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Gujarat Gas Ltd.

BSE: 539336 Sector: Others
NSE: GUJGASLTD ISIN Code: INE844O01030
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VOLUME 103203
52-Week high 786.65
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P/E 30.99
Mkt Cap.(Rs cr) 45,458
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OPEN 646.50
CLOSE 656.55
VOLUME 103203
52-Week high 786.65
52-Week low 335.00
P/E 30.99
Mkt Cap.(Rs cr) 45,458
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gujarat Gas Ltd. (GUJGASLTD) - Auditors Report

Company auditors report

To

The Members of

Gujarat Gas Limited

(Formerly Known as GSPC Distribution Networks Limited)

Gandhinagar

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of GujaratGas Limited (“the Company”) which comprise the Balance Sheet as at March31 2020 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and notes to the financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as“the standalone Ind AS financial 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 Companies Act 2013 (“the Act”) in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India including the Indian Accounting Standards (Ind AS) specified under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended ofthe state of affairs (financial position) of the Company as at March 31 2020 and itsprofit (financial performance including other comprehensive income) its cash flows andthe changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements section ofour report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone Ind AS financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone Ind AS financialstatements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr. No. Key Audit Matter Auditor's Response
1 Evaluation of Impact of COVID-19 on the business operations/ revenues/ cash flows/ Trade Receivables / Impairment of Assets etc. Principal Audit Procedures
The Company generates revenue from supply of Natural Gas of various kinds to customers and different jurisdictions within India which includes large numbers of Industrial and commercial Customers. As a part of our audit we have carried out the following procedures Obtained an understanding of the process and testing the operating effectiveness of internal controls over the impairment and preparation of the cash flow forecast based on assumptions and inputs to the model used to estimate the future cash flows.
Customers in different category and jurisdictions are subject to their independent business risks due to COVID-19. • We assessed the Company's methodology applied in determining the CGU it's key assumptions and valuation method used and the accuracy of the inputs used for the same.
Management has assessed the business continuity revenue from sale of natural gas and cash flows from operations and Company has prepared cash flow projections and believes it has sufficient liquidity based on the available liquid cash and available credit facilities the expected cash to be generated from operations to meet its financial obligations as they fall due for the following twelve months. • Compared the cash flow forecasts to recent trend of sales volume and management estimates and other relevant market and economic information as well as testing the underlying calculations.
• We discussed the potential changes in key drivers as compared to previous year / actual performance with management and considering impact of COVID-19 in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable.
Management has assessed the level of allowance for doubtful debts required at reporting date after taking into account the ageing analysis of trade receivables and all other factors based on historical experience adjusted for certain current factors arising due to COVID-19. We assessed the classification of trade receivables in the trade receivable ageing report by comparison with sales invoices and other underlying documentation on a test check basis;
• We evaluated the management's working of expected credit losses method used and the accuracy of the inputs used in the model to determine the recoverable value. We challenged the inputs used to assess their reasonableness tested the sensitivity of the recoverable value to the change in the inputs used and tested the arithmetical accuracy of the model.
Management has also considered the possible effects of the pandemic on the carrying amount of property plant and equipment investments inventories and other current assets. The impairment test model also includes sensitivity testing of key assumptions. Further management has factored impact of COVID-19 on the same considering as one CGU. • We evaluated disclosures related to management assessment on impact of COVID-19 for the continuity of operations and on the annual impairment tests and as required under Indian Accounting Standard (Ind-AS) -36 Impairment of Assets.
Accordingly the above assessment factoring impact of COVID-19 on continuity of its operations and the recoverability of trade receivables post COVID-19 environment has been identified as a key audit matter because the assumptions on which the tests are based are highly judgmental and are affected by future market and economic conditions which are inherently uncertain and because of the materiality of the balances to the standalone financial statements as a whole.
Refer note no. 54 Of Standalone Financial Statement.
2 Adoption of Ind AS 116 Leases Principal Audit Procedures
The Company has adopted Ind AS 116 Leases (Ind AS 116) in the current year which requires a new lease accounting model wherein lessees are required to recognize a right-to-use (ROU) asset and a lease liability arising from a lease on the balance sheet. Assessed and tested new processes and controls in respect of lease accounting standard (Ind AS 116).
Evaluated the policy followed by the company for identification of the leases which satisfy the conditions laid down as per Ind AS 116.
The Company has a large number of leases with different contractual terms and adoption of the standard involves complexity and requires significant judgements and estimates including determination of discounting rates and the lease term. Upon the date of transition as at 1 April 2019:
• Evaluated the method of transition and related adjustments.
• Tested completeness of the lease data by reconciling the Company's operating lease commitments to data used in computing ROU asset and lease liabilities.
Refer note 50 of the Standalone Ind AS Financial Statements On a sample basis we have assessed the key terms and conditions of lease contracts and verified the computation of lease liabilities. Assessed and tested the presentation and disclosures relating to Ind AS 116 including disclosure relating to transition.
3 Evaluation of material claims against the company not acknowledge as debt. Principal Audit Procedures
There are various claims disputed by the Company including matters under dispute with one of the suppliers in respect of use of domestic allocated gas other than specified purpose which involves significant judgment to determine the possible outcome and Future Cash outflow of these disputes. Obtained details of all the claims disputed by the company as on 31st March 2020 from the management. We have discussed the management's underlying assumptions in estimating that the claims are erroneous and the possible outcome of the disputes. We have also evaluated these underlying assumptions to determine the Legal Liability / Obligation of the company as defined in applicable Indian Accounting Standards (Ind AS 37) and also evaluated whether any change was required to management's position on these uncertainties' vis a vis past year with reference to new claims disputed by the company.
Refer note 42.2 (iii) of the Standalone Ind AS Financial Statements
4 Accuracy of Recognition measurement presentation and disclosure of revenues and other related balance in view of adoption of Ind AS 115 “Revenue from Contracts with Customers” Principal Audit Procedures
We evaluated the accounting policy and internal controls followed by the Company while accounting of connection charges from customers which is deferred over the period when the performance obligation is satisfied as per the Ind AS 115 accounting standard.
Refer note 49 of the Standalone Ind AS Financial Statements Further we test checked some of the contracts and carried out a combination of procedures involving enquiry and observation and inspection of evidence in respect of operation of these controls. We also performed analytical procedures for reasonableness of revenues disclosed as per the new accounting standard.

