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GAIL (India) Ltd.

BSE: 532155 Sector: Others
NSE: GAIL ISIN Code: INE129A01019
BSE 15:55 | 27 Mar 2018 GAIL (India) Ltd
NSE 05:30 | 01 Jan 1970 GAIL (India) Ltd
OPEN 319.00
PREVIOUS CLOSE 424.75
VOLUME 220972
52-Week high 518.00
52-Week low 311.30
P/E 13.26
Mkt Cap.(Rs cr) 54,291
Buy Price 321.00
Buy Qty 710.00
Sell Price 0.00
Sell Qty 0.00
OPEN 319.00
CLOSE 424.75
VOLUME 220972
52-Week high 518.00
52-Week low 311.30
P/E 13.26
Mkt Cap.(Rs cr) 54,291
Buy Price 321.00
Buy Qty 710.00
Sell Price 0.00
Sell Qty 0.00

GAIL (India) Ltd. (GAIL) - Auditors Report

Company auditors report

To the Members of GAIL (India) Limited

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 thestatement of profit and loss and the cash flow statement for the year then ended and asummary 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 Section134(5) of the Companies Act 2013 (“the Act”) with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand 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 statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide 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 explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 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 productsup to 30.09.2014.

2. Note No: - 45 regarding various provisional transportation tariff orders issued byPetroleum and Natural Gas Regulatory Board (PNGRB) these orders have been contested bythe company at Appellate Tribunal for Electricity (APTEL) and adjustment if any will berecognized as and when matter is finally decided.

3. Note No:- 46 & 47 regarding debit notes raised by ONGC in respect of Non-APMprices for C-Series gas and differential tariff of Uran Tombay pipeline of ONGC andcorresponding 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 (11) of section 143 ofthe Act we give in the Annexure “A" statement on the matters specified in theparagraph 3 and 4 of the Order to the extent applicable.

2. As required by C&AG of India through supplementary directions dated 19.10.2014issued under Section 143(5) of the Companies Act 2013 on the basis of writtenrepresentation received from the management we give our report on the matter specified inthe 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 bestof 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 theCompany 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 statementdealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

(e) On the basis of the written representations received from the directors as on 31March 2015 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March st 2015 from being appointed as a director in terms of Section164 (2) of the Act; and

(f) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its financial statements Refer Note 32(1) (a) 33 and 55 to the financialstatements;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and

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

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: 27 May 2015 th

Annexure to the Auditor's report

The Annexure referred to in para 1 to Report on Other legal and Regulatory Requirementof the auditor's report to the shareholders of GAIL (India) Limited for the year endedMarch 31 2015. We report that:

(i) (a) The company has generally maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) According to the information and explanation given to us there is a regularprogramme of verification of fixed assets by the management which in our opinion isreasonable having regard to the size of the company and the nature of its assets. Fixedassets have been physically verified by the management during the year and as per thereport no material discrepancies were noticed on such verification.

(ii) (a) The inventories have been physically verified at reasonable intervals by theManagement except the stores & spares lying with Engineers India Ltd. and othercontractors. We have been explained that the stock of gas at the end of the year has beentaken with reference to reading of Turbine Flow Meter/Gas Chromatograph installed atTerminals Stock of LPG/Pentane/SBP Solvent are determined with reference to Tank LevelGauge measurement which are converted into tonnage by measurement of density and applyingcorrection factor for temperature. LPG vapors volume is converted to tonnage by standardformulae.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventory followed by the Management are reasonableand 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 ismaintaining proper records of inventory and no material discrepancy was noticed onphysical verification of inventory.

(iii) According to the information given to us the company has not granted any loanssecured or unsecured to the companies firms or other parties covered in the registermaintained under section 189 of the Companies Act.

(iv) According to information and explanations given to us there are generallyadequate internal control systems commensurate with the size of the company and nature ofits business for the purchase of inventory and fixed assets and for the sale of goods andservices.

(v) The company has not accepted any deposits from the public during the year coveredunder section 73 or any other relevant provision of the Companies Act 2013.

(vi) We have broadly reviewed the costing records being maintained by the Companypursuant to the order made by the Central Government for the maintenance of Cost recordsunder sub-section (1) of Section 148 of The Companies Act 2013 and we are of the opinionthat prima facie the prescribed accounts and records have been maintained.

