| 1. We have audited the accompanying financial statements of Essar Oil
Limited ("the Company"), which comprise the Balance Sheet as at March
31, 2015, the Statement of Profit and Loss, the Cash Flow Statement for
the year then ended, and a summary of the significant accounting
policies and other explanatory information.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
2. The Company's Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 ("the Act") with
respect to the preparation of these financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
3. Our responsibility is to express an opinion on these financial
statements based on our audit.
4. We have taken into account the provisions of the Act, the
accounting and auditing standards and matters which are required to be
included in the audit report under the provisions of the Act and the
Rules made there under.
5. We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require that
we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers the internal financial control
relevant to the Company's preparation and fair presentation of the
financial statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on whether the Company has in
place an adequate internal financial controls system over financial
reporting and operating effectiveness of such controls. An audit also
includes evaluating the appropriateness of the accounting policies used
and the reasonableness of the accounting estimates made by the
Company's Directors, as well as evaluating the overall presentation of
the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the financial
statements.
OPINION
7. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid financial statements give
the information required by the Act in the manner so required and
further to the matters described in paragraph 8 below give a true and
fair view in conformity with the accounting principles generally
accepted in India, of the state of affairs of the Company as at March
31, 2015, and its profit and its cash flows for the year ended on that
date.
EMPHASIS OF MATTERS
8. We draw attention to:
(a) Note 7(ii) (a) to the financial statements regarding accounting for
interest on debentures for the period October 1998 to April 2012 on
cash basis, in accordance with the orders of the Gujarat High Court.
(b) Note 7(ii) (c) to the financial statements regarding measurement of
certain borrowings in accordance with the Accounting Standard 30 on
Financial Instruments, Recognition and Measurement as per the
accounting policy consistently followed by the Company.
Our opinion is not modified in respect of these matters.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
9. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government in terms of Section 143(11) of
the Act, we give in the Annexure a statement on the matters specified in
paragraphs 3 and 4 of the Order.
10. 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 best of our knowledge and belief were necessary for the
purposes of our audit;
(b) in our opinion, having regard and further to the matters described
in paragraph 8 (a) above, proper books of account as required by law
have been 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 and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account;
(d) having regard and further to the matters described in paragraph 8
above, in our opinion, the aforesaid financial statements comply with
the Accounting Standards specified under Section 133 of the Act, read
with Rule 7 of the Companies (Accounts) Rules, 2014;
(e) on the basis of the written representations received from the
directors as on March 31, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2015
from being appointed as a director in terms of Section 164(2) of the
Act.
(f) with respect to the other matters to be included in the Auditors'
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, to the best of our knowledge and belief and according to
the information and explanations given to us by the management:
i. The Company has disclosed the impact as estimated of pending
litigations on its financial position in its financial statements in
accordance with generally accepted accounting principles- Refer Note 30
to the financial statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure to the Independent Auditors' Report
[Referred to in paragraph 9 under "Report on Other Legal and Regulatory
Requirements" section of our report of even date]
1. In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) The fixed assets of the Company have been physically verified during
the year by the Management according to a phased programme designed to
cover all the items over a period of three years, which in our opinion,
is reasonable having regard to the size of the Company and the nature
of its assets. As per the information and explanation given to us by
the Management, no material discrepancies as compared to book records
were noticed in respect of the fixed assets verified during the year.
2. In respect of its inventories:
(a) As explained to us, inventories were physically verified during the
year by the Management at reasonable intervals.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business. In respect of
coal inventory requiring technical expertise for establishing physical
quantities, the Company has hired independent agencies for physical
verification of such stocks whose certificate we have relied upon.
(c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
3. According to the information and explanation given to us, the
Company has not granted any loans, secured or unsecured, to companies,
firms or other parties covered in the Register maintained under section
189 of the Act.
4. In our opinion and according to the information and explanations
given to us, and considering that certain items purchased are of
specialised nature and suitable alternative sources do not exist for
obtaining comparable quotations, there is an adequate internal control
system commensurate with the size of the Company and the nature of its
business for the purchase of inventory and fixed assets and for the sale
of goods and services During the course of our audit, we have not
observed any failure to correct major weaknesses in internal controls.
5. According to the information and explanations given to us, the
Company has not accepted any public deposit during the year.
Accordingly, the provisions of clause 3(v) of the Order are not
applicable to the Company.
6. We have broadly reviewed the cost records maintained by the Company
pursuant to the rules made by the Central Government for the
maintenance of cost records under Section 148 (1) of Act in respect of
manufacture of petroleum products and are of the opinion that prima
facie the prescribed accounts and records have been made and
maintained. We have, however, not made a detailed examination of the
records with a view to determine whether they are accurate or complete.
