the parties covered in the register as aforesaid.
b) Repayment of the principal amount and payment of interest in respect of one of the loans have not been regular during the year. In this respect the company has settled the outstanding loan and interest thereon by way of converting the same into equity shares of the borrower company for partial amount and balance amount has been recovered in accordance with such settlement. (Refer Note 54)
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 and the rules framed there under.
(vi) We have broadly reviewed the accounts and records maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Companies Act, 2013 read with Companies (Cost Records & Audit) Rules, 2014 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made detailed examination of the records with a view to determine whether they are accurate and complete.
(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, Goods and Service Tax 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 or Goods and Service Tax which have not been deposited on account of dispute or deposited under protest and the forum where the dispute is pending are given below: (Amount '' in Crores)
No. |
S=f |
Nature of |
Period to which the amount relates |
Forum where the dispute is pending |
Gross disputed amount |
Amount deposited under protest/ appeal |
Amount not deposited |
1 |
Entry Tax Act of respective States |
Entry Tax / Penalty / Interest |
2002-03 to 2004-05 |
Hon. High Court, Allahabad |
19.90 |
- |
19.90 |
1999-00 to 2009-10 |
Commercial Tax Tribunal, UP |
219.46 |
6.41 |
213.05 |
|||
2008-09 |
Additional Commissioner (Appeals) Noida, Commercial Taxes |
0.50 |
0.50 |
||||
2015-16 |
Additional Commissioner (Appeals) Gwalior, Commercial Taxes |
18.75 |
18.75 |
||||
2002-03 to 2005-06 |
Dy. Commissioner (Appeals), Commercial Tax, Ajmer |
6.69 |
- |
6.69 |
|||
2011-12 & 2012-13 |
Dy. Commissioner (Appeal) Bengaluru |
0.15 |
- |
0.15 |
|||
SUB -TOTAL |
265.45 |
6.41 |
259.04 |
No. |
Name of |
Nature of the Dues |
Period to which the amount relates |
Forum where the dispute is pending |
amount |
Amount deposited under protest/ appeal |
Amount not deposited |
2 |
Central Sales Tax Act, 1956 and respective State Sales Tax / VAT Act |
CST / Sales Tax / VAT/ Penalty / Interest |
2011-12 |
Hon. High Court, Gwalior |
10.31 |
3.24 |
7.07 |
2003-2004 |
Hon. High Court, Mumbai |
0.63 |
0.03 |
0.60 |
|||
2003-2004 |
Hon. High Court, Guwahati |
0.29 |
0.14 |
0.15 |
|||
2006-07 to 2010-11 |
Sales Tax Tribunal Mumbai |
55.10 |
20.12 |
34.98 |
|||
Oct 2011 to Dec 2011 |
Joint Commissioner of Commercial Taxes, Trichy |
0.65 |
- |
0.65 |
|||
2005-06 to 2011-12 |
Joint Commissioner (Appeals), Sales Tax, Mumbai |
64.12 |
5.94 |
58.18 |
|||
2014-15 |
Dy.Commissioner (Appeals), Commercial Taxes, Ernakulam |
2.85 |
0.07 |
2.78 |
|||
2003-04, 2008-09, 2009-10, 2012-13 |
Joint Commissioner (Appeals), Commercial Tax, Vadodara |
93.60 |
82.98 |
10.62 |
|||
SUB -TOTAL |
227.55 |
112.52 |
115.03 |
||||
3 |
Central Excise Act1944 |
Central Excise Duty / Interest / Penalty |
Mar 2000 to Feb 2002, April 2002 to March 2003 & Nov 2004 to Feb 2005 |
Hon. Supreme Court |
56.20 |
56.20 |
|
Sept 2006 to Feb 2014 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
2772.96 |
2772.96 |
||||
Jan 2001 to Feb 2005 |
Customs, Excise and Service Tax Appellate Tribunal, Mumbai |
212.51 |
212.51 |
||||
July 2004 to March 2011 |
Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad |
149.62 |
149.62 |
||||
April 2008 to March 2010 & July 2010 to Nov 2010 |
Customs, Excise and Service Tax Appellate Tribunal, Kolkata |
98.06 |
0.66 |
97.40 |
|||
April 2008 to July 2009 |
Commissioner Vadodara |
47.46 |
- |
47.46 |
|||
SUB -TOTAL |
3336.81 |
0.66 |
3336.15 |
||||
4 |
Finance Act 1994 (Service Tax) |
Service Tax / Interest / Penalty |
Oct. 2006 to Mar 2015 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
49.18 |
1.36 |
47.82 |
Aug. 2005 to Sept 2009 |
Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad |
10.31 |
10.31 |
||||
July 2010 to Nov 2010 |
Commissioner (Appeals) GST, Delhi |
0.65 |
- |
0.65 |
|||
2014-15 |
Commissioner (Appeals) GST, Noida |
0.86 |
- |
0.86 |
|||
Jan 2011 to March,2012 |
Commissioner (Appeals) GST, Lucknow |
0.29 |
- |
0.29 |
|||
SUB -TOTAL |
61.29 |
1.36 |
59.93 |
S. No. |
Name of Statute |
Nature of |
Period to which the amount relates |
Forum where the dispute is pending |
Gross disputed amount |
Amount deposited under protest/ appeal |
Amount not deposited |
5 |
Customs Act, 1962 |
Customs Duty/ Interest / Penalty |
March 2006 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
0.53 |
0.46 |
0.07 |
Oct 2015 to Mar 2016 |
Commissioner of Customs, Excise and Service Tax, (Appeals), Pune |
0.31 |
0.02 |
0.29 |
|||
March 2013 to July 2014 |
Commissioner of Customs, Excise and Service Tax, (Appeals), Ahmedabad |
7.78 |
7.78 |
||||
SUB |
TOTAL |
8.62 |
8.26 |
0.36 |
|||
6 |
Income Tax Act, 1961 |
Income Tax/ Penalty/ Interest |
A.Y 2008-09 to A.Y. 2018-19 |
Jurisdictional Assessing Officer (TDS) |
1.27 |
- |
1.27 |
A.Y. 2013-14, 2014-15 & 2015-16 |
Commissioner Income Tax (Appeals)-22, New Delhi |
145.27 |
145.27 |
- |
|||
A.Y. 1996-97 to 2012-13 |
Income Tax Appellate Tribunal, Delhi |
1,920.46 |
1,245.57 |
674.89 |
|||
1997-98 & 1998-99 |
Hon. Supreme Court |
0.26 |
0.26 |
- |
|||
SUB |
TOTAL |
2067.26 |
1391.10 |
676.16 |
|||
7 |
Gujarat Municipalities Act, 1963 |
Notified Area Tax/ GIDC Tax / Interest |
1998-99 to 2005-06 & 1985-86 to 2009-10 |
Hon. High Court, Ahmedabad |
4.50 |
4.50 |
|
SUB |
TOTAL |
5,971.48 |
1,520.31 |
4,451.17 |
(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 by way of initial public offer or further public offer or further public offer (including debt instrument). As informed to us, no term loans have been obtained during the year.
