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Mahanagar Gas Ltd.

BSE: 539957 Sector: Others
NSE: MGL ISIN Code: INE002S01010
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OPEN 902.05
PREVIOUS CLOSE 900.30
VOLUME 31743
52-Week high 938.00
52-Week low 666.35
P/E 16.68
Mkt Cap.(Rs cr) 8,968
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Sell Price 0.00
Sell Qty 0.00
OPEN 902.05
CLOSE 900.30
VOLUME 31743
52-Week high 938.00
52-Week low 666.35
P/E 16.68
Mkt Cap.(Rs cr) 8,968
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Mahanagar Gas Ltd. (MGL) - Auditors Report

Company auditors report

To the Members of Mahanagar Gas Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Mahanagar GasLimited ("the Company") which comprise the Balance sheet as at March 31 2022the Statement of Profit and Loss including the statement of Other Comprehensive Incomethe Cash Flow Statement and the Statement of Changes in Equity 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 financial statements give the information requiredby the Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2022 its profitincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance withthe Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Financial Statements' section of our report. We areindependent of the Company in accordance with the 'Code of Ethics' issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements for the financial yearended March 31 2022. These matters were addressed in the context of our audit of thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. For each matter below our description of how ouraudit addressed the matter is provided in that context.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the financial statements. The results of our audit procedures includingthe procedures performed to address the matters below provide the basis for our auditopinion on the accompanying financial statements.

Key audit matters How our audit addressed the key audit matters
Impairment of slow movinq/non-movinq projects lyina in Capital Work-in-Proqress (as described in note 2.2(b) of the significant accounting policies and note 3 for details and movement in capital work-in-progress in the financial statements)
As at March 31 2022 the Company has Rs 61594.53 Lakh of Capital Work-in-Progress. The Company's spending on Capital Work-in-progress is material as indicated by the total value as at date. The assessment and the timing of recognition of asset is when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by management as set out in Ind AS 16 'Property Plant and Equipment' requires judgement and is dependent on the completion of projects after obtaining all necessary approvals. Our audit procedures among others included the following:
The Company has long outstanding capital work- in- progress relating to old slow/non-moving projects which have been delayed because of several external factors. • Assessed the design and implementation and tested the operating effectiveness of key financial controls over the management review of capital work-in-progress.
As a result this is considered as a key audit matter with focus on certain slow moving/non-moving projects where the risk of assessment of impairment of such items was deemed higher because of the complexity of the specific projects and the delays involved. • We obtained the list of delayed projects from the management and on a sample basis obtained reasons of the delay and the expected capitalization dates from the management.
• For assets capitalized during the year we considered the planned vs actual capitalization dates to test the management's assessment of expected capitalization dates.
• We tested management's assessment of indicators of impairment of old projects and the allowance created and write offs made in the current year basis the policy on slow and non-moving projects as approved by the Board. We have tested the appropriateness of categorizing the projects as slow and non-moving basis the expected period of completion as determined by the Company.
• For old projects capitalized during the year we tested on sample basis to determine that the useful life of the asset was adjusted to reflect the wear and tear of such assets.
• For capital inventory forming part of Capital work-in- progress we assessed the allowance for old obsolescence created basis the allowance policy on aged inventory approved by the Board.
• We evaluated the disclosures in the financial statements.
Contingencies: Uran Trombay Transportation Tariff Matter (as described in notes 30.9 containing details of contingencies of the financial statements)
The Company has entered into an agreement with GAIL (India) Limited for supply of Natural Gas which is being supplied by ONGC to GAIL at ONGC Trombay. ONGC is transporting its own gas from ONGC Uran to Trombay through its Uran Trombay Natural Gas Pipeline (UTNGPL). Our audit procedures included the following:
The Company has certain disputes with GAIL with respect to applicability of transportation tariff of UTNGPL. as levied retrospectively from 20 November 2008 till July 2021 of H 33180 lakh which has not been provided in the books of accounts or paid to GAIL till date. • We evaluated the design and tested the operating effectiveness of controls in respect of the identification and evaluation of claims proceedings and investigations at different levels and the recording and continuous re-assessment of the related contingent liabilities and disclosures.
• We performed inquiries with the in-house legal counsel on the legal evaluation of the litigation.
• We have tested the underlying computation of the management in relation to the measurement of the contingency.
Key audit matters How our audit addressed the key audit matters
Dispute was being discussed at the Appellate Tribunal for Electricity (APTEL) which has been referred back to PNGRB to consider several facts before concluding on the matter. • We have obtained written legal confirmation of litigation claims from the legal counsel and have also relied on the written legal opinion obtained by the Company in the earlier year's from an independent legal counsel for the matter relating to their expectations of the Company's prospects in this case and have evaluated the conclusions as said in the legal opinion with the current treatment and disclosures given in the financial statements. The management has informed that the legal opinion as obtained in the earlier year's holds good in the current situation considering there has been no changes in the laws and regulations and no new judgements in this matter.
On March 18 2020 PNGRB ruled the case against the Company and the company subsequently in April 2020 had filed an appeal against the order with APTEL and a writ petition with the Delhi High Court. The High Court referred the matter back to APTEL on May 04 2020. APTEL after hearing both the parties and going through the submissions made has remanded the case back to PNGRB for proper adjudication on July 16 2021. Matter is awaiting adjudication with PNGRB. • We evaluated the disclosures in the financial statements.
The evaluation of claims made by GAIL involves complex estimation and the Company is required to assess the need to make provision or disclose a contingency considering the underlying facts of the litigation and its probability of winning the case at the PNGRB. The Company has disclosed this fact as contingent liability as at the balance sheet date.
Due to the complexity involved in the litigation the management's judgement and assessment of the outcome of the matter and the measurement of provisions is inherently uncertain and might change over time as the legal case progresses. Accordingly the legal dispute has been considered as a key audit matter.

