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Disclosure in auditor’s report explanatory

INDEPENDENT AUDITORS REPORT

TO THE MEMBERS OF MAHANAGAR GAS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of MAHANAGAR GAS LIMITED
("the Company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management s Responsibility for the Financial Statements
The Company s 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 notified under the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. 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.

Auditors 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 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 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 the accounting policies used and the reasonableness of the accounting estimates made by the 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 aforesaid 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 31st March, 2014;
(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

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 in terms of Section 227(4A) 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 comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs).
(e) On the basis of the written representations received from the directors as on 31st March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of Section 274(1) (g) of the Act.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm Registration No. 117365W)

Rupen K. Bhatt
Partner
(Membership No.46930)

MUMBAI, 18th June, 2014

Annexure to the Independent Auditors Report of Mahanagar Gas Limited for the year ended 31st March, 2014 (Referred to in paragraph (1) under Report on Other Legal and Regulatory Requirements section of our report of even date).
(i) Having regard to the nature of the Company s business / activities, clause (xiii) of CARO is not applicable.

(ii) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets and capital inventory.

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, the Company has not made any substantial disposals of fixed assets during the year affecting the going concern status of the Company.

(iii) (a) As explained to us, the inventories were physically verified by the management during the year at reasonable intervals. In respect of inventories lying with third parties, a substantial portion was physically verified or has been confirmed by third parties at the year end.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification as compared to book records.

(iv) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to/ from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs (iii) (b), (c), (d), (f) and (g) of the Order are not applicable to the Company.

(v) In our opinion and according to the information and explanations given to us, having regard to the explanations that many of the items purchased are of a special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system 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 gas and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(vi) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, that needed to be entered into the register, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lakh rupees in respect of any party during the year have been made at prices, which are reasonable having regard to the prevailing market prices at the relevant time.

(vii) The Company has not accepted deposits from public. Accordingly, paragraph (vi) of the Order is not applicable to the Company.

(viii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

(ix) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(x) (a) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, the Company has been generally 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, customs duty, excise duty, cess and other material statutory dues as applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income–tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

(c) As at 31st March, 2014, according to the records of the Company and the information and explanations given to us, following are the particulars of dues on account of income tax, sales tax, service tax, and excise duty that have not been deposited on account of any dispute: 

Name of the statute

Nature of the dues

Amount Rs. Lakhs

Period to which the amount relates various years covering the period

Forum where pending

Central Excise Act, 1944

Excise Duty

103,55.05

March–2001 To March–2012

CESTAT

9.94

May 2001 To January 2013

Commissioner (Appeals)

1,395.56

April 2009 To May 2010

Upto Commissioner

Central Excise Act, 1944

Service Tax

719.41

April–2001 To September 2012

CESTAT

0.18

October 2012 To October 2013

Commissioner (Appeals)

66.6

April–2006 To March 2013

Upto Commissioner

MaharashtraValue AddedAct, 2002

Sales Tax

124.4

April 2005 To March 2007April 2009 To March 2010

CESTAT

Income Tax Act, 1961

Income Tax

87.79

Assessment year 2010–11

Commissioner (Appeals)

(xi) The Company does not have accumulated losses as at 31st March, 2014 and has not incurred cash losses during the financial year ended on that date and in the immediately preceding financial year.

(xii) In our opinion and according to the information and explanations given to us, the Company has not taken any loans from financial institution, bank or through issue of debentures, hence the clause (xi) of CARO is not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.


(xv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.


(xvi) In our opinion and according to the information and explanations given to us, the Company has not taken any term loans, hence the clause (xvi) of CARO is not applicable to the Company.

(xvii) Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, in our opinion, there are no funds raised on a short term basis which have been used for long term investment.
(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.


(xix) In our opinion and according to the information and explanations given to us, as the company has not issued any debentures during the year, paragraph (xix) of the Order is not applicable to the Company.

(xx) The Company has not raised any money by public issue during the year.


(xxi) To the best of our knowledge and according to the information and explanation given to us, no material fraud on or by the Company has been noticed or reported during the year.


For Deloitte Haskins & Sells
Chartered Accountants
(Registration No. 117365W)
 
Place: Mumbai
Date: 18th June, 2014
 
Rupen K. Bhatt
Partner
(Membership No.46930

Disclosure in auditors report relating to fixed assets

(a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets and capital inventory.
(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.
(c) In our opinion and according to the information and explanations given to us, the Company has not made any substantial disposals of fixed assets during the year affecting the going concern status of the Company.

