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Updated:16 Aug, 2019, 15:59 PM IST

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Updated:16 Aug, 2019, 16:01 PM IST

AUDITORS REPORT

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Coal India Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. These financial statements include figures in respect of Head Quarter (HQ) Kolkata, North Eastern Coalfields (NEC) and GM's office at New Delhi and Marketing office, Kolkata.

2. 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 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.

3. 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 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 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 control 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, 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 Matters

We draw attention to the following notes:–

(a) Note No. 10A (2) regarding non–provision against fixed assets in Dankuni Coal Complex leased to South Eastern Coalfields Limited (SECL) for lease rent of Re.1 per annum. In opinion of the management the nominal income earning is a temporary policy matter and actual worth of the assets including land is much higher than the book value and hence no provision is called for.

MANAGEMENT REPLY 

This is a statement of fact referring to the notes on accounts no 10A (2) only. As mentioned by the Audit, referring to the relevant note, the recoverable value (actual worth), of the assets of Dankuni Coal Complex (given on operating lease to SECL, a 100% subsidiary of CIL on a nominal rent) is considered much higher than its WDV. Hence no provision as per AS–28 (Accounting Standard on Impairment) or otherwise is required.

(b) Note No. 11 and 18, dealing with an aggregate investments of Rs. 8926.42 Crores and loans & advances of Rs. 578.55 Crores (Current Account Debit Balances) in its 100%subsidiaries namely, Bharat Coking Coal Limited (BCCL) and Eastern Coalfields Limited (ECL) have come out of Board for Industrial & Financial Reconstruction (BIFR). These subsidiaries are turning around and have started earning profits. In the view of changing circumstances, the management is of the opinion that no writing down or provisioning is required against the erosion in the value of assets

MANAGEMENT REPLY  

This is a statement of fact referring to the notes on accounts only . Eastern Coalfields Limited (ECL) & Bharat Coking Coal Limited (BCCL) are 100% subsidiary of Coal India Limited. BCCL had come out of BIFR during FY 2012–13. ECL has also come out of BIFR from Jan 2015. Both the companies are earning profits consistently from last few years. Hence, the diminution in value of investment is not considered as permanent in nature and therefore following the provisions of AS 13 (accounting Standard on Investments), no writing down or provision is required. Current account debit balances under "loans & advances" are also on the same analogy considered to be recoverable and hence no provision is required.

(c) Note 34(i) (c) & (d), Contingent Liability of the accompanying financial statements, which describes the uncertainty related to the outcome of the lawsuits filed and demands raised against the Company by various parties and Government authorities;

MANAGEMENT REPLY   

This being a statement of fact calls for no comments separately.

(d) Note 34(xvii), regarding non consideration of effects of The Mines and Minerals (Development and Regulations) Amendment Act,2015 in the books of accounts as on March 31,2015 in absence of notification of rules by the Central or State government under the said act

MANAGEMENT REPLY   

This is a statement of fact referring to the notes on accounts no 34(xvii) only.

As mentioned by the Audit, referring to the relevant note, the effects of The Mines and Minerals (Development and Regulations) Amendment Act,2015 have not been considered in the books of accounts as the rules have not been notified yet by the Central or State government under the said act

(e) Pending write off action of certain account balances against which full provision has been made in the books of accounts;

MANAGEMENT REPLY   

Noted, action is being taken to initiate write off.

(f) Balance under Long Term Loans and advances of Rs. 134.78 Crores, Trade Receivables of Rs. 9.76 Crores, Other Current assets of Rs. 199.82 Crores, Trade Payables of Rs. 2.28 Crores and Other Current Liabilities of Rs. 235.14 Crores, have not been confirmed. Consequential impact on confirmation/ reconciliation of such balances, if any is not ascertainable.

MANAGEMENT REPLY   

Trade receivables are periodically reconciled on regular basis. In respect of trade payables & other current Liabilities, system for obtaining confirmation is there, although in most of the cases response from the creditors are not received. However, efforts will be taken to increase the coverage area.

(g) The Independent Directors have not been appointed in the Board of the Company as per the provisions of Section 149(1) of the Companies Act, 2013.

MANAGEMENT REPLY  

The matter has been taken up with Ministry of Coal, Govt. of India which is the appointing authority of Independent Directors

Our opinion is not qualified in respect of above matters.

Report on Other Legal and Regulatory Requirements

1. As required under Section 143(5) of the Companies Act, 2013, we give in the Annexure I, a Statement on the Directions issued by the Comptroller and Auditor General of India after complying the Suggested methodology of Audit, the action taken thereon and its impact on the accounts and financial statements of the company.

2. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub–section (11) of Section 143 of the Act, we give in the Annexure II, a statement on the matters specified in paragraphs 3 and 4 of the Order.

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 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 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 written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as director under sub­section (2) of Section 164 of the Companies Act.

