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Auditor Report of Coal India Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Coal India Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 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. These financial statements include figures in respect of Head Quarter (HQ) Kolkata, North Eastern Coalfields (NEC) and GM's office at New Delhi and Marketing office, Kolkata.

2. Management's Responsibility for the Standalone Financial Statements

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 standalone 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.

3. Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

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.

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.

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 internal financial control relevant to the Company's preparation 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 control system over financial reporting and the 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, 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 standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and 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 31st March, 2015, and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following notes:-

(a) Note No. 10A (2) regarding non-provision against fixed assets in Dankuni Coal Complex leased to South Eastern Coalfields Limited (SECL) for lease rent of Re.1 per annum. In opinion of the management the nominal income earning is a temporary policy matter and actual worth of the assets including land is much higher than the book value and hence no provision is called for.

This is a statement of fact referring to the notes on accounts no 10A (2) only.

As mentioned by the Audit, referring to the relevant note, the recoverable value (actual worth), of the assets of Dankuni Coal Complex (given on operating lease to SECL, a 100% subsidiary of CIL on a nominal rent) is considered much higher than its WDV. Hence no provision as per AS-28 (Accounting Standard on Impairment) or otherwise is required.

(b) Note No. 11 and 18, dealing with an aggregate investments of Rs. 8926.42 Crores and loans & advances of Rs. 578.55 Crores (Current Account Debit Balances) in its 100%subsidiaries namely, Bharat Coking Coal Limited (BCCL) and Eastern Coalfields Limited (ECL) have come out of Board for Industrial & Financial Reconstruction (BIFR). These subsidiaries are turning around and have started earning profits. In the view of changing circumstances, the management is of the opinion that no writing down or provisioning is required against the erosion in the value of assets.

This is a statement of fact referring to the notes on accounts only .

Eastern Coalfields Limited (ECL) & Bharat Coking Coal Limited (BCCL) are 100% subsidiary of Coal India Limited. BCCL had come out of BIFR during FY 2012-13. ECL has also come out of BIFR from Jan 2015. Both the companies are earning profits consistently from last few years. Hence, the diminution in value of investment is not considered as permanent in nature and therefore following the provisions of AS 13 (accounting Standard on Investments), no writing down or provision is required. Current account debit balances under "loans & advances" are also on the same analogy considered to be recoverable and hence no provision is required.

(c) Note 34(i) (c) & (d), Contingent Liability of the accompanying financial statements, which describes the uncertainty related to the outcome of the lawsuits filed and demands raised against the Company by various parties and Government authorities;

This being a statement of fact calls for no comments separately.

(d) Note 34(xvii), regarding non consideration of effects of The Mines and Minerals (Development and Regulations) Amendment Act,2015 in the books of accounts as on March 31,2015 in absence of notification of rules by the Central or State government under the said act.

This is a statement of fact referring to the notes on accounts no 34(xvii) only.

As mentioned by the Audit, referring to the relevant note, the effects of The Mines and Minerals (Development and Regulations) Amendment Act,2015 have not been considered in the books of accounts as the rules have not been notified yet by the Central or State government under the said act.

(e) Pending write off action of certain account balances against which full provision has been made in the books of accounts;

Noted, action is being taken to initiate write off.

(f) Balances under Long Term Loans and advances of Rs. 134.78 Crores, Trade Receivables of Rs. 9.76 Crores, Other Current assets of Rs. 199.82 Crores, Trade Payables of Rs. 2.28 Crores and Other Current Liabilities of Rs. 235.14 Crores, have not been confirmed. Consequential impact on confirmation/ reconciliation of such balances, if any is not ascertainable.

Trade receivables are periodically reconciled on regular basis. In respect of trade payables & other current Liabilities, system for obtaining confirmation is there, although in most of the cases response from the creditors are not received. However, efforts will be taken to increase the coverage area.

(g) The Independent Directors have not been appointed in the Board of the Company as per the provisions of Section 149(1) of the Companies Act, 2013.

The matter has been taken up with Ministry of Coal, Govt. of India which is the appointing authority of Independent Directors .

Our opinion is not qualified in respect of above matters.

Report on Other Legal and Regulatory Requirements

1. As required under Section 143(5) of the Companies Act, 2013, we give in the Annexure I, a Statement on the Directions issued by the Comptroller and Auditor General of India after complying the Suggested methodology of Audit, the action taken thereon and its impact on the accounts and financial statements of the company.

2. As required by the Companies (Auditor's Report) Order, 2015 ("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 II, a statement on the matters specified in paragraphs 3 and 4 of the Order.

3. 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 purpose of our audit.

