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GAIL (India) Ltd.

BSE: 532155 Sector: Others
NSE: GAIL ISIN Code: INE129A01019
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VOLUME 384292
52-Week high 150.00
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P/E 7.04
Mkt Cap.(Rs cr) 46,184
Buy Price 102.40
Buy Qty 4157.00
Sell Price 102.50
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OPEN 106.00
CLOSE 105.50
VOLUME 384292
52-Week high 150.00
52-Week low 65.70
P/E 7.04
Mkt Cap.(Rs cr) 46,184
Buy Price 102.40
Buy Qty 4157.00
Sell Price 102.50
Sell Qty 758.00

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

Company auditors report

To the Members of GAIL (India) Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statementsof GAIL (India) Limited (“the Company”) which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity the Statement of Cash Flows for the year then endedand notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS financial statements give theinformation required by the Companies Act 2013 (“the Act”) in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019its profit including other comprehensive income changes in equity and its cash flows forthe year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditors' Responsibilities for the Audit ofthe Standalone Ind AS Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (“ICAI”) together with the ethical requirements that arerelevant to our audit of the standalone Ind AS financial statements under the provisionsof the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Emphasis of Matter

We draw attention to the following matters in the Notes to thefinancial statements:

1. Note No: 33 (c) - regarding various provisional transportationtariff orders issued by Petroleum and Natural Gas Regulatory Board (PNGRB) these ordershave been contested by the Company at Appellate Tribunal for Electricity (APTEL) and alsocertain customers have challenged these orders of PNGRB in Court of Law. Adjustment if anywill be recognized as and when matter is finally decided.

2. Note no. 56 pending opinion of Expert Advisory Committee (EAC) ofICAI with respect to applicability of provisions of Ind-AS 109 (Financial instruments) foraccounting of embedded derivative in certain contracts entered into by the Company throughinternational competitive bidding the Company has not considered such transaction asembedded derivatives. Any adjustment if any will be recognized as and when the EAC opinionis received.

3. Note no. 29 (I) (a) (iii) regarding CESTAT order confirming thedemand for the differential amount by the Central Excise Department in the matterpertaining to classification of ‘Naphtha' manufactured by the Company of Rs.2888.72 crore including applicable penalty and interest thereon. Considering the meritsof the case Company has filed an appeal before the Hon'ble Supreme Court. Based onthe legal opinion obtained the Company does not foresee any probable outflow in thematter and accordingly has disclosed the same under contingent liability.

4. Note No. 48 (ii) regarding subsequent investment of Rs. 143.01 crorein equity and Rs. 252 crore in preference shares of a joint venture Company Konkan LNGPrivate Limited (‘KLPL') as approved by Board of Directors of the Companytowards construction of Breakwater and other business requirements of KLPL. Investment inKLPL of Rs. 139.75 crore stood fully impaired in view of accumulated losses and erodednet-worth upto March 31 2018. In order to assess impact of further infusion of capital asaforesaid the Company has during the year carried out fresh impairment study of KLPLwhich projects positive future cash flows after commencement of operation of breakwaterand accordingly a sum of Rs. 2.18 crore has been reversed from the aforesaid Impairmentprovision.

Our opinion is not modified in respect of above matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements ofthe current period. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. We have determined the mattersdescribed below to be the key audit matters to be communicated in our report