(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 No.34(i)(c )&(d)]

ii. The Company did not have any long–term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE II TO THE AUDITORS' REPORT

i) In respect of Fixed Assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. However certain details as regards to purchase orders reference, date of commissioning and location, identification and codifications of fixed assets are absent in some cases.

MANAGEMENT REPLY

These are related to old items of fixed assets which are fully depreciated.

b) The Fixed assets located at Head quarter, North Eastern Coalfields, the production unit of the Company and offices at New Delhi and Kolkata Marketing office have been physically verified substantially by the management periodically. Discrepancies noticed on such verification were not material are pending for reconciliation and adjustment in the accounts.

MANAGEMENT REPLY

This being a statement of fact calls for no comments separately. Necessary adjustments for discrepancies, if required after reconciliation, will be made in the accounts

ii) In respect of Inventories

a) The Physical verification of inventories at North Eastern Coalfields has been conducted at reasonable intervals during the year by the management. The inventories have been measured on the basis of volumetric system. : 

This being a statement of fact calls for no comments separately.

b) In our opinion, the procedures and frequency of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business : 

This being a statement of fact calls for no comments separately.

c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification : 

This being a statement of fact calls for no comments separately.

iii) According to the information and explanation given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Hence provisions to Para 3 (iii)(a) and (b) of the said order are not applicable.: 

This being a statement of fact calls for no comments separately.

iv) In our opinion and according to the information and explanations given to us, there are in general, adequate internal control systems 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. During the course of our audit, no major weakness in internal control has been noticed except in the following cases where the Internal control mechanism needs to be further strengthened:–

a) Identification and Codification of fixed assets with respect to their current locations at different units

b) The control over maintenance of records related to payment of salary and wages at certain units;

c) Non receipt of confirmations of outstanding balances from customers, suppliers and contractors and reconciliation of balances in case of difference, if any;

MANAGEMENT REPLY

Noted, action is being taken to further strengthen the same.

Noted, action is being taken to further strengthen the same.

Noted, action is being taken to further strengthen the same.

v) According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of directives issued by the Reserve Bank of India and provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under.

MANAGEMENT REPLY

This being a statement of fact calls for no comments separately.

vi) The maintenance of Cost records has been prescribed by the Central Government under section 148(1) of the Companies Act, 2013 in respect of Mining activities of the Company. We have broadly reviewed the records and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made any detailed examination of the records

MANAGEMENT REPLY

This being a statement of fact calls for no comments separately.

vii) (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the Company is regular in depositing the undisputed statutory dues including Provident fund, Income Tax, Sale tax, Wealth Tax, Service Tax, Duty of customs, Duty of Excise, Value added Tax, Cess and any other statutory dues with the appropriate authorities. There were no un–disputed statutory dues as at the end of the year concerned outstanding for a period of more than six months from the date they became payable. As informed to us, Employee State Insurance is not applicable to the Company.

MANAGEMENT REPLY

This being a statement of fact calls for no comments separately.

(b) According to the information and explanations given to us, and as per the records of the Company examined by us, there are no dues of income tax, Duty of customs, Duty of excise, Cess and other statutory dues except following sales tax, which have not been deposited on account of any dispute are as under:–

MANAGEMENT REPLY

These cases are very old and pending before assessing officer /sales tax departmental appellate authority. Pending verdict of these appeal cases, no deposit has been made. However, these have been disclosed as contingent liability.

(c) According to the information and explanations given to us, there is no amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the CompaniesAct,1956(1 of 1956) and rules made there under during the year.

MANAGEMENT REPLY

This being a statement of fact calls for no comments separately.

viii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year as well as in the immediately preceding financial year.

MANAGEMENT REPLY

This being a statement of fact calls for no comments separately.

ix) In our opinion and according to the information and explanations given to us, the Company has not taken any term loan from any financial institutions or banks or debenture holders.

MANAGEMENT REPLY

This being a statement of fact calls for no comments separately.

x) In our opinion and according to the information and explanations given to us, the terms and conditions on which the company has given guarantees for loans taken by its subsidiaries from banks and financial institutions are not prima–facie prejudicial to the interest of the Company.

MANAGEMENT REPLY

This being a statement of fact calls for no comments separately.

xi) As per the information and explanations given to us by the management and on the basis of the examination of the records, the Company has not taken any term loan during the year.

MANAGEMENT REPLY  

This being a statement of fact calls for no comments separately

xii) To the best of our knowledge and belief and according to the information and explanations given to us, no frauds on or by the Company has been noticed by us during the year. However, according to the information and explanation given to us, a case of misappropriation of Company's fund for personal gain had come to the notice of the management in earlier years, which is still under investigation by different agencies; the impact of such misappropriation cannot be ascertained at this stage

MANAGEMENT REPLY 

As stated by the Audit, the matter is under investigation by different agencies.

For CHATURVEDI & CO.

Chartered Accountants

Firm Regn. No.302137E

S.C.Chaturvedi

Partner

Mem.No.012705

Date : 28th May, 2015

Place : Kolkata

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