FOR THE YEAR ENDED 31ST MARCH 2017 INCLUDING REPORT ON THE INTERNAL FINANCIAL CONTROLSUNDER CLAUSE (i) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 ("THEACT") Independent Auditors' Report
The Members of Coal India Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of CoalIndia Limited (hereinafter referred to as the Company') which comprisethe balance sheet as at 31st March 2017 the statement of profit and loss including othercomprehensive income the statement of cash flows and the statement of changes in equityfor the year then ended and a summary of significant accounting policies and otherexplanatory information.
Management's Responsibility for the Standalone Ind AS 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 thepreparation of these standalone Ind AS financial statements that give a true and fair viewof the financial position financial performance including other comprehensive incomecash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)prescribed under Section 133 of the Act read with relevant rules issued thereunder. 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 standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under 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 standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the standalone Ind ASfinancial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the Company as at 31st March 2017 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.
Emphasis of Matters
We draw attention to the following notes:-
a) Note No.3 (1-Land) refers to title deeds/lease deeds and documentary evidences offreehold land amounting Rs 11.92 Crores and for leasehold land amounting Rs 0.92 Croreshave been verified by us and the same are held in the name of the Company. Titledeeds/lease deeds and other evidences of title for freehold land for Rs 0.13 Crores arenot available for our verification. Further as per the details made available to us titledeeds/lease deeds or other evidences of title for freehold land measuring 1072.97 hectaresand leasehold land measuring 5558.23 hectares for which no value is recorded in the booksof accounts are not available for our verification;
b) Note No.7 refers to an aggregate Investment of Rs 9688.42 Crores (PY: Rs 9433.69Crores) in its two fully owned subsidiary companies which is for long term and strategicin nature. As these subsidiary companies are turning around the management has notconsidered any provision under the changing circumstances against the erosion of Rs3169.85 Crores (PY: Rs 3042.14 Crores) in the value of Investment.
c) 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 not ascertainable;
d) Required number of Independent Director was not appointed in the Board of theCompany as per the provisions of Section 149(1) of the Companies Act 2013 during theyear. However the Company meet the number of required Independent Directors as at the dateof financial statements;
e) Note No.38(5) (a) Contingent Liability of the accompanying standalone Ind ASfinancial statements which describes the uncertainty related to the outcome of thelawsuits filed and demands raised against the Company by various parties and Governmentauthorities.
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 ("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 the suggested methodology of audit the action taken thereon and its impacton 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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit read with as reported in clause (a)and (c) of the "Emphasis of Matters" paragraph above. b) in our opinion properbooks of account as required by law have been kept by the Company so far as it appearsfrom our examination of those books. c) the balance sheet the statement of profit andloss the statement of cash flows and the statement of changes in equity dealt with bythis Report are in agreement with the books of account. d) in our opinion the aforesaidstandalone Ind AS financial statements comply with the Indian Accounting Standardsspecified under Section 133 of the Act read with relevant rule issued 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) withrespect to the adequacy of the internal financial controls over financial reporting of theCompany and the operating effectiveness of such controls refer to our report in "Annexure-C" and g) with respect to the other matters to be included in the Auditors'Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. the Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements [Refer Note No.38(5)(a) tothe standalone Ind AS financial statements];
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseable losses;
iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. the Company has provided requisite disclosures in its standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016 and these are in accordance with the books ofaccounts maintained by the Company.-[Refer Note No.14 to the standalone Ind AS financialstatements]
For CHATURVEDI & CO.
Chartered Accountants Firm Regn. No.302137E
Dated: May 29 2017
"Annexure-A" to the Independent Auditors' 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. 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 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 11.92 Crores and for leasehold land amounting Rs0.92 Crores have been verified by us and the same are held in the name of the Company.Title deeds for freehold land for Rs 0.13 Crores are not available for our verification.Further as per the details made available to us title deeds/lease deeds or otherevidences of title for freehold land measuring 1072.97 hectares and leasehold landmeasuring 5558.23 hectares for which no value is recorded in the books of accounts arenot available for our verification.
(ii) In respect of Inventories:
(a) The physical verification of inventories at North Eastern Coalfields theproduction unit of the Company has been conducted at reasonable intervals during the yearby 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 grantedunsecured loan aggregating of Rs 1200.00 Crores (PY:Nil) to three bodies corporate (Fullyowned subsidiary companies) covered in the register maintained under section 189 of theCompanies Act 2013 and balance outstanding in respect of these unsecured loans is Rs1200.00 Crores as at 31st March 2017.(PY:Nil)
(a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to the bodies corporate listed in the register maintained underSection 189 of the Act were prima facie not prejudicial to the interest of the Company.
(b) In the case of the loans granted to the bodies corporate listed in the registermaintained under Section 189 of the Act there is no stipulation of schedule of repaymentof principal and payment of interest thereon hence unable to make specific comment on theregularity of repayment of principal & payment of interest in such cases.
(c) According to the information and explanations given to us in respect of the saidloans there is no demand raised during the year as such no overdue amounts as at the endof the year.
(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 ofCost records has been prescribed by the Central Government under section 148(1) of theCompanies Act 2013 in respect of Mining activities of the Company. We have broadlyreviewed the records and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made any detailed examinationof 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 delays noticed in deposit of service taxprovident fund and additional MMDR Royalty State Fund. 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 cess and other material statutory dues werein arrears as at 31st March 2017 for a period of more than six months from the date theybecame 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 sale tax value added tax duty ofcustoms duty of excise cess and other statutory dues were in arrears as at 31st March2017 which have not been deposited on account of any dispute. However according to theinformation and explanations given to us the following are the dues of income tax whichof Rs 147.32 Crores have been deposited as "Demand under Protest" and liabilityof Rs 161.46 Crores have been provided for in the books of accounts.
|Name of the Statute ||Nature of Dues ||Amount ||Period to which the amount relates ||Forum where the dispute is pending |
| || ||(In Crores) || || |
| || || ||(FY) || |
|Income Tax Act ||Income Tax ||55.20 ||2010-2011 ||CIT(Appeals) |
| || ||64.90 ||2011-2012 ||CIT(Appeals) |
| || ||80.00 ||2007-2008 ||ITAT |
| || ||110.15 ||2005-2006 ||ITAT |
|Total || ||310.25 || || |
(viii)The Company does not have any loans or borrowings from any financial institutionbanks Government or debenture holders during the year as such paragraph 3(viii) of theOrder 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 year. (xi) Section 197 of the Act regarding managerial remuneration is not applicableto the Company by virtue of Notification No. G.S.R 463(E) dated 05-06-2015 issued by theMinistry of Corporate affairs Govt. of India.
(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
Dated: May 29 2017