Sr. No. Key Audit Matter Audit Response on Key Audit Matters
1 Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 “Revenue from Contracts with Customers” Principal Audit Procedures
The application of the new revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized over a period. Additionally new revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. Refer notes 1.9 21 and 37. We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard and checked the appropriateness of accounting policy. Our audit approach consisted testing of the design and operating effectiveness of the internal controls as follows:
1. Evaluated the design of internal controls relating to implementation of the new revenue accounting standard wherever applicable.
2. Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation re-performance and inspection of evidence in respect of operation of these controls.
3. Tested the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard. Selected a sample of continuing and new contracts and performed the following substantive procedures:
1. Read analyzed and identified the distinct performance obligations in these contracts.
2. Compared these performance obligations with that identified and recorded by the Company.
3. Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration.
2 Evaluation of uncertain tax positions and contingent liabilities We have applied the following audit procedures in this regard:
The Company has material uncertain tax positions and contingent liabilities including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. It includes order of CESTAT confirming the demand for the differential amount by the Central Excise Department in the matter pertaining to classification of ‘Naphtha' manufactured by GAIL of Rs. 2888.72 crore including applicable penalty and interest thereon. Considering the merits of the case Company has filed an appeal before the Hon'ble Supreme Court. Based on the legal opinion obtained the Company does not foresee any probable outflow in the matter and accordingly has disclosed the same under contingent liability. 1. Obtained details of completed tax assessments and demands for the year ended March 31 2019 from management.
2. We have obtained the opinion from independent expert to support the management's judgement about the probable outcome in this regard.
3. We also obtained the opinion from legal team and representation taken from the management.
4. We assessed the appropriate disclosures in the financials.
5. We considered the effect of new information in respect of uncertain tax positions as at April 1 2018 to evaluate whether any change was required to management's position on these uncertainties.
6. Referring to point no 3 of Emphasis of Matter Paragraph in this audit report for disputes with Central Excise Department as it is fundamental to the users of the financial statements.
Refer note 29 (I) (a) (iii)
3. Derivative transaction and accounting of hedge accounting We have applied the following audit procedures in this regard:
The hedge accounting has resulted into significant impact on financial statements coupled with complexity of its accounting calculations and complex/numerous assumptions taken for establishing hedge relationship. 1. Understanding management's controls over the recording of derivative transactions and the application of hedge accounting
Mark to market gain / loss pertaining to these derivative contracts are recognized in the other comprehensive income. Refer note 58 2. Testing the accuracy and completeness of derivative transactions.
3. We have relied on the valuation report evaluating the appropriateness of the valuation methodologies applied and testing on sample basis the valuation of the derivative financial instruments.
4. Validated that the derivative financial instruments qualified for hedge accounting and tested accuracy of hedge effectiveness and ineffectiveness on sample basis.
4. Technical parameters and voluminous transactions of Natural gas trading and transmission captured to measure Revenue and Inventory through integrated system and complexities involved therein. We have applied the following audit procedures in this regard:
Revenue from sale of Natural Gas amounted to ` 61501.94 crore and Closing inventory of ` 843.54 crore for the year ended 31 March 2019. 1. We performed test of controls assisted by our IT specialists over the accuracy and completeness of the quantity captured via IT system through to the accounting software.
The determination of the quantity of Natural Gas sold and in stock through gas-pipelines involves use of various technical aspects of the natural gas such as pressure temperature etc. captured from the measuring devices installed on the gas pipelines. We were informed that the methodology is standard and used industry-wide. This increases the complexity around the validating of quantity of Natural Gas sold and in stock in pipeline. 2. We have obtained the management representation that the IT system applies the standard methodology to capture the quantity of Natural Gas for the purpose of Revenue and inventory measurement.
3. We have carried out the audit procedures for verification of valuation of closing Inventories by applying the various aspects made available to us by the management such as conversion factors meter reading etc.
Refer notes 1.8 1.9 10 and 21.
5. Gratuity We have applied the following audit procedures in this regard:
Pursuant to implementation of Pay Revision Directions the Company has evaluated impact of increase in gratuity ceiling from Rs. 10 Lakh to Rs. 20 Lakh and has considered the incremental amount of Rs. 150.51 crore as recoverable from the respective fund as on March 31 2018 by reversing the impact taken in Statement of Profit & Loss account in financial year 2016-17. During the year vide directive of DPE dated July 10 2018 clarified that gratuity under DPE guidelines dated August 3 2017 is subject to affordability of the CPSE concerned effective for the period from January 1 2017 till March 28 2018 where pay has been revised with effect from January 1 2017. Accordingly the Board of Directors has approved to fund the contribution along with interest and accordingly a sum of Rs. 182.58 crore has been charged to Statement of Profit and Loss. Refer note 40 (b) 1. Obtained the copy of the notifications
2. Obtained the approval of the board and management representation letter for the same.
3. We have verified the accuracy of the amount charged.
6 Impairment of Investment of `173.62 crores in an overseas subsidiary. We have applied the following audit procedures in this regard:
Gail Global(USA) Inc. (GGUI): Refer to note 48 (iv) -GGUI is a wholly owned subsidiary of the Company and has during the year sold certain producting property assets which has resulted reduction in profit to the extent of ` 173.62 crore being impairment provision in Standalone Financial Statements of the Company consequent to the erosion of net worth of GGUI as at last reporting dated December 31 2018. The Company has evaluated fair value through an independent valuer which has resulted in impairment of investment of `173.62 crore. The impact of impairment has been affected in financial statements as at end of the year. 1. Obtained valuation report of GGUI by the Independent Valuer considering the financial aspect as on date.
2. Obtained and verified the audited financial statements as on December 31 2018
3. Obtained the management representation letter for the same.
7. Accounting of corporate guarantees in line with the requirements of Ind AS 109 “Financial Instruments” We have applied the following audit procedures in this regard:
1. Obtained the confirmation from the management that the EAC opinion is yet to be received as of date.
Refer to note No. 38 regarding matter pertaining to the accounting in line with the requirements of Ind AS 109 “Financial Instruments” of the fair value of the corporate guarantees given by the Company on behalf of its subsidiaries. In response to the opinion provided by the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India the Company has sought further clarification. Pending clarification from the EAC no accounting entry has been passed in respect of these corporate guarantees. Management have confirmed that impact if any will not be material to the financial statements. 2. Obtained the management representation letter that the impact of the same if any will not be material