Other Matters

In view of the Government imposed lockdown and travel restrictions we have performedthe audit from remote location on the basis of data scan copies of key recordsdocuments management approvals estimates assumptions and other information's suppliedelectronically by the management on online platform. We were not able to participate inphysical verification of inventories that was carried out by the management and also notable to perform the requisite audit procedure including inquiries external confirmationsand test of controls in respect of certain receivables staff related claims etc.asprescribed in various Standards of Auditing issued by the ICAI.

We have relied on Management Assurance of the authenticity completeness and accuracyof these records electronically submitted to us and have performed additional auditprocedures to satisfy ourselves that these records are appropriate to gain the reasonableassurance that the Statement as a whole are free from material misstatement whether dueto fraud and error and to issue an Auditor's Report that includes our opinion.

 

Our opinion is not modified in respect of this matter.

Information Other than the Standalone Ind AS Financial Statements and Auditor's ReportThereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone Ind AS financial statements and our auditor's report thereon. Ouropinion on the standalone Ind AS financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. In connection with ouraudit of the standalone Ind AS financial statements our responsibility is to read theother information and in doing so consider whether the other information is materiallyinconsistent with the standalone Ind AS financial statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

When we read the Final Annual report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take necessary actions as per applicable laws and regulations.

Responsibilities of Management and those charged with Governance for the Standalone IndAS Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone Ind AS financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. The Board of Directors are responsible for overseeingthe Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone Ind AS financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls 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 the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements. Wecommunicate with those charged with governance regarding among other matters the plannedscope and timing of the audit and significant audit findings including any significantdeficiencies in internal control that we identify during our audit. We also provide thosecharged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence and whereapplicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 in terms of Section 143(11) of the Act we give in “AnnexureA” a statement on the matters specified in paragraphs 3 and 4 of the Order.