Litiqation: Demand for Additional trade discount by Oil Marketing Companies

(as described in notes 30.9 containing details of litigations of the financial statements)

The Company had an ongoing dispute with Oil Marketing Companies (OMCs) with respect to revision of trade discount with effect from April 01 2018 on sales made to OMCs. The last settlement on trade discount with the OMCs was finalized in June 2018 for the period ended March 31 2018. Our audit procedures among others included the following:
In the previous year the OMC's have communicated to the Company the revised trade discount basis a formal study conducted by them for the various geographical regions. The Company had contested the proposed revisions in trade discount and the Company along with the other City Gas distribution (CGD) companies had approached the Ministry of Petroleum and Natural Gas (MoP&NG) regarding such high trade discounts. • We evaluated the design and tested the operating effectiveness of controls in respect of the identification and evaluation of claims proceedings and investigations at different levels and the recording and continuous re-assessment of the related contingent liabilities and disclosures.
• We performed inquiries with the in-house legal counsel and management on the legal evaluation of the claims disputed.
• We read the copies of communication exchanged between OMCs MoP & NG and the Company during the year.
Key audit matters How our audit addressed the key audit matters
MoP&NG vide its letter dated November 01 2021 has issued guidelines pertaining to revised Trade discounts and subsequently citing MoP&NG guideline OMCs have raised their demand to the Company. However the demand raised by OMCs is not as per the guidelines issued by the MoP&NG and hence the Company has contested the demand raised by OMCs. Further the Company has raised the matter to the MoP&NG vide its letter dated December 30 2021 requesting their intervention and advise the OMCs to adhere to the guidance provided by the MoP&NG. • For management's estimate of discounts recorded we evaluated the details of assumptions used by the management to arrive at such estimate.
• We evaluated the disclosures in the financial statements and have compared the communications of the Company with the OMC and MoP&NG with the appropriateness of the disclosure in the financial statements.
As at the balance sheet date the matter is yet awaiting final settlement with OMCs. Pending such settlement and considering the management's judgement and assessment of the outcome of the matter the measurement of provisions involves significant estimates and thereby the matter has been considered as a key audit matter.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annual reportbut does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the financial statements or ourknowledge obtained in the 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.

Responsibilities of Management for the Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting 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 of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the 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. Those Board of Directors are also responsible foroverseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether thefinancial 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 financial statements.

