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INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF GAIL (INDIA) LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying tandalone financial statements of GAIL (India) Limited ('the Company'), which comprise the balance sheet as at 31s' 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 the se 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.
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 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.
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–Seriesgas 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 the se 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 (ll) 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 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 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 2015 from being appointed 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 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.
Annexure to the Auditor's report
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.
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
(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:
(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 there under.
(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.
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.
(Rajiv Kumar Wadhawan)
Dated: 27th May,2015