(x) According to the information and explanations given to us and as represented by the Management and based on our examination of the books and records of the Company and in accordance with generally accepted auditing practices in India, no case of frauds by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) As per notification no. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 is not applicable to the Government Companies. Accordingly, provisions of clause 3 (xi) of the Order are not applicable to the Company.
(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) In our opinion, the company has complied with provisions of sections 177 and 188 of Companies Act, 2013 in respect of transactions with the related parties 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.
Referred to in paragraph 2 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 31st March 2018.
(Amount Rs, in Crores)
S. No. |
Directions / Sub Directions |
Action taken |
Impact on financial statement |
1 |
Whether the company has clear title/lease deed for freehold and leasehold respectively? If not please state the area of freehold and leasehold land for which title/lease deed are not available? |
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. 37(b) & (c) along with area of these lands. |
Nil |
2 |
Whether there are any cases of waiver/ write off of debts/ loans/interest etc., if any, the reason there for and amount involved. |
During the year the company has settled its disputed claim with one of the customers. Refer note 41 |
Nil |
3 |
Whether proper records are maintained for inventories laying with third parties & assets received as gift from Govt. or other authorities. |
The company has maintained proper records of inventories including inventory lying with the third parties. The inventories have been physically verified at reasonable intervals by the Management, As informed to us physical verification of inventory has been conducted at reasonable intervals by the management except the store and spares lying with the third parties. We have been informed that no asset has been received as gift from government or other authorities. |
Nil |
Referred to in paragraph 3(f) 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 31st March 2018.
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 GAIL (INDIA) LIMITED ("the Company") as of 31st March 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
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. 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. Auditors'' 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 I/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.
For O.P. Bagla & Co. LLP ForASA & Associates LLP
(Formerly O P Bagla & Co.) Chartered Accountants
Chartered Accountants Firm No.: 009571N/N500006
Firm No.: 000018N/N500091
Rakesh Kumar Parveen Kumar
Partner Partner Membership No-°87537 Membership No.:088810
Place: New Delhi
Dated: 24thMay, 2018
Mar 31, 2017
To the Members of GAIL (India) Limited
This revised Independent Auditorâs Report is being issued in supersession of our earlier Independent Auditorsâ Report dated 22nd May 2017, at the instance of Comptroller & Auditor General (C&AG) of India. The revised report is being issued in view of certain modification in Annexure âAâ of Companies (Auditors Report) Order 2016, as pointed out by C&AG of India in our earlier report. Further, we confirm that these changes do not affect true & fair view and our opinion as expressed earlier and also none of the figures have undergone any change in the Standalone financial Statements of the Company as at 31st March2017.
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS financial statements of GAIL (India) Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Standalone Ind AS Financial Statements The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these Standalone Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (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, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with 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 Standalone Ind AS financial statements, that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs 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 there under. We conducted our audit of the Standalone Ind AS financial statements 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 misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Standalone Ind AS financial statements. The procedures selected depend on the auditorâs 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 Companyâs 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 Companyâs Directors, as well as evaluating the overall presentation of the 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 the Ind AS, of the state of affairs (financial position) of the Company as at 31st March, 2017, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the financial statements:
1. Note No: 35(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 anywill be recognized as and when matter is finally decided.
2. Note No: 39-regarding provision of impairment loss amounting to Rs.783 Crores out of carrying value of investment of Rs.974.31 Crores in a Joint Venture Entity on the basis of impairment study of such entity. Such case has been included in exceptional item in the statement of Profit & Loss.
3. Note No: 42-in respect of revenue recognition in previous year for ship or pay charges where the customer has disputed the claim of the company and final outcome is still uncertain.
Our opinion is not modified in respect of above matter.
Other Matters
The comparative financial information of the Company for the year ended 31stMarch 2016 and the transition date opening balance sheet as at 1st April 2015 included in these Standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by us/the predecessor auditors, whose audit report for the year ended 31st March 2016 & 31st March 2015 dated 25th May 2016 & 27th May 2015 respectively expressed an unmodified opinion on those Standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.