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 thefinancial 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 control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness 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 auditor's report to therelated disclosures in the 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 thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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 financialstatements for the financial year ended March 31 2022 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statement on thematters 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 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 theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2022 from being appointed as a director in termsof Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controlswith reference to these financial statements and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year endedMarch 31 2022 has been paid / provided by the Company to its directors in accordance withthe provisions of Section 197 read with Schedule V to the Act;

(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended 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 financial statements - Refer Note 30.9 to the financialstatements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

iv. a) The management has represented that to the best of itsknowledge and belief no funds have been advanced or loaned or invested (either fromborrowed funds or share premium or any other sources or kind of funds) by the Company toor in any other person or entity including foreign entities ("Intermediaries")with the understanding whether recorded in writing or otherwise that the Intermediaryshall whether directly or indirectly lend or invest in other persons or entitiesidentified in any manner whatsoever by or on behalf of the Company ("UltimateBeneficiaries") or provide any guarantee security or the like on behalf of theUltimate Beneficiaries;

b) The management has represented that to the best of its knowledgeand belief no funds have been received by the company from any person or entityincluding foreign entities ("Funding Parties") with the understanding whetherrecorded in writing or otherwise that the Company shall whether directly or indirectlylend or invest in other persons or entities identified in any manner whatsoever by or onbehalf of the Funding Party ("Ultimate Beneficiaries") or provide any guaranteesecurity or the like on behalf of the Ultimate Beneficiaries; and

c) Based on such audit procedures that were considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause (a) and

(b) contain any material misstatement.

v. The dividend declared or paid by the Company is in compliance withSection 123 of the Act.

Annexure 1 referred to in paragraph 1 under the heading "Report onOther Legal and Regulatory Requirements" of our report of even date

In terms of the information and explanations sought by us and given bythe company and the books of accounts and records examined by us in the normal course ofaudit and to the best of our knowledge and belief we state that:

(i) (a) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.

(b) The Company has maintained proper records showing full particularsof intangible assets.

(b) All Property Plant and Equipment have not been physically verifiedby the management during the year but there is a regular programme of verification of allassets except for underground assets in relation to the gas distribution network whichcannot be physically verified. The programme for physical verification in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (other thanproperties where the Company is the lessee and the lease agreements are duly executed infavour of the lessee) are held in the name of the Company.

(d) The Company has not revalued its Property Plant and Equipment(including Right of use assets) or intangible assets during the year ended March 31 2022.

(e) There are no proceedings initiated or are pending against theCompany for holding any benami property under the Prohibition of Benami PropertyTransactions Act 1988 and rules made thereunder.

(ii) (a) The management has conducted physical verification ofinventory including inventory lying with third parties except for inventory of Natural Gaswhich cannot be physically verified. In our opinion the frequency of verification by themanagement is reasonable and the coverage and procedure for such verification isappropriate.

Discrepancies on such physical verification were less than 10% inaggregate for each class of inventory and have been properly dealt with in the books ofaccounts.

(b) The Company has not been sanctioned working capital limits inexcess of H five crores in aggregate from banks or financial institutions during any pointof time of the year on the basis of security of current assets. Accordingly therequirement to report on clause 3(ii)(b) of the Order is not applicable to the Company.

(iii) (a) During the year the Company has not provided loans advancesin the nature of loans stood guarantee or provided security to companies firms LimitedLiability Partnerships or any other parties. Accordingly the requirement to report onclause 3(iii)(a) of the Order is not applicable to the Company.

(b) During the year the Company has not made investments providedguarantees provided security and granted loans and advances in the nature of loans tocompanies firms Limited Liability Partnerships or any other parties. Accordingly therequirement to report on clause 3(iii)(b) of the Order is not applicable to the Company.

(c) The Company has not granted loans and advances in the nature ofloans to companies firms Limited Liability Partnerships or any other parties.Accordingly the requirement to report on clause 3(iii)(c) of the Order is not applicableto the Company.

(d) The Company has not granted loans or advances in the nature ofloans to companies firms Limited Liability Partnerships or any other parties.Accordingly the requirement to report on clause 3(iii)(d) of the Order is not applicableto the Company.

(e) There were no loans or advance in the nature of loan granted tocompanies firms Limited Liability Partnerships or any other parties. Accordingly therequirement to report on clause 3(iii)(e) of the Order is not applicable to the Company.

(f) The Company has not granted any loans or advances in the nature ofloans either repayable on demand or without specifying any terms or period of repaymentto companies firms Limited Liability Partnerships or any other parties. Accordingly therequirement to report on clause 3(iii)(f) of the Order is not applicable to the Company.