(b) In our opinion, 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) In our opinion, the aforesaid standalone 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 written representations received from the directors as on March 31,2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015 from being appointed as director under sub- section (2) of Section 164 of the Companies Act.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements.[Refer Note No.34(i)(c )&(d)]

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

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

ANNEXURE II TO THE AUDITORS' REPORT (Referred to in Paragraph 2 of "Other Legal and Regulatory requirements" of our Audit Report)

i) In respect of Fixed Assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. However certain details as regards to purchase orders reference, date of commissioning and location, identification and codifications of fixed assets are absent in some cases.

These are related to old items of fixed assets which are fully depreciated.

b) The Fixed assets located at Head quarter, North Eastern Coalfields, the production unit of the Company and offices at New Delhi and Kolkata Marketing office have been physically verified substantially by the management periodically. Discrepancies noticed on such verification were not material are pending for reconciliation and adjustment in the accounts.

This being a statement of fact calls for no comments separately. Necessary adjustments for discrepancies, if required after reconciliation, will be made in the accounts.

ii) In respect of Inventories:

a) The Physical verification of inventories at North Eastern Coalfields has been conducted at reasonable intervals during the year by the management.

The inventories have been measured on the basis of volumetric system.

This being a statement of fact calls for no comments separately.

b) In our opinion, the procedures and frequency of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

This being a statement of fact calls for no comments separately.

c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

This being a statement of fact calls for no comments separately.

iii) 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 Companies Act, 2013. Hence provisions to Para 3 (iii)(a) and (b) of the said order are not applicable.

This being a statement of fact calls for no comments separately.

iv) In our opinion and according to the information and explanations given to us, there are in general, adequate internal control systems 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, no major weakness in internal control has been noticed except in the following cases where the Internal control mechanism needs to be further strengthened:-

a) Identification and Codification of fixed assets with respect to their current locations at different units

b) The control over maintenance of records related to payment of salary and wages at certain units;

c) Non receipt of confirmations of outstanding balances from customers, suppliers and contractors and reconciliation of balances in case of difference if any;

Noted, action is being taken to further strengthen the same.

Noted, action is being taken to further strengthen the same.

Noted, action is being taken to further strengthen the same.

v) According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of directives issued by the Reserve Bank of India and provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under.

vi) The maintenance of Cost records has been prescribed by the Central Government under section 148(1) of the Companies Act, 2013 in respect of Mining activities of the Company. We have broadly reviewed the records and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made any detailed examination of the records.

This being a statement of fact calls for no comments separately.

vii) (a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the Company is regular in depositing the undisputed statutory dues including Provident fund, Income Tax, Sale tax, Wealth Tax, Service Tax, Duty of customs, Duty of Excise, Value added Tax, Cess and any other statutory dues with the appropriate authorities. There were no un-disputed statutory dues as at the end of the year concerned outstanding for a period of more than six months from the date they became payable. As informed to us, Employee State Insurance is not applicable to the Company.

This being a statement of fact calls for no comments separately.

(b) According to the information and explanations given to us, and as per the records of the Company examined by us, there are no dues of income tax, Duty of customs, Duty of excise, Cess and other statutory dues except following sales tax, which have not been deposited on account of any dispute are as under:-

These cases are very old and pending before assessing officer /sales tax departmental appellate authority. Pending verdict of these appeal cases, no deposit has been made. However, these have been disclosed as contingent liability.

Sl. Name of the Statute Nature of Amount No. dues (In) Rs.

1 Provincial Sales Tax Act Sales Tax 3,86,234.13

2 Provincial Sales Tax Act Sales Tax 1,79,762.00

3 Provincial Sales Tax Act Sales Tax 48,441.00

4 Provincial Sales Tax Act Sales Tax 2,75,819.00

5 Provincial Sales Tax Act Trade Tax 9040.00



Name of the Statute Period to Forum where which the pending amount relates

Provincial Sales Tax Act FY:1989-90 Assessing officer

Provincial Sales Tax Act FY:1990-91 Additional Commissioner (Appeals)-3

Provincial Sales Tax Act FY:1990-91 Additional Commissioner (Appeals)-3

Provincial Sales Tax Act FY:1991-92 Additional Commissioner (Appeals)-3

Provincial Sales Tax Act FY:1993-94 Assessing officer

1(c) According to the information and explanations given to us, there is no amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the CompaniesAct,1956(1 of 1956) and rules made there under during the year.

This being a statement of fact calls for no comments separately.

viii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year as well as in the immediately preceding financial year.

This being a statement of fact calls for no comments separately.

ix) In our opinion and according to the information and explanations given to us, the Company has not taken any term loan from any financial institutions or banks or debenture holders.

x) In our opinion and according to the information and explanations given to us, the terms and conditions on which the company has given guarantees for loans taken by its subsidiaries from banks and financial institutions are not prima-facie prejudicial to the interest of the Company.

This being a statement of fact calls for no comments separately.

xi) As per the information and explanations given to us by the management and on the basis of the examination of the records, the Company has not taken any term loan during the year.