Our opinion is not modified in respect of above matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government in terms of Section 143(11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in âAnnexure -Aâ a statement on the matters specified in paragraphs 3 and 4 of the said Order.
2. As required by Comptroller and Auditor General of India through directions/sub directions 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 âAnnexure -Bâ 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 (including the Other Comprehensive Income), the 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 prescribed under Section 133 of the Act read with the Companies(Indian Accounting Standards) Rules, 2015 as amended.
(e) Being a Government Company pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of Section 164 of the Companies Act, 2013, are not applicable to the Company.
(f) We are enclosing herewith a report in âAnnexure - Câ for our opinion on adequacy of internal financial controls system in place in the company and the operating effectiveness of such controls;
(g) With respect to the other matters to be included in the Auditorâs 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 Standalone Ind AS financial statements. Refer Note 29 (I)(a)to the financial statements.
ii. The Company has made provision, 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.
iv. The Company has provided requisite disclosures in Note no9A of its financial statements as to holdings as well as dealings in Specified Bank Notes (SBN) during the period from 8th November 2016 to 30th December 2016. Based on the audit procedures and relying on the management representation, we report that the disclosures are in accordance with the books of accounts and records maintained by the Company.
ANNEXURE - A TO THE INDEPENDENT AUDITORSâ REPORT
Referred to in paragraph 1 to âReport on Other legal and regulatory requirementsâ of the Independent Auditorsâ Report of even date to the members of GAIL (INDIA) LIMITED on the Standalone Ind AS Financial Statements for the year ended March 31, 2017.
(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 follows.
Description of Asset |
No. of cases |
Area in Hectares |
Gross block as on 31.03.2017 (Rs. in Cr.) |
Net block as on 31.03.2017 (Rs. in Cr.) |
Land |
||||
- Freehold |
10 |
4.81 |
19.43 |
19.43 |
- Leasehold |
6 |
175.31 |
27.36 |
26.48 |
- Leasehold- stated at carrying value (classified as prepayment under non-financial assets) |
2 |
22.01 |
9.39 |
9.39 |
Building & Structures |
10 |
- |
1.67 |
1.00 |
(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 section 189 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 and the parties are making payments as per stipulation.
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 and the rules framed there under.
(vi) We have broadly reviewed the accounts and records maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Companies Act, 2013 read with Companies (Cost Records & Audit) Rules, 2014 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made detailed examination of the records with a view to determine whether they are accurate and complete.
(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, employeesâ 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 or deposited under protest and the forum where the dispute is pending are given below:
S. No. |
Name of Statute |
Nature of the Dues |
Period to which the amount relates |
Forum where the dispute is pending |
Gross disputed amount (Rs.In Crores) |
Amount deposited under protest/ appeal (Rs. In Crores) |
Amount not deposited (Rs. In Crores) |
2002-03 to 2004-05 |
Hon. High Court, Allahabad |
18.83 |
- |
18.83 |
|||
1999-00 to 2009-10 |
Commercial Tax Tribunal, UP |
205.34 |
6.41 |
198.93 |
|||
1 |
Entry Tax Act of respective State |
Entry Tax / Penalty / Interest |
2008-09 |
Additional Commissioner (Appeals), Commercial Taxes |
0.47 |
- |
0.47 |
2002-03 to 2005-06 |
Dy. Commissioner (Appeals), Commercial Tax, Ajmer |
6.19 |
- |
6.19 |
|||
2011-12 & 2012-13 |
MP Commercial Tax Appellate Board, Bhopal |
4.76 |
1.77 |
2.99 |
|||
SUB-TOTAL |
235.59 |
8.18 |
227.41 |
2011-12 & 2012-13 |
MP Commercial Tax Appellate Board, Bhopal |
12.26 |
4.01 |
8.25 |
|||
2005-06 to 2011-12 |
Joint Commissioner (Appeals), Sales Tax, Mumbai |
313.30 |
24.03 |
289.27 |
|||
2003-2004 |
Hon. High Court, Mumbai |
0.63 |
0.03 |
0.60 |
|||
Central Sales |
CST / Sales Tax / VAT/ Penalty / |
Oct 2011 to Dec 2011 |
Joint Commissioner of Commercial Taxes, Trichy |
0.59 |
- |
0.59 |
|
2 |
Tax Act, 1956 and respective State Sales Tax / VAT Act |
2003-2004 |
Hon. High Court, Guwahati |
0.29 |
0.14 |
0.15 |
|
Interest |
2014-15 |
Dy.Commissioner (Appeals), Commercial Taxes, Ernakulam |
2.85 |
0.07 |
2.78 |
||
2003-04 2008-09 2009-10 2012-13 |
Joint Commissioner (Appeals), Commercial Tax, Vadodara |
93.44 |
82.98 |
10.46 |
|||
1995-96 to 1996-97 |
Dy Commissioner, Commercial Tax, Gwalior |
0.16 |
0.16 |
- |
|||
SUB-TOTAL |
423.52 |
111.42 |
312.10 |
||||
Mar 2000 to Feb 2002, April 2002 to March 2003 & Nov 2004to Feb2005 |
Supreme Court |
54.24 |
- |
54.24 |
|||
Central Excise Duty / Interest / Penalty |
Sept 2006 to Feb 2014 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
2646.90 |
- |
2646.90 |
||
3 |
Central Excise Act 1944 |
Jan 2001 to Feb 2005 |
Customs, Excise and Service Tax Appellate Tribunal, Mumbai |
196.09 |
- |
196.09 |
|
July 2004 to March 2011 |
Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad |
188.44 |