(vii) (a) According to the records of the company and information and explanation givento us the company has generally been regular in depositing undisputed statutory duesincluding Provident fund Employees' State Insurance Income tax Sales tax Wealth taxService Tax duty of custom duty of excise value added tax cess and any other statutorydues with the appropriate authorities. According to the information and explanation givento us no undisputed amounts payable in respect of Provident fund employees' StateInsurance Income tax Sales tax Service Tax duty of custom duty of excise value addedtax cess and any other statutory dues were in arrear at the year-end for a period of morethan six months from the date they became payable.

(b) As certified by the Management on which we have relied upon the dues of Income taxor sales tax or wealth tax or service tax or duty of custom or duty of excise or valueadded tax or cess which have not been deposited on account of disputes and the forum wherethe dispute is pending are given below:

List of Cases of Unpaid Disputed Demand under various Statutes as on 31.03.2015

Sl. No. Statute Subject Matter of Dispute Amount (2014-15) Period of Dispute Status - Forum
1. Entry Tax (a) Demand of Entry Tax on Natural Gas in U.P. 189.24 1999-00 to 2009-10 Allahabad High Court Trade tax Tribunal & Additional Commissioner (Appeals)
(b) Demand of Entry Tax on Natural Gas in Rajasthan 5.18 2002-03 to 2005-06 Dy. Commissioner (Appeals) Ajmer
(c) Demand of Entry Tax on Natural Gas in Madhya Pradesh 6.28 2008-09 2011-12 & 2012-13 Tribunal Bhopal & Additional Commissioner (Appeals) Gwalior
2 Sales Tax & VAT (a) Non-acceptance of declaration form for concessional sales tax 0.37 1995-96 & 1996-97 Tribunal Bhopal
(b) Sales Tax demand as per assessment order 4.24 2005-06 & 2006-07 Additional Commissioner (Appeals) Noida
(c) VAT demand as per assessment order 35.78 2010-11 Additional Commissioner (Appeals) Noida
(d) CST demand on Transmission charges 1.91 2006-07 Commercial Tax Officer Nagapattinam
(e) VAT demand on transfer of material 6.28 2011-12 Additional Commissioner (Appeals) Gwalior
(f) Demand of CST on account of disallowance of LPG absorption credit notes 1.44 2011-12 & 2012-13 Additional Commissioner (Appeals) Gwalior
(g) Demand of VAT on account of disallowance of input tax credit 107.58 2010-11 & 2012-13 Additional Commissioner (Appeals) Gwalior & Joint Commissioner (Appeals) Mumbai
(h) Demand of VAT on account of disallowance of LPG subsidy 18.2 2005-06 Joint Commissioner (Appeals) Mumbai
(i) Demand of VAT on sale of Natural Gas to Electricity Co. 123.06 2007-08 Joint Commissioner (Appeals) Mumbai
(j) Demand of VAT on bandwidth charges 2.58 2008-09 JointCommissioner(Appeals) Mumbai
(k) Demand of VAT on sale of LPG for domestic use 38.6 2007-08 2008-09 & 2010-11 Joint Commissioner (Appeals) Mumbai
(l) Demand of VAT on spurline charges 4.23 2011-12 Additional Commissioner (Appeals) Etawah
(m) Demand of GVAT & CST on account of disallowance of LPG subsidy discount 37.72 2006-2007 Tribunal Gujarat
(n) Penalty for delay in payment of sales tax 0.6 2003-2004 Joint Commissioner (Appeals) Mumbai
(o) Demand of VAT on account of rate change 0.49 Oct 2011 to Dec 2011 Joint Commissioner Trichy
(p) Demand of CST on account of disallowance of LPG subsidy discount 49.38 2005-06 High Court Gwalior
(q) Demand for treating CST sale as local sale 0.15 2003-2004 Assam Revenue board
(r) Sales Tax demand 0.2 1998-1999 Mumbai Tribunal
(s) Revised Sales Tax demand as per assessment order 2.59 2003-04 Joint Commissioner (Appeals) Vadodara
3 Customs Excise and Service Tax (a) LPG valuation Dispute 18.72 Jan 2001 to Feb2005 CESTAT Mumbai
(b) Dispute on Pentane Classification 106.7 Aug.2005 to Jul 2009 CESTAT Ahmedabad
(c) Dispute on MFO Classification 75.33 July 2004 to Mar 2011 CESTAT Ahmedabad
(d) Demand of duty under Rule 6(3) of CCR 2004 for credit taken on input services 13.8 2008-2009 & 2009-2010 CESTAT Kolkata
(e) Demand of Service Tax on Marketing Margin 733.28 Oct. 2006 to Mar 2013 CESTAT Delhi
(f) Demand of Service Tax on deputation of employees to JVs & Govt. Deptt. 37.17 Oct. 2006 to June 2012 CESTAT Delhi
(g) Demand of differential service tax based on service tax returns 0.11 Oct.2006 to March 2007 Commissioner (Appeals) Vadodara
(h) Demand raised by denying Cenvat & service tax credit taken at Hazira 9.01 Aug. 2005 to March 2012 CESTAT Ahmedabad & CESTAT Delhi
(I) Demand raised by denying Cenvat credit taken on input services 0.20 2008-09 & Dec. 2010 to March 2011 CESTAT Delhi & Commissioner (Appeals) Kanpur
(j) Demand of CVD on purchase of SAP software 0.07 March 2006 CESTAT Delhi
SUB-TOTAL 1630.49
4 Income Tax (a) Unpaid demand 76.75 AY- 2012-13 CIT (Appeals)
(b) Demand of TDS 3.1 AY- 2008-09 to AY - 2015-16 ITO (TDS)
5 Other taxes Notified Area tax & GIDC tax on revised value (incl. interest) 3.98 1998-99 to Aug 2005 & 1998-99 to Dec 2009 Ahmedabad High Court
TOTAL 1714.32

