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Coal India Ltd.

BSE: 533278 Sector: Metals & Mining
NSE: COALINDIA ISIN Code: INE522F01014
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VOLUME 144925
52-Week high 316.55
52-Week low 228.50
P/E 14.54
Mkt Cap.(Rs cr) 142,770
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 232.05
CLOSE 232.05
VOLUME 144925
52-Week high 316.55
52-Week low 228.50
P/E 14.54
Mkt Cap.(Rs cr) 142,770
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Coal India Ltd. (COALINDIA) - Auditors Report

Company auditors report

To

The Members of Coal India Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Coal IndiaLimited (hereinafter referred to as ‘the Company') which comprise thebalance sheet as at 31st March 2018 and the statement of profit and lossincluding other comprehensive income the statement of cash flows and the statement ofchanges in equity for the year then ended and a summary of significant accountingpolicies 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 preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) prescribed underSection 133 of the Act read with relevant rules issued thereunder. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditors' 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 standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. 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 standalone 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 including the Ind AS of the state ofaffairs (financial position) of the Company as at 31st March 2018 and itsprofit (financial performance including other comprehensive income) its cash flows andthe changes in equity for the year ended on that date.

Emphasis of Matters

We draw attention to the followings:-

a) Certain balances of loans other financial assets trade receivables other current& non-current assets Trade payables other financial liabilities and other currentliabilities have not been confirmed. Consequential impact on confirmation/ reconciliation/adjustment of such balances (which will not be material as per management) if any is notascertainable;

b) Note No.7 refers to an aggregate Investment of Rs. 9963.52 Crores (as at 31stMarch 2017: Rs. 9688.42 Crores) in its two wholly owned subsidiary companies have beenshown at book value. As explained by the management the investment in these subsidiarycompanies is long term and of strategic in nature and the performance of these subsidiarycompanies is improving. The management is of the opinion that no provisioning is requiredagainst the erosion of Rs. 5278.75 Crores (as at 31st March 2017: Rs. 3169.84Crores) in the value of Investment as the same is of temporary in nature;

c) Note No.38(4) (a) Contingent Liability of the accompanying standalone financialstatements which describes the uncertainty related to the outcome of the lawsuits filedand demands raised against the Company by various parties and Government authorities.

Our opinion is not qualified in respect of the above matters.

Other Matters

Our Audit Report dated 29th May2018 on financial statement as approved bythe Board of Directors of the Company as of even date is revised to consider observationof the Comptroller and Auditor General of India and amendment is made in Para no. vii(b)in Annexure-"A'' to include amount of deposits made under protest against thedisputed tax amounts.

Our Audit procedure on events subsequent to the date of the original report isrestricted solely to the amendment made to the Para no. vii(b) in Annexure-"A'' tothe Independent Auditors' Report under Companies(Auditor's Report) Order 2016.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor's Report) Order 2016 ("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" 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 and Auditor General of India aftercomplying with their suggested methodology of audit the action taken thereon and itsimpact 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 read with mattersas reported in clause (a) of "Emphasis of Matters" paragraph above.

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 including other comprehensiveincome the statement of cash flows and the statement of changes in equity dealt with bythis Report are in agreement with the books of accounts.

d) in our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with relevant ruleissued thereunder;

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 standalone financial statements–[Refer Note No.38(4)(a) to thestandalone 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 the amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For CHATURVEDI & CO.

Chartered Accountants

Firm Regn. No.302137E

Sd/-

S.C.Chaturvedi

Partner

Mem.No.012705

Place: Kolkata

Date: July 6 2018

"Annexure-A" to the Independent Auditors' Report

 

(Referred to in Paragraph 1 of "Report on Other Legal and Regulatoryrequirements" section of our 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 (NEC) variousRegional Sales offices and other offices have been physically verified periodically ascertified by the management. Pending for reconciliation and adjustment in the books ofaccounts discrepancies noticed on such verification were not material as per themanagement. The process should be further improved by having a well defined Programme ofphysical verification 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 lease deeds and/or other evidencesof title of freehold land amounting Rs. 12.15 Crores and for leasehold land amounting Rs.0.92 Crores have been verified by us and the same are held in the name of the Company. AtNEC 946.51 hectares of freehold land and 4489.82 hectares of leasehold land were acquiredby the company or came in the possession of the company on Nationalization for which‘nil' value is recorded in the books of accounts. Out of the above title deeds andother evidences of title for freehold land are available except for 4.23 hectares andincase of leasehold land documents for title in some cases either not available or couldnot be properly identified to the concerned leasehold land.

