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Coal India Ltd.

BSE: 533278 Sector: Metals & Mining
NSE: COALINDIA ISIN Code: INE522F01014
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OPEN 308.70
PREVIOUS CLOSE 306.45
VOLUME 262721
52-Week high 349.85
52-Week low 272.05
P/E 14.28
Mkt Cap.(Rs cr) 193343.78
Buy Price 306.10
Buy Qty 60.00
Sell Price 0.00
Sell Qty 0.00
OPEN 308.70
CLOSE 306.45
VOLUME 262721
52-Week high 349.85
52-Week low 272.05
P/E 14.28
Mkt Cap.(Rs cr) 193343.78
Buy Price 306.10
Buy Qty 60.00
Sell Price 0.00
Sell Qty 0.00

Coal India Ltd. (COALINDIA) - Auditors Report

Company auditors report

FOR THE YEAR ENDED 31ST MARCH 2016 INCLUDING REPORT ON THE INTERNAL FINANCIAL CONTROLSUNDER CLAUSE (i) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 ("THEACT")

Independent Auditor’s Report

To

The Members of

Coal India Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Coal India Limited(hereinafter referred to as ‘the Company’) which comprise the balance sheet asat 31 March 2016 the statement of profit and loss and the cash flow statement for theyear then ended and a summary of significant accounting policies and other explanatoryinformation.

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 thereunder.

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 ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company’s Directors as well as evaluating theoverall 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 2016 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 10A (Para-1) which refers to title deeds for freehold land amounting Rs 6.38Crores and for leasehold land amounting Rs 1.34 Crores have been verified by us and thesame are held in the name of the company. Title deeds for freehold land for Rs 5.43 Croresare not available for our verification. Further as per the details made available to ustitle deeds for freehold land measuring 1072.97 hectares and leasehold land measuring5558.23 hectares for which no value is recorded in the books of accounts are notavailable.

b) Note 10A (Para-2) regarding non-provision for impairment against fixed assetswritten down value of which is Rs 11.76 Crores of Dankuni Coal Complex let out to SouthEastern Coalfields Limited (SECL) for nominal lease rent of Re.1per annum undercancellable operating lease agreement. In the opinion of the management the actual worthof the assets including land is much higher than the book value and hence no provision iscalled for.

c) Note No.11 dealing with an aggregate investment of Rs 8926.42 Crores in its 100%subsidiary companies namely Bharat Coking Coal Limited (BCCL) and Eastern CoalfieldsLimited (ECL) have come out of Board for Industrial & Financial Reconstruction (BIFR).These subsidiaries are turning around and have started earning profits. In the view ofchanging circumstances the management is of the opinion that no provisioning is requiredagainst the erosion of Rs 2614.85 Crores (PY: 4243.30 Crores) in the value of Investmentas the same is of temporary nature.

d) Note 34(1) (c) Contingent Liability of the accompanying financial statements whichdescribes the uncertainty related to the outcome of the lawsuits filed and demands raisedagainst the Company by various parties and Government authorities.

e) Pending write off action of certain old account balances against which fullprovision has been made in the books of accounts.

f) Balances under Long-term loans and advances of Rs 157.04 Crores Short-term loansand advances Rs 0.39 Crores Trade receivables of Rs 0.39Crores Trade payables of Rs 1.51Croresand Other current liabilities of Rs 207.48 Crores have not been confirmed.Consequential impact on confirmation/ reconciliation/adjustment of such balances (whichwill not be material as per management) if any is not ascertainable.

g) Required number of Independent Directors has not been appointed in the Board of theCompany as per the provisions of Section 149(1) of the Companies Act 2013.

Our opinion is not qualified in respect of above matters.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure-A" a statement on the mattersspecified in the paragraph 3 and 4 of the said order.

2) As required under Section 143(5) of the Companies Act 2013 we give in the"Annexure-B" a Statement on the Directions issued by the Comptroller andAuditor General of India after complying the suggested methodology of audit the actiontaken thereon and its impact on the accounts and financial statements of the company.

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) in pursuance to the Notification No. G.S.R 463(E) dated 05-06-2015 issued by theMinistry of Corporate affairs Section 164(2) of the Companies Act 2013 pertaining todisqualification of Directors is not applicable to the Government Company.

f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourreport in "Annexure C" and

g) with respect to the other matters to be included in the Auditors’ 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 34(1)(c ) to the standalonefinancial statements;

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

iii. therewere no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For CHATURVEDI & CO.