Information Other than the Standalone Ind AS Financial Statements andAuditors' Report Thereon

The Company's Board of Directors is responsible for thepreparation of other information. The other information comprises the Director'sreport Corporate Governance report Business Responsibility report and ManagementDiscussion and Analysis of Annual report but does not include the Standalone Ind ASFinancial Statements and our report thereon. The Directors report Corporate Governancereport Business Responsibility report and Management Discussion and Analysis of Annualreport is expected to be made available to us after the date of this auditors'report.

Our opinion on the Standalone Ind AS Financial Statements does notcover the other information and we will not express any form of assurance conclusionthereon.

In connection with our audit of the Standalone Ind AS FinancialStatements our responsibility is to read the other information identified above when itbecomes available to us and in doing so consider whether the other information ismaterially inconsistent with the Standalone Ind AS Financial Statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

When we read such other information as and when made available to usand if we conclude that there is a material misstatement therein we are required tocommunicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance forthe Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standaloneInd AS financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) prescribed under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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.

In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those charged with governance are also responsible for overseeing theCompany's financial reporting process.

Auditors' Responsibilities for the Audit of the Standalone Ind ASFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditors' report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone Ind AS financialstatements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors' report to therelated disclosures in the standalone Ind AS financial statements or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors' report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matters

We draw attention to the following matters in the Notes to thefinancial statements:

1. Note no. 45(B)(iii)- regarding inclusion of proportionate share inJointly Controlled Operations in the standalone financial statements of the Company. Thetotal proportionate share includes Assets of Rs. 1567.91 crore Liabilities of ` 430.75crore Expenditure of ` 365.48 crore Income of ` 639.35 crore along with the elementsmaking up the Cash Flow Statement and related disclosures. The aforesaid amounts have beenincluded based on the unaudited statements of these entities. Management is of view thatthis will not have a material impact on the Company's financial statements.

Our opinion is not modified in respect of above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016(“the Order”) issued by the Central Government of India in terms of Section143(11) of the Act and on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and explanationgiven to us we give in “Annexure A” a statement on the matters specified inparagraphs 3 and 4 of the said Order to the extent applicable.

2. As required by Comptroller and Auditor General of India throughdirections/sub-directions issued under Section 143 (5) of the Companies Act 2013 on thebasis of written representation received from the management we give our report on thematter specified in the “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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss (including theOther Comprehensive Income) the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Indian Accounting Standards (Ind AS) prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended.;

(e) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015issued by the Ministry of Corporate Affairs Government of India provisions ofsub-section (2) of Section 164 of the Companies Act 2013 are not applicable to theCompany being a Government Company.;

(f) We are enclosing herewith a report in “Annexure C” forour opinion on adequacy of internal financial controls system in place in the Company andthe operating effectiveness of such controls;

(g) Pursuant to the Notification No. GSR 463(E) dated 5th June 2015issued by the Ministry of Corporate Affairs Government of India provisions of Section197 of the Companies Act 2013 are not applicable to the Company being a GovernmentCompany; and

(h) With respect to the other matters to be included in theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements Refer Note 29(l)(a) tothe financial statements;

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any and to the extentascertainable on long-term contracts including derivative contracts.