- |
188.44 |
|||
April 2008 to March 2010 & July 2010 to Nov 2010 |
Customs, Excise and Service Tax Appellate Tribunal, Kolkata |
77.72 |
- |
77.72 |
|||
SUB-TOTAL |
3163.39 |
0.00 |
3163.39 |
||||
Oct. 2006 to Mar 2015 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
1216.80 |
23.61 |
1193.19 |
|||
4 |
Finance Act 1994 (Service Tax) |
Service Tax / Interest/ Penalty |
Aug. 2005 to Sept 2009 |
Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad |
9.88 |
- |
9.88 |
July 2010 to Nov 2010 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
0.37 |
- |
0.37 |
|||
2008-09 |
Customs, Excise and Service Tax Appellate Tribunal, Allahabad |
0.03 |
- |
0.03 |
Apr 2007 to Mar 2009 & Oct 2009 to Mar 2015 |
Commissioner (Appeals), Customs, Excise and Service Tax, Delhi |
1.18 |
- |
1.18 |
|||
SUB-TOTAL |
1228.26 |
23.61 |
1204.65 |
||||
March 2006 |
Customs, Excise and Service Tax Appellate Tribunal, Delhi |
0.53 |
0.46 |
0.07 |
|||
5 |
Customs Act, 1962 |
Customs Duty/ Interest / Penalty |
Oct 2015 to Mar 2016 |
Commissioner of Customs, Excise and Service Tax, (Appeals), Pune |
0.77 |
0.65 |
0.12 |
March 2013 to July 2014 |
Commissioner of Customs, Excise and Service Tax, (Appeals), Ahmedabad |
7.78 |
7.78 |
- |
|||
SUB-TOTAL |
9.08 |
8.89 |
0.19 |
||||
2008-09 to 2017-18 |
Jurisdictional Assessing Officer (TDS) |
4.94 |
- |
4.94 |
|||
Income Tax Act, 1961 |
Income Tax / |
1999-00, 2013-14 & 2014-15 |
Commissioner Income Tax (Appeals) - 22, New Delhi |
152.20 |
152.20 |
- |
|
6 |
Interest/ Penalty |
1996-97 to 199899 & 2000-01 to 2012-13 |
Income Tax Appellate Tribunal, Delhi |
1808.28 |
1180.19 |
628.09 |
|
1997-98 & 1998-99 |
Hon. Supreme Court |
0.26 |
0.26 |
- |
|||
SUB-TOTAL |
1965.68 |
1332.65 |
633.03 |
||||
7 |
Gujarat Municipalities Act, 1963 |
Notified Area Tax / GIDC Tax / Interest |
1998-99 to 200506 & 1985-86 to 2009-10 |
Hon. High Court, Ahmedabad |
4.33 |
- |
4.33 |
TOTAL |
7029.85 |
1484.75 |
5545.10 |
(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 by way of initial public offer or further public offer or further public offer (including debt instrument). Term Loans obtained during the year were applied for the purpose for which those were obtained by the company.
(x) According to the information and explanations given to us and as represented by the Management and based on our examination of the books and records of the Company and in accordance with generally accepted auditing practices in India, no case of frauds by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) As per notification no. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 is not applicable to the Government Companies. Accordingly, provisions of clause 3 (xi) of the Order are not applicable to the Company.
(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) The company has complied with in respect of 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 noncash 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 ActRs.1934.
ANNEXURE - B TO THE INDEPENDENT AUDITORSâ REPORT
Referred to in paragraph 2 to âReport on Other legal and regulatory requirementsâ of the Independent Auditorsâ Report of even date to the members of GAIL (INDIA) LIMITED on the financial statements for the year ended March 31, 2017.
S. No. |
Directions / Sub Directions |
Action taken |
Impact on financial statement |
1 |
Whether the company has clear title/lease deed for freehold and leasehold respectively? If not please state the area of freehold and leasehold land for which title/lease deed are not available? |
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. 37(b) & (c)along with area of these lands. |
Nil |
2 |
Whether there are any cases of waiver/ write off of debts/loans/interest etc., if any, the reason there for and amount involved. |
We have been informed that there has been no case of waiver, write off of debt/interest/loans etc. |
Nil |
3 |
Whether proper records are maintained for inventories laying with third parties & assets received as gift from Govt. or other authorities. |
The company has maintained proper records of inventories including inventory lying with the third parties. 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 informed that no asset has been received as gift from government or other authorities. |
Nil |
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 : 20th July, 2017
Mar 31, 2016
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
Mar 31, 2015
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
Mar 31, 2014
We have audited the accompanying financial statements of GAIL(India)
Limited, which comprise the Balance Sheet as at March 31, 2014, 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") read with General Circular 15/2013
dated 13th September 2013 of the Ministry of Corporate Affairs in
respect of section 133 of the Companies Act 2013., 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 but not for the
purpose of expressing an opinion on the effectiveness of the Company''s
Internal Control. 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 Companies Act 1956 to the extent applicable and the
Companies Act 2013 (to the extent notified) 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, 2014;
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.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note no.41
regarding sharing of under recoveries on sensitive petroleum products
by way of subsidy given to oil marketing companies as decided by
Ministry of Petroleum & Natural Gas (MOPNG).