(iv) There are no loans investments guarantees and security inrespect of which provisions of Sections 185 and 186 of the Companies Act 2013 areapplicable and accordingly the requirement to report on clause 3(iv) of the Order is notapplicable to the Company.

(v) The Company has neither accepted any deposits from the public noraccepted any amounts which are deemed to be deposits within the meaning of Sections 73 to76 of the Companies Act and the rules made thereunder to the extent applicable.Accordingly the requirement to report on clause 3(v) of the Order is not applicable tothe Company.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under Section 148(1) of the Companies Act 2013 related to the manufacture ofcompressed natural gas and piped natural gas and are of the opinion that prima facie thespecified accounts and records have been made and maintained. We have not however made adetailed examination of the same.

(vii) (a) The Company is regular in depositing with appropriateauthorities undisputed statutory dues including goods and services tax provident fundemployees' state insurance income-tax sales-tax service tax duty of customs duty ofexcise value added tax cess and other statutory dues applicable to it. According to theinformation and explanations given to us and based on audit procedures performed by us noundisputed amounts payable in respect of these statutory dues were outstanding at theyear end for a period of more than six months from the date they became payable.

(vii) (b) The dues of goods and services tax provident fundemployees' state insurance income-tax sales-tax service tax duty of custom duty ofexcise value added tax cess and other statutory dues have not been deposited on accountof any dispute are as follows:

Name of the Statute Nature of Dues Amount Rs in lakhs* Period Forum where the dispute is pending
Central Excise Act 1944 Excise Duty 340.09 March 2001 - December 2004 High Court
523.17 July 2005 - April 2016 CESTAT/CESTAT (Appeal)
3.53 October 2009 - April 2019 Commissioner/Commissioner (Appeal)
Central Excise Act 1944 Service Tax 0.87 November 2015 - September 2016 CESTAT/CESTAT (Appeal)
20.20 April 2006 - January 2016 Commissioner/Commissioner (Appeal)
19.52 October 2015 - March 2017 Deputy Commissioner
3.19 April 2017 - June 2017 Superintendent of Central Goods and Service Tax
0.61 April 2016 - June 2017 Superintend-Range II-Division IV
819.60 October 2015 to June 2017 Commissioner Audit-II
Maharashtra Value Added Tax 2002 Sales Tax 372.07 April 2006 - March 2011 Joint Commissioner/Joint Commissioner (Appeals)
Income Tax Act 1961 Income Tax 1342.62 AY 2002-2003 to AY 2018- 2019 Commissioner of Income Tax / Commissioner of Income Tax (Appeals)

(viii) The Company has not surrendered or disclosed any transactionpreviously unrecorded in the books of Accounts in the tax assessments under the IncomeTax Act 1961 as income during the year. Accordingly the requirement to report on clause3(viii) of the Order is not applicable to the Company.

(ix) (a) The Company did not have any outstanding loans or borrowingsor interest thereon due to any lender during the year. Accordingly the requirement toreport on clause ix(a) of the Order is not applicable to the Company.

(b) The Company has not been declared wilful defaulter by any bank orfinancial institution or government or any government authority.

(c) The Company did not have any term loans outstanding during the yearhence the requirement to report on clause (ix)(c) of the Order is not applicable to theCompany.

(d) The Company did not raise any funds during the year hence therequirement to report on clause (ix)(d) of the Order is not applicable to the Company.

(e) The Company does not have any subsidiary associate or jointventure. Accordingly the requirement to report on clause 3(ix)(e) of the Order is notapplicable to the Company.

(f) The Company does not have any subsidiary associate or jointventure. Accordingly the requirement to report on Clause 3(ix)(f) of the Order is notapplicable to the Company.

(x) (a) The Company has not raised any money during the year by way ofinitial public offer / further public offer (including debt instruments) hence therequirement to report on clause 3(x)(a) of the Order is not applicable to the Company.

(b) The Company has not made any preferential allotment or privateplacement of shares /fully or partially or optionally convertible debentures during theyear under audit and hence the requirement to report on clause 3(x)(b) of the Order isnot applicable to the Company.

(xi) (a) No fraud by the Company or no material fraud on the Companyhas been noticed or reported during the year.

(b) During the year no report under sub-section (12) of section 143 ofthe Companies Act 2013 has been filed by cost auditor/ secretarial auditor or by us inForm ADT - 4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules 2014with the Central Government.