Chartered Accountants

Firm Regn. No.302137E

S.C.Chaturvedi

Partner

Mem.No.012705

Place:Kolkata

Dated:May 28 2016

"ANNEXURE-A"TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in Paragraph 1 of "Other Legal and Regulatory requirements" ofour Audit Report)

(i) In respect of Fixed Assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets except for assets at Regional salesoffices. Further certain details as regards to purchase orders reference date ofcommissioning location identification and codifications etc. of some movable tangibleassets needs to be updated. Location details and area of freehold and leasehold land alsoneeds to be updated in the fixed asset register and need to be reconciled with the revenuerecords maintained by the local authority.

(b) The fixed assets located at Head quarter North Eastern Coalfields variousRegional sales offices and other offices have been physically verified periodically ascertified by the management. Discrepancies noticed on such verification were not materialas per the management pending for reconciliation and adjustment in the books of accounts.The process should be further improved by having well defined programme of physicalverification to cover all the assets in phased manner.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company title deeds for freehold land amounting Rs 6.38Crores and for leasehold land amounting Rs 1.34 Crores have been verified by us and thesame are held in the name of the Company. Title deeds for freehold land for Rs 5.43 Croresare not available for our verification. Further as per the details made available to ustitle deeds for freehold land measuring 1072.97 hectares and leasehold land measuring5558.23 hectares for which no value is recorded in the books of accounts are notavailable.

(ii) In respect of Inventories:

(a) The physical verification of inventories at North Eastern Coalfields has beenconducted at reasonable intervals during the year by the management.

(b) The inventories have been measured on the basis of volumetric system.

(c) In our opinion the procedures and frequency of physical verification ofinventories followed by the management are reasonable and adequate in relation to the sizeof the Company and nature of its business.

(iii) According to the information and explanation given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 as such paragraph 3(iii) of the Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.

(v) The Company has not accepted any deposits from the public.

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

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of books of accounts the Company is generally regular in depositing theundisputed statutory dues including provident fund income tax sale tax wealth Tax dutyof customs duty of excise value added tax cess and any other statutory dues with theappropriate authorities except few cases of delay noticed in deposit of servicetax. As informed to us Employee’s state insurance is not applicable to the company.

According to the information and explanations given to us except dues of additionalroyalty of Rs 2851836/-as on March 312016 which have not been deposited for reasonstated in Note- 34(17) of the accompanying financial statements no other undisputedamounts payable in respect of provident fund income tax sales tax wealth tax duty ofcustoms duty of excise service tax value added tax cess and other material statutorydues were in arrears as at 31 March 2016 for a period of more than six months from thedate they became payable.

(b) According to the information and explanations given to us and as per the recordsof the Company examined by us there are no dues of income tax duty of customs duty ofexcise cess and other statutory dues except following sales tax which have not beendeposited on account of any dispute are as under:

Name of the statute Nature of dues Amount Period to which the amount relates Forum where dispute is pending
(in Rs)
Provincial Sales Tax Act Sales Tax 386234.13 FY:1989-90 Assessing officer
Provincial Sales Tax Act Sales Tax 179762.00 FY:1990-91 Additional Commissioner (Appeals)-3
Provincial Sales Tax Act Sales Tax 48441.00 FY:1990-91 Additional Commissioner (Appeals)-3
Provincial Sales Tax Act Sales Tax 275819.00 FY:1991-92 Additional Commissioner (Appeals)-3
Provincial Sales Tax Act Trade Tax 9040.00 FY:1993-94 Assessing officer

(viii) The Company does not have any loans or borrowings from any financialinstitution banks government or debenture holders during the year as such paragraph3(viii) of the Order is not applicable.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year.

(x) According to the information and explanations given to us no material fraud by theCompany or on the company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi Company as such paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the company transactions with the related parties are incompliance with sections 177 and Section 188 of the Act where applicable and details ofsuch transactions have been disclosed in the financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them as such paragraph 3(xv) of theOrder is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For CHATURVEDI & CO.

Chartered Accountants

Firm Regn. No.302137E

S.C.Chaturvedi

Partner

Mem.No.012705

Place:Kolkata

Dated:May 28 2016

"ANNEXURE-B" TO THE INDEPENDENT AUDITOR’S REPORT

[Referred to in Paragraph 2 of "Other Legal and Regulatory requirements" ofour Audit Report]