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

For O. P. Bagla & Co. LLP For ASA & Associates LLP
Chartered Accountants Chartered Accountants
Firm No.: 000018N/N500091 Firm No.: 009571N/N500006
Rakesh Kumar
Partner Parveen Kumar
Membership No.: 087537 Partner
Place: New Delhi
Dated: 27 May 2019

ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 1 to “Report on Other legal andregulatory requirements” of the Independent Auditors' Report of even date to themembers of GAIL (INDIA) LIMITED on the Standalone Ind AS Financial Statements for the yearended March 31 2019.

(i) (a) As informed to us the Company has generally maintained properrecords showing full particulars including quantitative details and situation of fixedassets.

(b) According to information and explanation given to us there is aregular programme of physical verification of these fixed assets by the management whichin our opinion is reasonable having regard to the size of the Company and nature of itsassets. As informed to us no material discrepancies were noticed on such verification.

(c) As informed to us and as verified by us during the course of ouraudit the title deeds of immovable properties are held in name of the Company except forthe cases as follows.

Description of Asset No. of cases Area in Hectares Gross block as on 31.03.2019 (Rs. in Cr.) Net block as on 31.03.2019 (Rs. in Cr.)
Land
- Freehold 9 5.31 10.93 10.93
- Leasehold 6 40.53 10.46 10.46
- Leasehold stated at carrying value (classified as prepayment under non-financial assets) 1 20.96 4.59 4.59

(ii) As informed to us physical verification of inventory has beenconducted at reasonable intervals by the management except the store and spares lying withthe third parties. We have been explained that the stock of gas at the end of the year hasbeen taken 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. As informed to us no material discrepancies were noticed on physicalverification of inventory.

(iii) As informed to us the Company has granted unsecured loans tocompanies covered in the register maintained under section189 of the Companies Act 2013.In respect of such loans: a) In our opinion and as informed to us the terms and conditionsof the grant of such loans are not prejudicial to the Company's interest.

b) The schedule of repayment of principal and payment of interest hasbeen stipulated and repayments or receipts of principal amounts and interest have beenregular as per stipulations.

c) As informed to us no amount of loan is overdue as at end of theyear for a period more than ninety days.

(iv) According to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of Companies Act 2013 inrespect of loans/investment/guarantee/security granted during the year.

(v) The Company has not accepted any deposits in terms of thedirectives issued by the Reserve Bank of India and the provisions of sections 73 to 76 orany other relevant provisions of the Companies Act 2013 and the rules framed there under.

(vi) We have broadly reviewed the accounts and records maintainedby the Company pursuant to the Rules made by the Central Government for the maintenance ofcost records under sub-section (1) of Section 148 of the Companies Act 2013 read withCompanies (Cost Records & Audit) Rules 2014 and we are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made detailed examination of the records with a view to determine whether theyare accurate and complete.

(vii) (a) According to records of the Company and information andexplanation given to us the Company has generally been regular in depositing undisputedstatutory dues including provident fund employees' state insurance income-taxsales-tax service tax duty of customs duty of excise value added tax cess Goods andService Tax and any other statutory dues with the appropriate authorities. According toinformation and explanation given to us there are no outstanding statutory dues asreferred above as at the last day of the financial year under audit 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 thedues of income tax or sale tax or service tax or duty of custom or duty of excise or valueadded tax or cess or Goods and Service Tax which have not been deposited on account ofdispute or deposited under protest and the forum where the dispute is pending are givenbelow:

S. No. Name of Statute Nature of the Dues Period to which the amount relates Forum where the dispute is pending Gross disputed amount Amount deposited under protest/ appeal Amount not deposited
1 Entry Tax Act of respective States Entry Tax / Penalty / Interest 2002-03 to 2004-05 Hon. High Court Allahabad 20.97 - 20.97
1999-00 to 2009-10 Commercial Tax Tribunal UP 233.59 6.41 227.18
2008-09 Additional Commissioner (Appeals) Noida Commercial Taxes 0.53 - 0.53
2015-16 Additional commissioner (Appeals) Gwalior Commercial Taxes 20.83 - 20.83
2002-03 to 2005-06 Dy. Commissioner (Appeals) Commercial Tax Ajmer 7.19 - 7.19
SUB-TOTAL 283.11 6.41 276.70
2 Central Sales Tax Act 1956 and respective State CST / Sales Tax / VAT/ Penalty / 2011-12 Hon. Supreme Court 10.77 3.24 7.53
Interest 2003-2004 Hon. High Court Mumbai 0.63 0.03 0.60
Sales Tax / VAT Act 2003-2004 Hon. High Court Guwahati 0.29 0.14 0.15
2006-07 to 2010-11 Sales Tax Tribunal Mumbai 55.10 20.12 34.98
2014-15 Sales Tax Tribunal Ernakulam 0.46 0.07 0.39
Oct 2011 to Dec 2011 Joint Commissioner of Commercial Taxes Trichy 0.77 - 0.77
2011-12 to 2014-15 Joint Commissioner (Appeals) 73.27 6.81 66.46
Sales Tax Mumbai
2014-15 Joint Commissioner (Appeals) Sonepat 4.88 - 4.88
2003-04 2008-09 Joint Commissioner (Appeals) 93.77 82.98 10.79
2009-10 2012-13 Commercial Tax Vadodara
SUB-TOTAL 239.94 113.39 126.55
3. Central Excise Act 1944 Central Excise Duty / Interest / Penalty Jan 2008 to March 2012 Hon. Supreme Court 2888.72 20 (in addition to that Bank guarantee of `132 crore has been submitted to the department) 2868.72
Mar 2000 to Feb 2002 April 2002 to March 2003 & Nov 2004 to Feb 2005 Hon. Supreme Court 58.16 - 58.16
Aug 2006 to Feb 2014 Customs Excise and Service Tax Appellate Tribunal Delhi 10.29 - 10.29
Jan 2001 to Feb 2005 Customs Excise and Service Tax Appellate Tribunal Mumbai 21.06 - 21.06
April 2010 to March 2011 Customs Excise and Service Tax Appellate Tribunal Ahmedabad 10.95 - 10.95
April 2008 to March 2010 & July 2010 to Nov 2010 Customs Excise and Service Tax Appellate Tribunal Kolkata 102.74 0.66 102.08
SUB-TOTAL 3091.92 20.66 3071.26
4 Finance Act 1994 (Service Tax) Service Tax / Interest / Penalty Apr 2009 to Mar 2014 Customs Excise and Service Tax Appellate Tribunal Delhi 6.36 0.42 5.94
Oct. 2006 to Mar 2007 Customs Excise and Service Tax Appellate Tribunal Ahmedabad 0.17 - 0.17
Jan 2011 to Mar 2012 Customs Excise and Service Tax Appellate Tribunal Allahabad 0.29 - 0.29
July 2010 to Nov 2010 Commissioner (Appeals) Delhi 0.12 - 0.12
April 2014 to March 15 Commissioner (Appeals) Noida 0.92 - 0.92
SUB-TOTAL 7.86 0.42 7.44
5 Customs Act 1962 Customs Duty/ Interest / Penalty March 2006 Customs Excise and Service Tax Appellate Tribunal Delhi 0.53 0.46 0.07
March 2013 to July 2014 Commissioner of Customs Excise and Service Tax (Appeals) Ahmedabad 7.78 7.78 -
SUB-TOTAL 8.31 8.24 0.07
6 Income Tax Act 1961 Income Tax/ Penalty/ Interest A.Y. 2008-09 to A.Y. 2018-19 Jurisdictional Assessing Officer (TDS) 1.02 - 1.02
A.Y. 2013-14 & 2016-17 Commissioner Income Tax (Appeals)-22 New Delhi 85.02 75.09 9.93
A.Y. 1996-97 to AY 2012-13 & A.Y. 2014-15 to AY 2015-16 Income Tax Appellate Tribunal Delhi 2072.06 1350.38 721.68
1997-98 & 1998-99 Hon. Supreme Court 0.26 0.26 -
SUB-TOTAL 2158.36 1425.73 732.63
7 Gujarat Municipalities Act 1963 Notified Area Tax / GIDC Tax / Interest 1998-99 to 2005-06 & 1985-86 to 2009-10 Hon. High Court Ahmedabad 4.50 - 4.50
SUB- TOTAL 4.50 - 4.50
TOTAL 5794.00 1574.85 4219.15

(viii) Based on our audit procedures and in accordance with theinformation and explanations given to us by the management the Company has not defaultedin repayment of dues to a bank or government or bonds holders.

(ix) The Company has not raised any money by way of initial publicoffer or further public offer or further public offer (including debt instrument). Asinformed to us no term loans have been obtained during the year.

(x) According to the information and explanations given to us and asrepresented by the Management and based on our examination of the books and records of theCompany and in accordance with generally accepted auditing practices in India no case offrauds by the Company or any fraud on the Company by its officers or employees has beennoticed or reported during the year.