Report on Other Legal and Regulatory Requirements
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 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 Balance Sheet, the Statement of Profit and Loss
and the 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 read with General Circular 15/2013 dated 13th
September 2013 of the Ministry of Corporate Affairs in respect of
section 133 of the Companies Act 2013.
(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.
ANNEXURE TO THE AUDITOR''S REPORT The Annexure referred to in the
auditor''s report to the shareholders of GAIL (India) Limited for the
year ended March 31, 2014. 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.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the company
and such disposal has, in our opinion, not affected the going concern
status of the company.
(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 vapors 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. 64.17 crores and year-end balance
of loan was Rs. 56.38 crores.
(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) According to information and explanations given to us, there are
adequate internal control procedures commensurate with the size of the
company and nature of its business for the purchase of inventory, fixed
assets and for the sale of goods and services.
(v) In respect of contract or arrangement entered in the register
maintained in pursuance of section 301 of the Act, to the best of our
knowledge and belief and according to the information and explanation
given to us:
(a) The particulars of contracts or arrangement referred to in section
301, that needed to be entered in the Register maintained under the
said section have been so entered.
(b) In our opinion and as per the information & explanation given to us
and on the basis of our examination of books of accounts, the
transactions made in pursuance of contract or arrangement referred to
in (a) above and exceeding the value of Rs. 5 Lacs have been made at
prices which are reasonable having regard to the prevailing market
prices at the relevant time.
(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 costing records being 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 has
generally been regular in depositing undisputed statutory dues
including Provident fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income tax Sales tax, Wealth tax, Service
Tax, Custom duty, Excise duty, cess and any other material statutory
dues with the appropriate authorities. According to the information
and explanation given to us, no undisputed amounts payable in respect
of Provident fund, Investor Education and Protection Fund, Employees''
State Insurance, Income tax Sales tax, Service Tax, Custom duty, Excise
duty and 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 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
31.03.2014
(Rs. In Crores)
Sl. Statute Subject Matter
of Dispute Amount Period of
Dispute Status- Forum
No. (2013-14)
1 Entry Tax (a) Demand of
Entry Tax on
Natural Gas
in U.P. 173.88 1999-00 to
2009-10 Allahabad High
Court, Trade tax
Tribunal &
Additional
Commissioner
(Appeals)
(b) Demand of
Entry Tax on
Natural Gas 0.86 2005-06 Dy.Commissioner
(Appeals), Ajmer
in Rajasthan
(c) Demand of
Entry Tax on
Natural Gas in 2.60 2008-09 Tribunal, Bhopal
Madhya Pradesh
2 Sales Tax (a) Non-acceptance
of declaration
form for 0.37 1995-96 &
1996-97 Tribunal, Bhopal
& VAT concessional sales
tax
(b) Sales Tax
demand as per
assessment order 3.90 2005-06 &
2006-07 Additional
Commissioner
(Appeals)
Noida
(c) VAT demand as
per assessment order 32.58 2010-11 Additional
Commissioner
(Appeals)
Noida
(d) CST demand on
Transmission charges 0.71 2005-06 to
2006 -07 High Court, AP
(e) Demand of GVAT &
CST on account of 29.78 2006-2007 Tribunal,
Gujarat
disallowance
of LPG subsidy discount
(f) Penalty for delay
in payment of
sales tax 0.90 2003-2004 Mumbai
Tribunal
(g) Demand of VAT on
account of rate
change 0.43 Oct 2011 to
Dec 2011 Joint Commiss
-ioner, Trichy
(h) Demand of CST on
account of
disallowance 46.93 2005-06 High Court,
Gwalior
of LPG subsidy
discount
(i) Demand for treating
CST sale as local sale 0.15 2003-2004 Assam Revenue
board
(j) Sales Tax demand 0.20 1998-1999 Mumbai
Tribunal
(k) Revised Sales Tax
demand as per 2.42 2003-04 Joint Commissioner
(Appeals),
assessment order Baroda
3 Custom, (a) LPG valuation
Dispute 17.81 Jan 2001 to
Feb 2005 CESTAT
Mumbai
Excise &
Service
Tax
(b) Dispute on
Pentane Classification 99.50 Aug. 2005 to
Jul 2009 CESTAT
Ahmedabad
(c) Dispute on MFO
Classification 70.89 July 2004 to
March 2011 CESTAT
Ahmedabad
(d) Demand of duty
under Rule 6(3)
of CCR, 12.89 2008-2009 & CESTAT
Kolkata
2004 for
credit taken on input
services 2009-2010
(e) Demand of Service
Tax on Marketing
Margin 147.32 Oct. 2006 to
Mar.2012 CESTAT Delhi
(f) Demand of Service
Tax on deputation of 2.61 Oct. 2006 to
Mar. 2011 CESTAT Delhi
employees to JVs &
Govt. Deptt.
(g) Demand of
differential service
tax based 0.22 Oct. 2006 to
Mar. 2007 CESTAT
Ahmedabad
on service tax returns.
(h) Demand raised by
denying Cenvat & 8.30 Aug. 2005 to
Sep. 2009 CESTAT
Ahmedabad
service tax credit
taken at Hazira
(i) Demand raised by
denying Cenvat credit 0.09 Dec. 2010 to
March 2011 CESTAT Delhi
taken on input services
(j) Demand of CVD on
purchase of SAP software0.07 March 2006 CESTAT Delhi
taken on input services
SUB-TOTAL 655.41
4 Income Unpaid demands
including interest 39.01 AY- 2006-07,
2007-08, CIT (Appeals)
Tax 2009-10,
2011-12
5 Other Notified Area tax &
GIDC tax on revised 3.81 1998-99 to
Aug 2005 & Ahmedabad High
Court
taxes value (incl.
interest) 1998-99 to Dec
2009
TOTAL 698.23
(x) 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.