(ii) As informed to us physical verification of inventories at North EasternCoalfields the production unit of the Company has been conducted at reasonable intervalsduring the year by the management. The inventories of coal have been measured on the basisof volumetric system. In our opinion and according to the information and explanationsgiven to us discrepancies noticed on physical verification of inventories were notmaterial and have been properly dealt with in the books of account.

(iii) According to the information and explanation given to us the Company had grantedunsecured loan aggregating Rs. 1200 Crores (PY: Rs. 1200 Crores) to three companiescovered in the register maintained under section 189 of the Companies Act 2013 and thebalance outstanding in respect of these unsecured loans is Nil as at 31st March2018.(PY:INR 1200 Crores):-

(a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to companies listed in the register maintained under Section 189 ofthe Act were prima facie not prejudicial to the interest of the Company;

(b) The loan has been repaid during the year and as informed to us there was nospecific stipulation of schedule of repayment of principal and payment of interestthereon.

(c) As informed to us no amount of loan is overdue as at end of the year for a periodmore than ninety days.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

(v) The company has not accepted any deposits in terms of the directives issued by theReserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Companies Act and the rules framed there under.

(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 faciethe prescribed accounts and records have been made and maintained. However we have notmade any detailed examination of the records with a view to determine whether they areaccurate or complete

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of books of accounts the Company has generally been regular in depositingthe undisputed statutory dues including provident fund income tax sales tax wealth Taxduty of customs duty of excise value added tax goods and services tax cess and anyother statutory dues with the appropriate authorities. As informed to us employee's stateinsurance is not applicable to the company.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax wealth tax duty of customsduty of excise service tax value added tax goods and services tax cess and othermaterial statutory dues were in arrears as at 31st March 2018 for a period ofmore than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the records ofthe Company examined by us following dues of income tax and central excise were inarrears as at 31st March 2018 :-

(Rs. in crore)

Name of the Statute Nature of Dues Gross Amount Under dispute Period to which the amount relates (FY) Forum where the dispute is pending Amount deposited under protest Amount not deposited
Income Tax Act Income Tax 55.20 2010-2011 ITAT 20.00 35.20
64.90 2011-2012 ITAT 53.00 11.90
80.00 2006-2007 ITAT 20.00 60.00
110.15 2005-2006 ITAT 54.32 55.83
84.78 2012-2013 CIT (Appeal) 0.00 84.78
115.04 2013-2014 CIT (Appeal) 0.00 115.04
Total 510.07 147.32 362.75
Central Excise Act1944 Central Excise 2.22 2010-11 to 2014-15 CESTAT 0.17 2.05

(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 to the Company.

(ix) According to the information and explanations given to us the Company has notraised moneys by way of initial public offer or further public offer (including debtinstruments) or term loans and hence reporting under paragraph 3 (ix) of the Order is notapplicable to the Company.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) As per notification no. GSR 463(E) dated 5 June 2015 issued by the Ministry ofCorporate Affairs Government of India Section 197 is not applicable to the GovernmentCompany. Accordingly paragraph 3 (xi) of the Order is not applicable to the Company.

(xii) According to the information and explanations given to us the Company is not aNidhi 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 Section 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) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underparagraph 3 (xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us during the year theCompany has not entered into any non-cash transactions with its Directors or personsconnected to its directors and hence provisions of Section 192 of the Companies Act 2013are not applicable to the Company.

