To the Members of Linde India Limited
Report on the financial statements
We have audited the accompanying financial statements of Linde India Limited('theCompany') which comprise the Balance Sheet as at 31 December 2015 the Statement ofProfit and Loss the Cash Flow Statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
Management's Responsibility for the 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 preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions 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 the auditor's judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror. In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstancesbut not for the purpose of expressing an opinion on whether the Company has in place anadequate internal financial controls system over financial reporting and the operatingeffectiveness of such controls. An audit also includes evaluating the appropriateness ofthe accounting policies used and the reasonableness of the accounting estimates made bythe Company's Directors as well as evaluating the overall presentation of the financialstatements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31December 2015 and its profit and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to Note 42 (ii) which explains the impact of early adoption ofAccounting Standard 30 "Financial Instruments: Recognition and Measurement"issued by the Institute of Chartered Accountants of India. As a result of such adoptionthe Company during the year ended 31 December 2015 has recognised net loss of Rs.78.53million (net of deferred tax Rs. 41.32 million) under 'Translation and hedging reserves'representing net exchange gain/loss on borrowings and mark to market gain/loss arisingfrom changes in fair value of principal and interest rate swaps forward contracts againstfirm commitments which qualify for hedge accounting being effective hedges.
Further as explained in Note 42(iii) the Company has transferred gain of Rs 86.95million from "Translation and hedging reserves" to the Statement of Profit andLoss during the year ended 31 December 2015 on account of cancellation of certain crosscurrency cum interest rate swaps.
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 subsection (11) of section 143 ofthe Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. 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 financial statements comply with the AccountingStandards 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 31December 2015 taken on record by the Board of Directors none of the directors isdisqualified as on 31 December 2015 from being appointed as a director in terms of Section164 (2) of the Act.
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 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure to the auditor's report.
(Referred to in our report of even date)
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. No material discrepancies were noticedon such verification.
ii) a) The inventory except goods-in-transit has been physically verified by themanagement during the year. In our opinion the frequency of such verification isreasonable.
b) The procedures for the physical verification of inventories followed by themanagement are reasonable and adequate in relation to the size of the Company and thenature of its business.
c) The Company is maintaining proper records of inventory. The discrepancies noticed onverification between the physical stocks and the book records were not material.
iii) According to the information and explanation given to usand on the basis of ourexamination of the records of the companythe Company has not granted any loans securedor unsecured to companies firms or other parties covered in the register maintainedunder section 189 of the Act. Accordingly paragraphs 3(iii) of the Order is notapplicable.
iv) In our opinion and according to the information and explanations given to us andhaving regard to the explanation that purchases of certain items of inventories and fixedassets are for the Company's specialised requirements and similarly certain goods sold andservices rendered are for the specialised requirement of the buyer and suitablealternative sources are not available to obtain comparable quotations there is anadequate internal control system commensurate with the size of the Company and the natureof its business with regard to purchase of inventories and fixed assets and with regard tothe sale of goods and services. There is no continuing failure to correct major weaknessesin the internal control system.
v) In our opinion and according to the information and explanations given to us theCompany has not accepted depositsas per the directives issued by the Reserve Bank of Indiaunder the provisions of Section 73 to 76 or any other relevant provisions of the Act andthe rules framed thereunder. Accordingly paragraph (v) of the Order is not applicable tothe Company.
vi) We have broadly reviewed the books of account maintained by the Company pursuant tothe rules prescribed by the Central Government for maintenance of cost records undersection 148(1) of the Actand are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not made a detailedexamination of the records.
vii) a) According to the information and explanations given to us and on the basis ofour examination of the records of the company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax wealth tax service tax duty of customs duty ofexcise value added tax cess and other material statutory dues have been regularlydeposited during the year by the Company with the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax sales-taxwealth tax service tax duty of customs duty of excise value added tax cess and othermaterial statutory dues were in arrears as at 31 December 2015 for a period of more thansix months from the date they became payable.
b) According to the information and explanations given to us there are no dues ofincome-tax sales tax wealth tax service tax duty of customs duty of excise valueadded tax and cess which have not been deposited with the appropriate authorities onaccount of any dispute except the following:
|Name of the Statute ||Nature of Dues ||Amount in (Rs. million) # ||Period to which amount relates ||Forum where the dispute is pending |
|Central State Sales Tax Act and VAT Acts ||Sales Tax/ VAT ||55.05* ||2005-2006 ||High Court |
| || || ||1998-2001 || |
| || ||206.95 ||2007-2012 ||Revisional Board |
| || || ||1995-1999 || |
| || || ||2003-2004 || |
| || || ||2004-2006 || |
| || || ||2007-2008 || |
| || ||136.10* ||2008-2014 ||Tribunal |
| || ||375.55 ||2005-2013 ||Joint Commissioner (Appeals) of Commercial taxes |
| || || ||2004-2005 ||Deputy Commissioner (Appeals) of |
| || ||64.79 ||2009-2011 ||Commercial Taxes |
| || ||17.98 ||2012-13 ||Additional Commissioner of Commercial taxes |
|Central Excise Act 1944 ||Excise Duty ||21.72 ||1999-2009 ||Supreme Court |
| || || ||1998-2001 || |
| || ||10.49 ||2008-2009 ||High Court |
| || ||134.34** ||1991-2011 ||Customs Excise and Service Tax Appellate Tribunal |
| || ||7.89 ||1991-2010 ||Commissioner (Appeals) |
| || || ||2007-2010 || |
| || ||56.65 ||2012-2014 ||Commissioner of Central Excise |
| || || ||1996-2000 || |
| || ||15.24 ||2007-2012 ||Additional Commissioner |
| || ||2.89 ||2006-2010 ||Deputy Commissioner |
| || || ||2005-2012 || |
| || ||14.92 ||2014-2015 ||Assistant Commissioner |
|Finance Act 1994 ||Service tax || ||2005-2008 ||Customs Excise and Service Tax |
| || ||423.64 ||2008-2014 ||Appellate Tribunal |
| || ||5.94 ||2005-2010 ||Commissioner (Appeals) |
| || || ||2004-2010 || |
| || ||297.84 ||2013-2015 ||Commissioner of Service tax |
| || || ||2004-2007 || |
| || ||4.35 ||2009-2010 ||Additional Commissioner |
| || ||0.13 ||2009-2011 ||Deputy Commissioner |
| || ||6.49 ||2007-2011 ||Assistant Commissioner |
* Including amounts aggregating to Rs. 141.63 million in respect of sales tax caseswhich have been stayed by respective authorities ** Including amounts aggregating to Rs.81.76 million in respect of Excise cases which have been stayed by respective authorities
# Excluding the demands the proceedings of which have been set aside or remanded forreassessment by the appropriate authorities. Amounts are net of pre-deposits aggregatingto Rs 73.51 million.
(c) According to the information and explanations given to us no amount is required tobe transferred to Investor Education and Protection Fund in accordance with the relevantprovision of the Companies Act 1956 (1 of 1956) and rules made thereunder.
(viii) The Company does not have any accumulated losses at the end of the financialyear and has not incurred cash losses in the current financial year and in the immediatelypreceding financial year.
(ix) In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to banks. The Company did not have anyoutstanding dues to any financial institutionsor debenture holders during the year.
(x) According to the information and explanations given to us the Company has notgiven any guarantee for loans taken by others from banks or financial institutions.
(xi) In our opinion and according to the information and explanations given to us theterm loans taken by the Company has been applied for the purpose for which the loans wereobtained.
(xii) According to the information and explanations given to us no fraud on or by theCompany has been noticed or reported during the year.