(xi) 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.
(xii) In our opinion and according to information and explanation given
to us, 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) In our opinion and 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) 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.
(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, a
legal notice has been sent to an original equipment manufacturer (OEM)
of the company regarding recovery of USD 4.34 million plus GBP 3,48,549
along with interest thereon on account of payments of commission to its
agent over and above the declared amount in violation of instructions
to bidders (ITB) & terms and condition of Integrity Pact (IP) (Refer
Note No. 56).
For M/s M.L. Puri & Co. For M/s G.S Mathur & Co.
Chartered Accountants Chartered Accountants
Firm No.: 002312N Firm No.: 08744N
(Navin Bansal) (Rajiv Kumar Wadhawan)
(Partner) (Partner)
Membership No.:91922 Membership No.: 091007
Place : New Delhi
Dated : May 26, 2014
Mar 31, 2013
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
Mar 31, 2012
1. We have audited the attached Balance Sheet of GAIL (India) Limited
as at 31st March, 2012, the Statement of Profit and Loss and Cash Flow
Statement of the company for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards
generally accepted in India. These Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the statement on the Companies (Auditor's Report)
order, 2003 issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, 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 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 appears from our examination of those
books;
c) The Balance Sheet and Statement of Profit & Loss and the 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
the 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;
e) Disclosure in terms of clause (g) of sub-section (1) of Section
274ofthe Companies Act, 1956 is not required as per notification no.
GSR 829(E) dated October21,2003 issued by the Department of Company
Affairs.
f) 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 the significant accounting policies and notes thereon
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:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012;
ii. in the case of the Statement of Profit & Loss, of the profit for
the year ended on that date ;and
iii. in the case of the Cash Flow Statement, of the cash flow of the
company for the year ended on that date.
The Annexure referred to in the auditor's report to the shareholders of
GAIL (India) Limited for the year ended March 31,2012.We report that:
(i) (a) The company has generally maintained proper rords 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 vapour 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 two subsidiaries
companies (None of the Directors individually or collectively hold more
than two per cent the paid-up share capital). The Company has
maintained the register under section 301 often Companies Act, 1956,
inter-alia, in which the name of said two subsidiaries is also entered.
The maximum amount involved during the year for Rs. 336.78 crores and
year-end balance of loan was Rs. 57.32 crores.
(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 parties have repaid the principal amounts as stipulated and
have also been regular in the payment of interest to the company.
(d) There is no over due 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 to
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.
(v) On the basis of our examination of the 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
31.03.2012 (Rs. in Crores)
SI. Amount Period
No. Statute Subject Matter
of Dispute (2011-12) of Dispute Status-
Forum
1 Entry Tax(a) Entry Tax on
Market Value of
Natural Gas 121.92 1999-OOto Allahabad
High Court,
Trade tax
Tribunal&
instead of its
Purchase Price
(Including Interest) 2009-10 Additional/
Joint
Commissioner
-Appeals
(b) Rajasthan Entry
Tax Demand 8.41 2005-06 & Dy. Commi
ssioner,
Appeals, Kota/
2008-09 Appeallate
Authority,
Gwalior
2 Sales Tax (a) Non-acceptance
of declaration form 0.63 1995-96 & Additional
Commissioner
-Appeals,
for concessional
sales tax 1996-97 Commercial Tax
, Gwalior
(b) Sales Tax
demand as per
assessment 3.34 2005-06 & Additional
Commissioner-
Appeal Noida
order of 2005-06
and 2006-07 2006-07
(c) CST demand on
Transmission
charges and 0.86 2005-06 to AP High Court
penalty & interest 2008-09
(d)Demand on account
of LPG subsidy
discount 75.37 2006-2007 Joint
Commissioner
-Appeals
and treating
domestic LPG as
non-domestic
(e)Interest for
delay for sales
tax assessment 0.54 2003-2004 Dy.Commi
ssioner,
Sales Tax,
Mumbai
(f)Demand of VAT
on account of rate
change 0.29 0ct 2011 to Joint
Commissioner,
Trichy
Dec 2011
(g)Disallowance of
credit note for LPG 117.91 2008-2009 High Court,
Gwalior
subsidy discount
(h)Demand for
treating CST sale
as local sale 0.15 2003-2004 High Court,
Guwahati
(i)Sales Tax demand 0.20 1998-1999 Mumbai Tribunal
3 Excise& (a) LPG valuation
Dispute 15.96 Jan 2001 to CESTAT Mumbai
Service
Tax Feb 2005
(b)Dispute on
Pentane
Classification 92.14 Mar.2000 to CESTAT New
Delhi &
CESTAT
Ahmedabad
Feb 2002 &
Aug.2005 to
Jul 2009
(c)Dispute on MFO
Classification 62.01 July 2004 to CESTAT
Ahemdabad &
Commissioner
March 2011 (Appeals)
Vadodara
(d)Demand of duty
under Rule 6(1)
of CCR,2004 11.07 2008-2009 & CESTAT
Kolkata
for credit taken on
input services 2009-2010
(e)Demand of
Differential service
tax based on 0.17 0ct.2006 to CESTAT
Ahemdabad
returns for the
period from Oct 06
to Mar 07 March 2007
(f)Demand raised
denying refund
claim allowed 0.43 Sep.2007 CESTAT
Ahemdabad
to GAIL for service
tax on compression
charges
(g)Demand raised by
denying Cenvat &
service tax 7.28 May 2005 to CESTAT
Ahemdabad