(xi) As per notification no. GSR 463(E) dated 5 June 2015 issued by theMinistry of Corporate Affairs Government of India Section 197 is not applicable to theGovernment Companies. Accordingly provisions of clause 3 (xi) of the Order are notapplicable to the Company.

(xii) The Company is not a nidhi Company and therefore clause 3(xii) ofthe Order related to such companies is not applicable to the Company.

(xiii) In our opinion the Company has complied with provisions ofsections 177 and 188 of

Companies Act 2013 in respect of transactions with the related partiesand the details have been disclosed in the Financial Statements as required by theapplicable accounting standards.

(xiv) The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview.

(xv) As informed to us during the year the Company has not enteredinto any non-cash transactions with any of its directors or persons connected with theDirectors.

(xvi) The Company is not required to get registered under section 45-IAof Reserve Bank of India Act'1934.

For O. P. Bagla & Co. LLP For ASA & Associates LLP
Chartered Accountants Chartered Accountants
Firm No.: 000018N/N500091 Firm No.: 009571N/N500006
Rakesh Kumar Parveen Kumar
Partner Partner
Membership No.: 087537 Membership No.: 088810
Place: New Delhi
Dated: 27 May 2019

ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 2 to “Report on Other legal andregulatory requirements” of the Independent Auditors' Report of even date to themembers of GAIL (INDIA) LIMITED on the financial statements for the year ended March 312019.

Sl. No. Directions / Sub Directions Action taken Impact on financial statement
1 Whether the Company has system in place to process all the accounting transitions through IT system? If yes the implications of processing of accounting transaction outside IT system on the integrity of the accounts along with the financia l implications if any may be stated? The Company maintain its books of account on IT system SAP which is an ERP system. All accounting transactions are processed in accounts maintained on SAP. We did not notice any transaction which was processed outside of IT system. Nil
2 Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest made by a lender due to Company inability to repay the loan? If yes the financial impact may be stated? There are no such case. Nil
3 Whether funds received/ receivable for specific schemes from central state agencies were properly accounted for/utilized as per its terms and conditions? List the cases of deviation. Refer to Note 54 regarding the grant received by the Company for the project Jagdishpur Haldia Bokaro Dhamra Pipeline Project (JHBDPL). According to the information and explanations given to us and as represented by the Management and based on our examination of the books and records of the Company these have been used for the purposes for which these were given. We did not encounter any deviation. Nil
4 Whether disclosure in Notes to Financial Statements/inclusion under contingent liabilities of Corporate Guarantee issued by the parent Company to a bank for issuance of Performance Bank Guarantee on behalf of its subsidiaries/JVs/Associates etc. if any has been made. Refer to Note no 29 (I)(b) the Company has disclosed the Corporate Guarantee issued to a bank for issuance of Performance Bank Guarantee on behalf of its subsidiaries. Nil
For O.P. Bagla & Co. LLP For ASA & Associates LLP
Chartered Accountants Chartered Accountants
Firm No.: 000018N/N500091 Firm No.: 009571N/N500006
Rakesh Kumar Parveen Kumar
Partner Partner
Membership No.:087537 Membership No.:088810
Place: New Delhi
Dated: 27 May 2019

ANNEXURE - C TO THE INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 3(f) to “Report on Other legal andregulatory requirements” of the Independent Auditors' Report of even date to themembers of GAIL (INDIA) LIMITED on the standalone Ind AS financial statements forthe year ended March 31 2019.

Report on the Internal Financial Controls under Clause (i) of Sub

section 3 of Section 143 of the Companies Act 2013 (“theAct”)

We have audited the internal financial controls over financialreporting of GAIL (INDIA) LIMITED (“the Company”) as of March 31 2019 inconjunction with our audit of the standalone Ind AS 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 andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. 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 internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the “Guidance Note”) and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. 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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditors' judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.We believe that the audit evidence I/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 aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial control overfinancial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and directors of theCompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assets thatcould 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 overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2019 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For O. P. Bagla & Co. LLP For ASA & Associates LLP
Chartered Accountants Chartered Accountants
Firm No.: 000018N/N500091 Firm No.: 009571N/N500006
Rakesh Kumar Parveen Kumar
Partner Partner
Membership No.: 087537 Membership No.: 088810
Place: New Delhi
Dated: 27 May 2019