Part-I

Sl. No. Details/ Directions Auditor’s Reply Action Taken and Impact on Accounts & Financial Statements
1. Whether the Company has clear title/lease deeds for freehold and leasehold land respectively? If not please state the area of freehold and leasehold land for which title/lease deeds are not available? According to the information and explanations given to us and on the basis of our examination of the records of the Company Title deeds for freehold land amounting Rs 6.38 Crores and for leasehold land amounting Rs 1.34 Crores have been verified by us and the same are held in the name of the company. Title deeds for freehold land for Rs 5.43 Crores are not available for our verification. Further as per the details made available to us title deeds for freehold land measuring 1072.97 hectares and leasehold land measuring 5558.23 hectares for which no value is recorded in the books of accounts are not available. Financial impact cannot be ascertainable.
2. Whether there are any cases of waiver/ write-off of debts/ loans/ interest etc. if yes the reasons there for and the amount involved. In view of critically weak financial position of ECL which was under BIFR till December 2014 expenditure incurred by CMPDIL on exploratory drilling work falling under command area of ECL was funded by CIL and shown as advance against which provisions were also made simultaneously. As per the resolution passed in the meeting of the CIL Board dated 20th July 2001 such advances if remains unadjusted for five years from the date the same were accounted for are to be written off. Thus the amount written off during the year in the above context amounts to Rs 29.75 Crores which were fully provided for. There is no financial impact.
Further development expenditure of Rs 1.75 crore has been written off which was kept under capital work in progress for more than two " five years" plan period for formulation of project as per significant accounting policy of the company which was fully provided for.
In addition Rs 10.16 crore has been written off against old advances/ receivables which were fully provided for.
3. Whether proper records are maintained for inventories lying with third parties & assets received as gift/grant(s) from the Govt. or other authorities. As stated by the management no inventories are lying with third parties. Further no assets were received as gift from Government or authorities. No impact on the financial Statements.
a) Whether coal stock measurement was done keeping in view the contour map. The stock measurement was done along with contour map and the same is available with the reports of stock measurement. The new heaps have been created with the approval of the competent authority. No impact on Accounts and Financial Statements.
Whether physical stock measurement reports are accompanied by contour map in all cases? Whether new heap if any created during the year has got the approval of the competent authority?
b) Whether the company conducted the physical verification exercise of asset and properties at the time of merger/split/restructure of an area. If so whether the concerned subsidiary followed the requisite procedure? There is no such merger/ split / restructure of an area during the year as informed to us. No impact on Accounts and Financial Statements.
c) Whether uniform treatment of land acquisition entries as well as interest on delayed payment of land compensation to the project affected persons (PAPs) across the subsidiaries have been considered during the preparation of annual accounts for the year 2015-2016. As explained to us by the company management there is no such payment of compensation to PAPs at NEC the production unit of the company during the year. No impact on the Financial Statements.
d) Whether disputes if any as to GCV ranges as a result of sampling have been duly examined. According to the information and explanation given to us there is no dispute with regard to GCV ranges at NEC. No impact on the Financial Statements.
e) If the audittee has computerized its operation or any part of it you should assess and report how much of the data in the company is in electronic format. Which of the major areas such as Financial accounting Sales accounting Personal information Pay-roll materials Inventory Management etc. have been computerized and its impact on your work in auditing the accounts. Financial accounting sales accounting payroll materials personal information inventory management have been computerized which have facilitated better audit environment and day to day transactions data are kept in electronic form. At the year-end copies of certain required documents are kept in hard form. No impact on the Financial Statements
However comprehensive ERP system needs to be introduced to integrate all offices and units of the company for better controls.

For CHATURVEDI & CO.

Chartered Accountants Firm Regn. No.302137E

S.C.Chaturvedi

Partner

Mem.No.012705

Place:Kolkata Dated:May 28 2016

ANNUAL REPORT & ACCOUNTS 2015-16 087

"ANNEXURE-C" TO THE INDEPENDENT AUDITOR’S REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Coal IndiaLimited (hereinafter referred to as ‘the Company’) as of 31 March 2016 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI’). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor’s judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company’s internal financial controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany’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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

According to the information and explanations given to us and based on our audit inour opinion the Company has generally maintained in all material respects an adequateinternal financial controls over financial reporting and such internal financial controlsover financial reporting were generally operating effectively as of March 31 2016 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal controls stated in the "GuidanceNote on Audit of Internal Financial Controls over Financial Reporting" issued by theInstitute of Chartered Accountants of India. However certain areas need furtherimprovement in designing the "Documentation on Internal Financial Controls" byway of identifying the significant account balances including the fixed assets accountingincorporating the process flow by which the aforesaid transactions are initiatedauthorized processed recorded and reported at departmental level related accountingrecords supporting informations procedure how the system is integrated to departments tocapture the transactions that related to financial statements and events/conditions otherthan the transactions that are significant to the financial statements so as to fulfillobjectives of control criteria established at Company introduction of Integrated ERPsystem of accounting so that financial reporting process can be further improvedespecially in case of compilation of information or data for financial reporting process.However our opinion is not qualified in above respect.

For CHATURVEDI & CO.

Chartered Accountants Firm Regn. No.302137E

S.C.Chaturvedi

Partner

Mem.No.012705

Place:Kolkata Dated:May 28 2016

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