Disclosure relating to quantitative details of fixed assets

The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets and capital inventory.

Disclosure relating to physical verification and material discrepancies of fixed assets

The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

Disclosure relating to fixed assets disposed off

In our opinion and according to the information and explanations given to us, the Company has not made any substantial disposals of fixed assets during the year affecting the going concern status of the Company.

Disclosure in auditors report relating to inventories

(a) As explained to us, the inventories were physically verified by the management during the year at reasonable intervals. In respect of inventories lying with third parties, a substantial portion was physically verified or has been confirmed by third parties at the year end.
(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification as compared to book records.

Disclosure of physical verification of inventories at fixed intervals

As explained to us, the inventories were physically verified by the management during the year at reasonable intervals. In respect of inventories lying with third parties, a substantial portion was physically verified or has been confirmed by third parties at the year end.

Disclosure of procedure followed for physical verification of inventories

In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

Disclosure about maintenance of inventory records and material discrepancies

In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification as compared to book records.

Disclosure in auditors report relating to loans

According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to/ from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs (iii) (b), (c), (d), (f) and (g) of the Order are not applicable to the Company.

Disclosure in auditors report relating to internal control system

In our opinion and according to the information and explanations given to us, having regard to the explanations that many of the items purchased are of a special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system 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 gas and services. During the course of our audit, we have not observed any major weakness in such internal control system.

Disclosure in auditors report relating to contracts and arrangements under section 301 of companies act

(a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, that needed to be entered into the register, have been so entered.
(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lakh rupees in respect of any party during the year have been made at prices, which are reasonable having regard to the prevailing market prices at the relevant time.

Disclosure relating to presence of register for necessary transactions

In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, that needed to be entered into the register, have been so entered.

Disclosure relating to reasonability of transactions

In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lakh rupees in respect of any party during the year have been made at prices, which are reasonable having regard to the prevailing market prices at the relevant time.

Disclosure in auditors report relating to deposits accepted from public

The Company has not accepted deposits from public. Accordingly, paragraph (vi) of the Order is not applicable to the Company.

Disclosure in auditors report relating to companies internal audit system

In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

Disclosure in auditors report relating to maintenance of cost records

We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

Disclosure relating to regularity in payment of undisputed statutory dues

(a) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, the Company has been generally 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, customs duty, excise duty, cess and other material statutory dues as applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income–tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

Disclosure in auditors report relating to accumulated losses

The Company does not have accumulated losses as at 31st March, 2014 and has not incurred cash losses during the financial year ended on that date and in the immediately preceding financial year.

Disclosure in auditors report relating to default in repayment of financial dues

In our opinion and according to the information and explanations given to us, the Company has not taken any loans from financial institution, bank or through issue of debentures, hence the clause (xi) of CARO is not applicable to the Company.

Disclosure in auditors report relating to loans and advances granted by way of pledge of shares debentures and other securities

In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

Disclosure in auditors report relating to provisions under special statute

Having regard to the nature of the Company's business / activities, clause (xiii) of CARO is not applicable.

Disclosure in auditors report relating to adequacy of records maintained by share trading companies

In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.

Disclosure in auditors report relating to guarantee given

According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

Disclosure in auditors report relating to term loans used for purpose other than for purpose they were raised

In our opinion and according to the information and explanations given to us, the Company has not taken any term loans, hence the clause (xvi) of CARO is not applicable to the Company.

Disclosure in auditors report relating to nature and amount of fund raised for short–term has been used for long–term or vice versa

Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, in our opinion, there are no funds raised on a short term basis which have been used for long term investment.

Disclosure in auditors report relating to preferential allotment of shares

The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

Disclosure in auditors report relating to securities created against debentures issued

In our opinion and according to the information and explanations given to us, as the company has not issued any debentures during the year, paragraph (xix) of the Order is not applicable to the Company.

Disclosure in auditors report relating to any material fraud reported during period

To the best of our knowledge and according to the information and explanation given to us, no material fraud on or by the Company has been noticed or reported during the year.

Disclosure in auditors report relating to purpose and end use of money raised through public issues

The Company has not raised any money by public issue during the year.

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