(c) We have taken into consideration the whistle blower complaintsreceived by the Company during the year while determining the nature timing and extent ofaudit procedures.

(xii) (a) The Company is not a nidhi Company as per the provisions ofthe Companies Act 2013. Therefore the requirement to report on clause 3(xii)(a) of theOrder is not applicable to the Company.

(b) The Company is not a nidhi company as per the provisions of theCompanies Act 2013. Therefore the requirement to report on clause 3(xii)(b) of the Orderis not applicable to the Company.

(c) The Company is not a nidhi company as per the provisions of theCompanies Act 2013. Therefore the requirement to report on clause 3(xii)(c) of the Orderis not applicable to the Company.

(xiii) Transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 where applicable and the details have beendisclosed in the notes to the financial statements as required by the applicableaccounting standards.

(xiv) (a) The Company has an internal audit system commensurate withthe size and nature of its business.

(b) The internal audit reports of the Company issued till the date ofthe audit report for the period under audit have been considered by us.

(xv) The Company has not entered into any non-cash transactions withits directors or persons connected with its directors and hence requirement to report onclause 3(xv) of the Order is not applicable to the Company.

(xvi) (a) The provisions of section 45-IA of the Reserve Bank of IndiaAct 1934 (2 of 1934) are not applicable to the Company. Accordingly the requirement toreport on clause (xvi)(a) of the Order is not applicable to the Company.

(b) The Company has not conducted any Non- Banking Financial or HousingFinance activities without obtained a valid Certificate of Registration (CoR) from theReserve Bank of India as per the Reserve Bank of India Act 1934.

(c) The Company is not a Core Investment Company as defined in theregulations made by Reserve Bank of India. Accordingly the requirement to report onclause 3(xvi) of the Order is not applicable to the Company.

(d) There is no Core Investment Company as a part of the Group hencethe requirement to report on clause 3(xvi) of the Order is not applicable to the Company.

(xvii) The Company has not incurred cash losses in the current year andin the immediately preceding financial year respectively.

(xviii) There has been no resignation of the statutory auditors duringthe year and accordingly requirement to report on Clause 3(xviii) of the Order is notapplicable to the Company.

(xix) On the basis of the financial ratios disclosed in note 30.12 tothe financial statements ageing and expected dates of realization of financial assets andpayment of financial liabilities other information accompanying the financial statementsour knowledge of the Board of Directors and management plans and based on our examinationof the evidence supporting the assumptions nothing has come to our attention whichcauses us to believe that any material uncertainty exists as on the date of the auditreport that Company is not capable of meeting its liabilities existing at the date ofbalance sheet as and when they fall due within a period of one year from the balance sheetdate. We however state that this is not an assurance as to the future viability of theCompany. We further state that our reporting is based on the facts up to the date of theaudit report and we neither give any guarantee nor any assurance that all liabilitiesfalling due within a period of one year from the balance sheet date will get dischargedby the Company as and when they fall due.

(xx) (a) In respect of other than ongoing projects there are nounspent amounts that are required to be transferred to a fund specified in Schedule VII ofthe Companies Act 2013 (the Act) in compliance with second proviso to sub section 5 ofsection 135 of the Act. This matter has been disclosed in note 30.13 to the financialstatements.

(b) All amounts that are unspent under section (5) of section 135 ofCompanies Act 2013 pursuant to any ongoing project has been transferred to specialaccount in compliance with provisions of sub section (6) of section 135 of the said Act.This matter has been disclosed in note 30.13 to the financial statements.

Annexure 2 to the Independent Auditor's Report of even date on thefinancial statements of Mahanagar Gas Limited Report on the Internal Financial Controlsunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls with reference tofinancial statements of Mahanagar Gas Limited ("the Company") as of March 312022 in conjunction with our audit of the financial statements of the Company for the yearended 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("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to these financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") and the Standards onAuditing as specified under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both issued by ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to these financial statements was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to these financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to these financial statements.

Meaning of Internal Financial Controls With Reference to theseFinancial Statements

A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements includes those policies andprocedures 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 as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls With Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2022 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note issued by the ICAI.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Vikram Mehta
Partner
Membership Number: 105938
UDIN: 22105938AIRRZC9600
Place of Signature: Mumbai
Date: May 10 2022

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