(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

Date: July 6 2018

"Annexure-B" to the Independent Auditors' Report

 

[Referred to in Paragraph 2 of "Report on Other Legal and Regulatoryrequirements" section of our Audit Report]

Part-I

Sl. No. Details/ Directions Auditors' 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 lease deeds and/or other evidences of title of freehold land amounting INR 12.15 Crores and for leasehold land amounting INR 0.92 Crores have been verified by us and the same are held in the name of the Company. At NEC 946.51 hectares of freehold land and 4489.82 hectares of leasehold land were acquired by the company or came in the possession of the company on Nationalization for which ‘nil' value is recorded in the books of accounts. Out of the above title deeds and other evidences of title for freehold land are available except for 4.23 hectares and incase of leasehold land documents for title in some cases either not available or could not be properly identified to the concerned leasehold land 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. There are no cases of waiver/ write-off of debts / loans / interest etc. during the financial year 17-18. No impact on the Financial statements.
3. Whether proper records are maintained for inventories lying with third parties & assets received as gift/grant(s) from the Government or other authorities. As stated by the management no inventories are lying with third parties. Further no assets were received as gift/grant(s) from the Government or other authorities No impact on the Financial statements.

Additional -Directions:-

Part-II
Sl. No. Details/ Directions Auditors' Reply Action Taken and Impact on Accounts & Financial Statements
1. Whether coal stock measurement was done keeping in view the contour map. Whether physical stock measurement reports are accompanied by contour map in all cases? Whether approval of the competent authority was obtained for new heap if any created during the year? The stock measurement was done keeping the view the contour map and the same is available with the reports of stock measurement. The new heap has been created with approval of competent authority. There is no impact on the financial statements.
2. 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? As per the information and explanations given to us by the company's management there is no such merger/split/ restructure of an area during the year. There is no impact on the accounts and financial statements.
3. Whether separate Escrow Accounts for each mine has been maintained in CIL and its Subsidiary companies. Also examine the utilization of the fund of the account. Yes separate escrow account for each mine of NEC the production unit of CIL has been maintained. No such fund as explained by the management has been withdrawn during the year. There is no impact on the financial statements.
4. Whether impact of penalty for illegal mining as imposed by the Hon'ble supreme court has been duly considered and accounted for? According to the information and explanations given to us no penalty for illegal mining has imposed by the Hon'ble supreme court during the year on the company. There is no impact on the Financial statements.
5. 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 Financial accounting Sales accounting personal information pay-roll materials inventory management have been computerized and day to day transactions data are kept in electronic form which have facilitated better audit environment. At the year-end hard copies of certain required documents are kept in physical form. No impact on the Financial statements.
Inventory Management etc. have been computerized and its impact on your work in auditing the accounts. However uniform and comprehensive ERP system needs to be introduced to integrate all offices and units of the company for better management & controls.

For CHATURVEDI & CO.

Chartered Accountants

Firm Regn. No.302137E

Sd/-

S.C.Chaturvedi

Partner

Mem.No.012705

Place: Kolkata

Date: July 6 2018

"Annexure-C" to the Independent Auditors' 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 CoalIndia Limited (hereinafter referred to as ‘the Company') as of 31st March2018 in conjunction with our audit of the standalone financial statements of the Companyfor the year 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 safeguarding ofits 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 controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 31st March2018 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal controls stated in the"Guidance Note on Audit of Internal Financial Controls over Financial Reporting"issued by the Institute of Chartered Accountants of India. However certain areas needfurther improvement in designing the "Documentation on Internal FinancialControls" of the Company by way of identifying the significant account balances ofexpenses income assets & liabilities including the fixed assets accountingincorporating the process flow by which the aforesaid transactions are initiatedauthorized processed recorded and reported at departmental level. How the system isintegrated to departments to capture the transactions that relates to the financialstatements and events/conditions and other transactions that are significant to thefinancial statements so as to fulfill objectives of control criteria established by theCompany. Financial reporting process can be further improved by way of introducingintegrated ERP system of accounting especially in case of compilation of information anddata for financial reporting process and for better internal controls. Internal audit isconcurrently done in the company. Regularity of Internal audit its reports and follow-upaction thereon should be timely ensured.

However our opinion is not qualified in the above respect.

For CHATURVEDI & CO.

Chartered Accountants

Firm Regn. No.302137E

Sd/-

S.C.Chaturvedi

Partner

Mem.No.012705

Place: Kolkata

Dated: July 6 2018