credit taken at
Hazira March 2010
(h)Demand raised by
denying Cenvat 0.26 Jan.2006 to Commissioner
(Appeals),
credit taken on
input services Oct. 2009 & Guwahati /
Kanpur
Dec. 2010 to
March 2011
SUB-TOTAL 518.94
4 Income
Tax Demand of Penalty
u/s 271(1)(c) 168.59 AY-2007-08 CIT Appeals
5 Other
taxes Notified Area tax
& GIDC tax on
revised value 3.46 1985-86 to Ahmedabad
High Court
(incl. interest) 2008-09
TOTAL 690.99
(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,clause4(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,clause4(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 (bonds) 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/s M.L.Puri & Co. For M/s Rasool Singhal & Co
Chartered Accountants Chartered Accountants
Firm No:002312 N Firm No :500015N
NavinBansal G. S. Haldia
Partner Partner
Membership No. 91922 Membership No.007012
New Delhi New Delhi
Dated: 30th May 2012 Dated: 30th May 2012
Mar 31, 2011
1. We have audited the attached Balance Sheet of GAIL (India) Limited
as at 31st March, 2011, the Profit and Loss Account and Cash Flow
Statement of the company for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards
generally accepted in India. These Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the statement on the Companies (Auditor's Report)
order,2003 issued by the Central Government of India in terms of sub-
section (4A) of Section 227 of the Companies Act, 1 956, we enclose in
the Annexure a statement on the matters specified in paragraphs 4 and 5
of the said Order.
4. Further to our comments in the Annexure referred to above, 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 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 appears from our examination of those
books;
c) The Balance Sheet and Profit & Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d) In our opinion, the Balance Sheet, Profit and Loss Account and the
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;
e) Disclosure in terms of clause (g) of sub-section (1) of Section
274of the Companies Act, 1 956 is not required as per notification no.
GSR 829(E) dated October 21,2003 issued by the Department of Company
Affairs.
f) 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 the significant accounting policies and notes thereon
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:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011;
ii. in the case of the Profit & Loss Account, of the profit for the
year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flow of the
company for the year ended on that date.
The Annexure referred to in the auditor's report to the shareholders of
GAIL (India) Limited for the year ended March 31,2011. 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 ndia 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 vapour 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) The Company has neither granted nor taken any loans secured or
unsecured, to or from companies, firms or other parties 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 to
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.
(v) On the basis of our examination of the 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, 1 956.
(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. We have not, however, made a
detailed examination of these records.
(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:
(Rs in Crores)
SI. Statute Subject Matter of Amount Period of Dispute
No. Dispute
1 Entry Tax (a) Entry Tax on
Market Value 300.58 1999-2008
of Natural Gas
instead of its
Purchase Price
(Including Interest)
(b) Rajasthan Entry
Tax Demand 0.65 2005-06
2 Sales Tax (a) Non-acceptance of
declaration form 0.16 1995-96 &
1996-97
for concessional
sales tax
(b) Sales Tax demand
as per assessment 3.00 2005-06 &
2006-07
order of 2005-06 and
2006-07
(c) CST demand on
Transmission charges 0.48 2005-06 and
2006-07
with penalty & interest
thereon
(d) Demand on account
of LPG subsidy 69.57 2006-2007
discount and treating
domestic LPG as
non-domestic
(e) Interest for delay
for sales tax
assessment 0.54 2003-2004
(f) Demand for non
submission of C Forms
and rejection of HPL
swap in transit sale 0.94 Apr. 2004 to
June 2004
3 Excise (a) LPG valuation
Dispute 15.04 Jan 2001 to
Feb 2005
(b) Dispute on
Pentane Classi
-fication 83.57 Mar. 2000 to
Feb 2002
& Aug.2005 to
Jul 2009
(c) Dispute on MFO
Classification 42.94 July 2004 to
May 2009
4 Service
Tax (a) Demand of
differential service
tax based 0.12 Oct.2006 to
Mar.2007
on returns for the
period from Oct 06 to
Mar 07
(b) Demand raised
denying refund claim 0.26 Sep.2007
allowed to GAIL for
service tax on
compression charges
(c) Demand raised by
denying Cenvat & 6.94 May 2005 to
Mar.2010
service tax credit
taken at Hazira
5 Other taxes Notified Area tax &
GIDC tax on revised 3.28 1985-86 to
2008-09
value, (incl. interest)
Statute Status - Forum
Entry Tax Allahabad High Court, Trade tax Tribunal &
Additional /Joint Commissioner-Appeals
Dy. Commissioner, Appeals, Kota
Sales Tax Additional Commissioner Appeals, Commercial Tax,
Gwalior
Additional Commissioner-Appeal Noida
Andhra Pradesh High Court
Joint Commissioner-Appeals, Vadodara
Dy. Commissioner, Sales Tax, Mumbai
Appellate & Revisional Bench, West Bengal
Excise CESTAT Mumbai
CESTAT New Delhi & CESTAT Ahmedabad
CESTAT Ahemda bad CESTAT Ahemda bad
CESTAT Ahemdabad
CESTAT Ahemda bad
Other Taxes 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 not granted loans and advances on
the basis of security by way of pledge of shares, debentures and other
securities other than to its employees. 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) According to the information and explanation given to us, the
company has not given any guarantee for loans taken by others from
banks and financial institutions during the year.