7. According to the information and explanations given to us, in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
statutory dues, including Provident Fund, Employee State Insurance,
Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise
Duty, Value Added Tax, Cess and any other statutory dues, as
applicable, with the appropriate authorities.
There are no undisputed amounts payable in respect of the above
statutory dues outstanding as at March 31, 2015 for a period of more
than six months from the date they became payable.
(b) According to the information and explanations given to us, details
of Income tax, Sales tax, Service tax, Customs Duty, Excise Duty and
Value Added Tax which have not been deposited as on March 31, 2015 on
account of disputes are given below:
Name of Statute Nature of dues Forum where dispute is pending
Gujarat Value
Added Tax Sales Tax &
Interest Gujarat Sales Tax Tribunal
Act, 2003 Jt. Commissioner Appeal, Rajkot
Central Sales
Tax Act, 1956 Sales Tax &
Interest Jt. Commissioner Appeal, Rajkot
Central Excise
Act, 1944 Excise Duty,
Interest, Fine Central Excise & Service Tax
and Penalty Appellate Tribunal (CESTAT)
Customs Act 1962 Customs Duty,
Interest, Fine Commissioner of Customs and
Penalty (Appeals)
Central Excise & Service Tax
Appellate Tribunal (CESTAT)
Service Tax
Rules, 1994 Penalty Central Excise & Service Tax
Appellate Tribunal (CESTAT)
Commissioner of Central
Excise (Appeals)
Madhya Pradesh
Sthaniya Entry Tax,
Penalty and MP Commercial Tax Appellate
Kshetra Me Mal
Ke Pravesh Interest Board, Bhopal
Par Kar
Adhiniyam, 1976 High Court of Madhya Pradesh
Uttar Pradesh
Value Added Sales tax
and interest Addl. Commissioner of
Tax Act, 2008 Commercial Tax (Appeal)
Income tax Act,
1961 Income tax
and Interest Supreme Court
Bombay High Court
Name of Statute Period to
which the Amount amount
(Rs. in Crores)
relates
Gujarat Value Added Tax Act 2003 2007-08 0.21
2008-09 690.27
Central Sales Tax Act 1956 2008-09, 88.22
2010-11
Central Excise Act 1944 2006-07 to 77.79
2012-13
Customs Act 1962 2009-10, 271.34
2012-13 and
2013-14
2008-09 0.26
Servise Tax Rules 1994 2005-06 to 1.77
2009-10
2004-05 0.08
2005-06
Madhya Pradesh Sthaniya
Kshetra Me Mal Ke Pravesh
Par Kar Adhiniyam 1976 2008-09 0.02
2007-08 0.06
Uttar Pradesh Value Added
Tax Act 2008 2010-11 0.19
Income tax Act 1961 AY 1998-99 0.18
AY 2004-05 6.25
In respect of a customs duty demand of Rs. 2.86 crores, we are informed
that the Company is in the process of fling an appeal before Central
Excise & Service Tax Appellate Tribunal (CESTAT).
According to the information and explanations given to us, there were
no dues pending to be deposited on account of any dispute in respect of
Wealth Tax and Cess as on March 31, 2015.
(c) The Company has been regular in transferring amounts to the
Investor Education and Protection Fund in accordance with the relevant
provisions of the Companies Act, 1956 (1 of 1956) and Rules made
there under within time.
8. The accumulated losses of the Company at the end of the financial
year are less than 50% of its net worth (before deducting such
accumulated losses) and the Company has not incurred cash losses during
the financial year covered by our audit and in the immediately preceding
financial year.
9. There have been no defaults in repayment of dues to financial
institutions, banks, and debenture holders, barring repayment of two
installments aggregating to Rs. 1,576.76 crores to a bank, which were
deferred pending availing of long term export advance guaranteed by the
same bank. The guarantee is with a condition that the export advance
proceeds are to be utilized solely for the repayment of such dues,
which have since been repaid.
10. In our opinion and according to the information and explanations
given to us, the terms and conditions of a guarantee given by the
Company for a loan taken by others from a bank is not, prima facie,
prejudicial to the interests of the Company.
11. In our opinion and according to the information and explanations
given to us, the term loans have been applied by the Company during the
year for the purposes for which they were obtained, other than
temporary deployment pending application.
12. To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 117365W)
P. B. Pardiwalla
Partner
MUMBAI, May 25, 2015 Membership No. 40005 |