(b) According to the information and explanation given to us there is no amount whichwas required to be transferred to the investor education and protection fund in accordancewith relevant provisions of The Companies Act 1956 (1 of 1956) and rules made thereunder.

(viii) The company does not have accumulated losses at the end of the financial yearand it has not incurred cash losses in the current and immediately preceding financialyear.

(ix) Based on our audit procedure and according to the information and explanationsgiven to us by the management we are of the opinion that the company has not defaulted inrepayment of dues to a financial institution bank and debenture holders.

(x) In our opinion and according to information and explanation given to us companyhas given guarantees for loans taken by its subsidiaries from bank and financialinstitutions. The terms and other conditions in our opinion are not prima facieprejudicial to the interest of the company.

(xi) On the basis of review of utilization of funds pertaining to term loans on overallbasis and related information as made available to us the term loans taken by the companyhave been utilized for the purposes for which these are obtained.

(xii) According the information and explanation given to us no fraud on or by thecompany 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: 27 May 2015 th

Annexure referred to in our report of even date to the members of GAIL (India) Limitedon the accounts for the year ended 31st March 2015

Sl. No. Directions / Sub-Directions Action taken Impact on financial statement
1 If the Company has been selected for disinvestment a complete status report in terms of valuation of assets (including intangible assets and land) and Liabilities (including Committed and General Reserves) may be examined including the mode and present stage of disinvestment process The company has not been selected for the disinvestment Nil
2 Please report whether there are any cases of waiver/ write off of debts/loans/ interest etc. if the reasons therefore and the 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 lying 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
4 A report on age-wise analysis of pending legal/arbitration cases including the reasons of pendency and existence/effectiveness of a monitoring mechanism for expenditure on all legal cases (foreign and local) may be given. There are 695 pending legal/arbitration cases against the company. The age-wise classification obtained from the management is as under: Nil
Age of cases No of cases
Less than 2 years 112
2 to 3 years 422
More than 3 years 161
Cases are generally pending due to (i) hearings are in process or not yet completed for the want of additional details/ documents required by arbitrators/courts (ii) non fixation of dates or stay granted by the courts.
As regards existence/ effectiveness of all monitoring mechanism for expenditure on all legal cases we have been informed that the Company has fixed schedule of rates for various legal cases. However it is suggested that company should maintain record of legal expenses incurred in respect of each and every case along with history for the purpose of better monitoring.

 

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: 27 May 2015