(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 raised any short term loan 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 issued debentures(bonds) during the year.
According to information and explanations given to us, the Company has
created necessary charges as per debenture (bond) trust deed in respect
of debentures(bonds) issued 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.: 500015 N
Navin Bansal Anil Gupta
Partner Partner
Membership No. 91922 Membership No. 072767
Place : New Delhi Place: New Delhi
Dated : May 23,2011 Dated : May 23,2011
Mar 31, 2010
We have audited the attached Balance Sheet of GAIL (India) Limited as
at 31st Match. 2010. the Profit and Loss Account and Cash Flow
Statement of the company for the year ended on that date annexed
thereto.These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We have conducted our audit in accordance with auditing standards
generally accepted in India. These Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
As required by the statement on the Companies (Auditors Report)
order.2003 issued by the Central Government of India in terms of
sub-sectton (4A) of Section 221 of the Companies Act. 1956. we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
Further to our comments in the Annexure referred to above, 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 purposes of our
audit;
b. in our opinion, proper books of account as required t^ law have
been kept by the Company so far as appears from our examination of
those books;
c. The Balance Sheet and Profit & Loss Account and the Cash Flow
Statement dealt with by this report are m agreement with the books of
account;
d. in our opinion, the Balance Sheet, Profit and Loss Account and the
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, 19S6;
e. Disclosure in terms of clause (g) of sub-section (l) of Section 274
of the Companies Act, 1956 is not requited as per notification no. GSR
829(E) dated October 21.2003 issued by the Department of Company
Affairs.
f. 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 the significant accounting policies and notes thereon
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) m thecaseof the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2010;
b) m the case of the Profit & Loss Account, of the profit for the year
ended on that date;and
c) in the case of the Cash Flow Statement, of the cash flow of the
company for the yeat ended on that date.
Annexure to the Auditors Report
The Annexure referred to in the auditors report to the shareholders of
GAIL (lnd(a) Limited for the year ended March 31.2010. 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 vapour 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) The Company has neither granted nor taken any loans secured or
unsecured, to or from companies, firms or other parties 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 to 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.
(v) On the basis of our examination of the 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. 19S6.
(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(l)(d) of the Companies
Act. 19S6 and we are of the opinion that prima facie the prescribed
accounts and records have been maintained. We have not, however, made a
detailed examination of these records.
(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.
(x) As certified by the Management on which we have relied upon, the
dues of Excise Duty. Custom Duly. 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:
(Rs. In Crores)
Sl. Statute Subject Matter of Dispute Amount
No.
1. Entry Tax (a) Entry Tax on Market Value of 234.90
Natural Gas instead of its Purchase
Price (Including Interest)
2. SalesTax (a) Non-acceptance of declaration 0.16
form for concessional sales tax
(b) Surcharge on Turnover tax Rajasthan 0.44
(c) Sales Tax demand as per assessment 2.61
order of 2005-06and 2006-07
(d) CST demand on Transmission 0.48
charges with penalty & interest thereon
3. Excise (a) LPG valuation Dispute 14.39
(b) Dispute on Pentane Classification 78.16
(c) Dispute on MFO Classification 40.69
as Motor spirit
4. Service Tax (a) Demand of differential service tax 0.10
based on returns for the period
from Oct 06 to Mar 07
(b) Demand raised denying refund 0.26
claim allowed to GAIL for
service tax on compression charges
(c) Credit denied on input services 0.81
Township security (Feb.08- Mar.09)
and Maintenence of land/lawns
(Nov.08)
5. Income Tax Liability of Tax on disallowance of 1.76
deductions claimed & Penalty
6. Other taxes Notified Area tax on revised value. 3.06
Subject Mateer of Dispute Period of Dispute Status - Forum
Entry Tax 1999-2007 Allahabad High
Court & Trade tax Tribunal
2002-O3, onwards Dy. Commissioner,
Appeals. Kota
SalesTax 1995-96& 1996-97 Dy.Commissioner,
Commerical Tax.Gwalior
2002-03.2003-04 & 2004-05 State tax
Tribunal, Ajmer
2005-06& 2006-07 Additional Commissioner
- Appeal Noida
2005-06 and 2006-07 A P High Court
Excise Jan 2001 to Feb 2005 CESTAT Mumbai
Mar. 2000 TO Feb 2002 & CESTAT New Delhi &
CESTAT Ahmedabad
Aug-2005to Jul 2009
July 2004 to May 2009 CESTAT Ahemdabad
ServiceTax Oct.2006 to Mar.2007 Commissioner
(Appeals) Vadodara
Sep.2007 CESTAT Ahemdabad
Feb-2008 to Mar.2009 Commissioner
(Appeals) Kanpur
Income Tax AY-1996-97 to 2007-08. ITAT Delhi
Other taxes 1985-86 to 2008-09 Ahmedabad High Court
x.The company has no accumulated losses ai ihe end of the financial
year and 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.
(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) According to the information and explanation given to us, the
company has not given any guarantee for loans taken by others from
banks and financial institutions during the year.
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 raised any short term loan during the year
xviil) The company has not made any preferential allotment of shares to
parlies 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 Mehra Goel &Co. For Rasool & Singhal &Co.
Chartered Accountants Chartered Accountants
Firm N00517N Firm No:S00015N
PJC Mehra Praveen Gupta
Partner Partner
Membership No. 6102 Membership No. 073489
New Delhi New Delhi
Dated: May 17,2010 Dated: May 17,2010