2) As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss the Cash Flow Statement and theStatement of Changes in Equity dealt with by this Report are in agreement with therelevant books of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theInd AS specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

e) As the company is a Government Company in terms of notification no. G.S.R. 463(E)dated 5th June 2015 issued by the Ministry of Corporate Affairs the sub-section (2) ofsection 164 of the Act is not applicable to the 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 ourseparate Report in “Annexure B”. Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.

g) As the company is a Government Company in terms of notification no. G.S.R. 463(E)dated 5th June 2015 issued by the Ministry of Corporate Affairs the sub-section (16) ofsection 197 of the Act is not applicable to the company.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended 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 42 to the standaloneInd AS financial statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

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

3) In terms of section 143(5) of the Act we give our report in “AnnexureC” by taking into consideration the information explanations and writtenrepresentations received from the management on the matters specified in the directionsand sub directions issued under the aforesaid section by the Comptroller and AuditorGeneral of India.

For S. R. Goyal & Co.
Chartered Accountants
FRN No. 001537C
A.K. Atolia
Place : Jaipur (Partner)
Date : 05/06/2020 M. No.: 077201
UDIN : 20077201AAAAAK3096

ANNEXURE A TO INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our Independent Auditor's Report of even date to the Members ofGujarat Gas Limited (Formerly known as GSPC Distribution Networks Limited) on StandaloneInd AS Financial Statements for the year ended 31st March 2020)

i. In respect of the Company's fixed assets:

a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items other than underground gas pipelines which arenot physically verifiable over a period of 3 years which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. Pursuant to theprogramme a portion of the fixed assets has been physically verified by the Managementduring the year and no material discrepancies have been noticed on such verification.

c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except in respect of the following freehold land as on31st March 2020.

Sr. No. Asset description Book value (Amount in INR)
1 Survey No. 306-A-/1 paiki 3 Post-Hazira Taluka Choryasi District-Surat13057 Sq. Mtrs Rs. 15.88 Crores
2 Survey No. 150 Mora village District-Surat13557 Sq. Mtrs Re. 1/-.

ii. The inventory has been physically verified by the Management during the year. Thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liabilities Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3 (iii) [(a) to (c)] of thesaid Order are not applicable to the Company.

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. In our opinion and according to the information and explanations given to us theCompany has not accepted deposits within the meaning of Sections 73 to 76 or any otherrelevant provisions of the Act and the rules framed there under. According to theinformation and explanations given to us no order has been passed by the Company LawBoard or the National Company Law Tribunal or the Reserve Bank of India or any Court orany other Tribunal.

vi. We have broadly reviewed the books of account maintained by the Company in respectof products (Natural Gas) pursuant to the rules made by the Central Government of Indiawhere the maintenance of cost records has been prescribed under sub- section (1) ofSection 148 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not made a detailedexamination of the records with a view to determine whether they are accurate or complete.

vii. According to the information and explanations given to us in respect of statutorydues:

a) According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company is regular in depositing theundisputed statutory dues including provident fund income tax goods and services tax(GST) sales tax wealth tax service tax duty of customs duty of excise value addedtax cess and other material statutory dues as applicable have generally been regularlydeposited with the appropriate authorities though there has been slight delay in fewcases.

According to the information and explanations given to us and the records of theCompany examined by us in our opinion no undisputed amounts payable were in arrears asat 31st March 2020 for a period of more than six months from the date they became payable exceptdelay in payment of VAT liability including interest amounting to Rs. 43336735/-arising due to change in the tax rates in the Union Territory of Dadra and Nagar Haveli.

b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of provident fund goods and services tax (GST)sales tax wealth tax duty of customs value added tax cess and other material statutorydues as applicable which have not been deposited on account of any dispute. c) Theparticulars of dues of service tax duty of excise and income tax as at 31st March 2020which have not been deposited on account of a dispute are as follows:

Sr. No. Name of statute Nature of dues Amount (in INR Crores) Period to which the amount relates Forum where the dispute is pending
1 Income Tax Act 1961 Income Tax & Interest thereon 0.03 Assessment Year 2018-19 Assessing Officer
2 Income Tax Act 1961 Income Tax & Interest thereon 0.03 Assessment Year 2017-18 Commissioner of Income Tax (Appeals)
3 Income Tax Act 1961 Income Tax & Interest thereon 0.04 Assessment Year 2016-17 Income Tax Appellate Tribunal
4 Income Tax Act 1961 Income Tax & Interest thereon 0.15 Assessment Year 2013-14 Commissioner of Income Tax (Appeals)
5 Income Tax Act 1961 Income Tax & Interest thereon 0.003 Assessment Year 2012-13 Assessing Officer
6 Income Tax Act 1961 Income Tax & Interest thereon 0.03 Assessment Year 2012-13 Income Tax Appellate Tribunal
7 Income Tax Act 1961 Income Tax & Interest thereon 0.05 Assessment Year 2011-12 Assessing Officer
8 Income Tax Act 1961 Income Tax & Interest thereon 0.01 Assessment Year 2010-11 Income Tax Appellate Tribunal
9 Income Tax Act 1961 Income Tax & Interest thereon 0.04 Assessment Year 2008-09 High Court of Gujarat
10 Income Tax Act 1961 Income Tax & Interest thereon 0.03 Assessment Year 2007-08 High Court of Gujarat
11 Central Excise Act 1944 Service Tax and Duty of Excise 11.86 April-2010 to March-2015 The Customs Excise and Service Tax Appellate Tribunal
12 Central Excise Act 1944 Service Tax and Duty of Excise 1.04 April-2015 to Nov-2015 Dy. Commissioner The Central Excise & CGST
13 Central Excise Act 1944 Service Tax and Duty of Excise 3.00 2009-10 to 2014-15 (up to Aug-2014) The Customs Excise and Service Tax Appellate Tribunal
14 Central Excise Act 1944 Service Tax and Duty of Excise 0.77 Sept-2014 to 14th May-2015 The Customs Excise and Service Tax Appellate Tribunal
15 Central Excise Act 1944 Service Tax and Duty of Excise 1.40 May'10 (2010-11) to Feb-2016 (up to 02.02.2016) Excise & Service Tax Commissioner
16 Central Excise Act 1944 Service Tax and Duty of Excise 0.18 2006-07 & 2007-08 The Customs Excise and Service Tax Appellate Tribunal
17 Finance Act 1994 Service Tax and Duty of Excise 0.10 2006-07 to 2009-10 The Customs Excise and Service Tax Appellate Tribunal
18 Finance Act 1994 Service Tax and Duty of Excise 37.66 2005-06 to 2012-13 The Customs Excise and Service Tax Appellate Tribunal
19 Finance Act 1994 Service Tax and Duty of Excise 2.51 2013-14 The Customs Excise and Service Tax Appellate Tribunal
20 Finance Act 1994 Service Tax and Duty of Excise 0.59 2006-07 to 2011-12 The Customs Excise and Service Tax Appellate Tribunal
viii. The Company has not defaulted in repayment of loans or borrowing dues to financial institution or bank or dues to debenture holders.
ix. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. During the year money raised from term loans were applied for the purpose for which they were raised.
x. During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and as per the alternate audit procedures performed by us due to COVID -19 restrictions as narrated in Other Matters Paragraph to our Independent Auditor Report and according to the information and explanations given to us no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year however we have been informed by the management regarding one case of fraud / financial irregularities by a staff member with customers amounting to Rs. 0.44 Crores. Based on the internal enquiries management does not expect any liability or obligation to arise on the Company out of this matter.
xi. As the company is a Government Company in terms of notification no. G.S.R. 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs section 197 of the Act is not applicable to the company. Therefore the provisions of Clause 3 (xi) of the said Order are not applicable to the Company.
xii. In our opinion and according to the information and explanations given to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of the Order is not applicable.
xiii. According to the information and explanations given to us and based on our examination of the records of the company transactions with the related parties are in compliance with sections 177 of the Act and Company being a government company transactions with other government companies are exempt for the compliance of Section 188 of the Act in terms of notification no. G.S.R 463(E) dated 5th June 2015 issued by Ministry of Corporate Affairs. Details of such transactions have been disclosed in the financial statements as required by the applicable Indian Accounting Standards.
xiv. According to the information and explanations give to us and based on our examination of the records of the Company the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
xv. According to the information and explanations given to us and based on our examination of the records of the Company and as per the alternate audit procedures performed by us due to COVID -19 restrictions as narrated in Other Matters Paragraph to our Independent Auditor Report the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly paragraph 3(xv) of the Order is not applicable.
xvi. According to the information and explanations given to us and based on our examination of the records of the Company the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
For S. R. Goyal & Co.
Chartered Accountants
FRN No. 001537C
A.K. Atolia
Place : Jaipur (Partner)
Date : 05/06/2020 M. No.: 077201
UDIN : 20077201AAAAAK3096

ANNEXURE - B

TO INDEPENDENT AUDITOR'S REPORT

REPORT ON THE INTERNAL FINANCIAL CONTROLS

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our Independent Auditor's Report of even date to the members ofGujarat Gas Limited (Formerly known as GSPC Distribution Networks Limited) on StandaloneInd AS Financial Statements for the year ended 31st March 2020) Report on the InternalFinancial Controls Over Financial Reporting 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 GujaratGas Limited (“the Company”) as of March 31 2020 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting 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 respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the “Guidance Note”) issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In view of the Government imposedlockdown and travel restrictions we have performed the audit from remote location on thebasis of data scan copies of key records documents management approvals estimatesassumptions and other information's supplied electronically by the management on onlineplatform. We were not able to perform the requisite test of controls in respect of variousfinancial control systems over financial reporting as prescribed in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting We have relied on ManagementAssurance of the authenticity completeness and accuracy of these records electronicallysubmitted to us and have performed additional audit procedures to satisfy ourselves thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the internal financial controls system over financial reporting ofthe Company.

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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

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

In our opinion to the best of our information and according to the explanations givento us further described in the Auditor's Responsibilities section of this reportthe Company has in all material respects an adequate internal financial controls systemover financial reporting and such internal financial controls over financial reportingwere operating effectively as at March 31 2020 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of Internal Controls stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For S. R. Goyal & Co.
Chartered Accountants
FRN No. 001537C
A.K. Atolia
Place : Jaipur (Partner)
Date : 05/06/2020 M. No.: 077201
UDIN : 20077201AAAAAK3096

ANNEXURE C

TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 3 under ‘Report on Other Legal and RegulatoryRequirements' section of our Independent Auditor's Report of even date to the Members ofGujarat Gas Limited (Formerly known as GSPC Distribution Networks Limited) on StandaloneInd AS Financial Statements for the year ended 31st March 2020)

Report on the Directions/Sub-Directions Issued by Comptroller and Auditor General ofIndia

Based on the audit procedures performed and taking into consideration the informationexplanations and written representations given to us by the management in the normalcourse of audit we report to the best of our knowledge and belief that:

Sr. No. Directions / Sub-Directions Response
Issued by Comptroller and Auditor General of India
(1) Whether the Company has system in place to process all the accounting transactions through IT system . If yes the implication of processing of accounting transaction outside IT system on the integrity of accounts along with the financial implication if any may be stated. The Company has system in place to process all the accounting transactions through IT System i.e. SAP. All the financial transactions including customer related transactions are integrated in SAP system. We have not come across any accounting transaction outside the SAP system.
(2) Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/ interest etc. made by a lender to the company due to the company's inability to repay the loan? If yes the financial impact may be stated. As per information and explanations given to us and based on examination of the records of the Company there are no cases of restructuring of any existing loan or any waiver of loan / debt / interest during the year.
(3) Whether funds received /receivable for specific scheme from Central /State agencies were properly accounted for/ utilised as per its term and conditions Rs. List the cases of deviation. Funds received/receivable for specific schemes from central/state agencies were properly accounted for/utilized as per its term and conditions.
(4) Whether the company has an effective system for recovery of dues in respect of its sales activities and the dues outstanding and recoveries there against have been properly recorded in the books of accounts . As per the information and explanations given to us and based on the examination of the policies in respect of recovery of dues from customers the Company has a policy and procedure for effective monitoring of credit exposure and recovery of dues from its customers in respect of its sales activities. In our opinion and according to the information and explanation given to us the recoveries against the dues have been properly recorded in the books of accounts.
(5) Whether the company has effective system for physical verification valuation of stock treatment of non- moving items and accounting the effect of shortage/excess noticed during physical verification. In our opinion and according to the information and explanations given to us the procedures and systems in relation to physical verification of inventories valuation of stock treatment of non-moving items and accounting the effect of shortage / excess noticed during physical verification are reasonable and adequate in relation to the size of the Company and the nature of its business.
(6) The effectiveness of the system followed in recovery of dues in respect of sale activities may be examined and reported. In our opinion and according to the information and explanations given to us the Company has a policy and procedure for effective monitoring of credit exposure and recovery of dues from its customers in respect of its sales activities. There are no significant instances of its failure observed for the year under audit.
For S. R. Goyal & Co.
Chartered Accountants
FRN No. 001537C
A.K. Atolia
Place : Jaipur (Partner)
Date : 05/06/2020 M. No.: 077201
UDIN : 20077201AAAAAK3096

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