This being a statement of fact calls for no comments separately.

xii) To the best of our knowledge and belief and according to the information and explanations given to us, no frauds on or by the Company has been noticed by us during the year. However, according to the information and explanation given to us, a case of misappropriation of Company's fund for personal gain had come to the notice of the management in earlier years, which is still under investigation by different agencies; the impact of such misappropriation cannot be ascertained at this stage.

As stated by the Audit, the matter is under investigation by different agencies.

For CHATURVEDI & CO.

Chartered Accountants Firm Regn. No.302137E S.C.Chaturvedi

Partner

Mem.No.012705

Date : 28th May, 2015 Place : Kolkata


Mar 31, 2014

We have audited the accompanying financial statements of COAL INDIA LIMITED, which comprise the Balance Sheet as at 31st March, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the Year then ended, and a summary of significant accounting policies and other explanatory information. These financial statements include figures in respect of Head Quarter (HQ), Kolkata, North Eastern Coalfields (NEC) GM''s Office at New Delhi and Marketing Division.

2. Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash fl ows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General circular15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control 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.

3. Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. 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.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements, read together with Significant Accounting Policies and Additional Notes to Accounts as referred in Note 33 and 34 respectively give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of Balance Sheet, the state of affairs of the Company as at 31st March, 2014;

b) In the case of Statement of Profit and Loss Account, the profit/ loss for the year ended on that date; and

c) In the case of Cash Flow Statement, the cash fl ows for the year ended on that date.

Emphasis of Matter

Without qualifying our opinion, we draw your attention to:

a) Notes No.11 (1), 12(2) and 18 dealing with investments in and loans & advances (Short term / Long term, Current Account debit balances) to sick subsidiary of the company, that is, Eastern Coalfields Limited (ECL) which is under the Board of Industrial & Financial Reconstruction (BIFR). Revival plans have been approved by BIFR and vetted by the concerned ministry. On implementation of revival schemes the subsidiary is turning around and has started earning profits. In view of the changing circumstances, the management is of the opinion that no writing down or provisioning is required.

This is a statement of fact referring to the notes on accounts only.

Eastern Coalfields Ltd is a 100% subsidiary of Coal India Limited. The revival scheme of BIFR is under implementation and ECL is earning substantial profit since 2009-10, by which its negative net worth is getting reduced. Hence, the diminution in value of investment is not considered as permanent in nature and therefore following the provisions of AS 13 ( Accounting Standard on Investments ), no writing down or provisions is required. The Loans & Advances and Current Account debit balances etc are also on the same analogy considered to be recoverable and hence no provision is required.

b) Not e No. 10A(2) regarding non-provision against fixed assets in Dankuni Coal Complex leased to South Eastern Coalfields Limited (SECL) for lease rent of Re.1 per annum. In the opinion of the management the nominal income earning is a temporary policy matter and actual worth of the assets including land is much higher than the book value and as such no provision is called for.

This is a statement of fact referring to the notes on accounts no 10A (2) only.

As mentioned by the Audit, referring to the relevant Note, the recoverable value (actual worth), of the assets of Dankuni Coal Complex (given on operating lease to SECL, a 100% subsidiary of CIL on a nominal rent) is considered much higher than its WDV. Hence no provision as per AS-28 (Accounting Standard on Impairment) or otherwise is required.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 (''the Order'') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

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

c. The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d. In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e. In terms of Notification No. GSR 829(E) Dated 21st October, 2003, of the Government of India, Department of Company Affairs, Government Companies are exempted from the applicability of provisions of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956, nor had it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure to the Auditors'' Report (Referred to in paragraph 1 of our report on Other Legal and Regulatory Requirements of even date to the members of Coal India Limited on the financial statements ended on 31st March, 2014)

On the basis of checks carried out during the course of audit and as per information and explanations furnished to us and to the best of our knowledge and belief we report that:

i. (a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. However, certain details as regards purchase order reference; date of commissioning and locations; identification marks are absent in some cases of old items.

Few old items of fixed assets mentioned by the audit are fully depreciated

(b) The Fixed Assets located at Head Quarter, North eastern Coalfields, the production unit of the company and GM''s office at New Delhi, have been physically verified by the management periodically in a phased manner. In respect of assets physically verified discrepancies noticed were not material and have been properly dealt with in the books of account.

This being a statement of fact calls for no comments separately.

(c) No substantial part of fixed assets has been disposed of during the year.

This being a statement of fact calls for no comments separately.

ii. (a) Physical verification of inventory at North Eastern Coalfields has been conducted at reasonable intervals during the year by the management. However, identification of obsolete items of stores & spares were not carried out during the year.

Efforts for identification of obsolete items of stores & spares, if any, as mentioned by the Audit will be done in 2014-15.

However, inventory at stockyards of West Bengal Regional Sales Office has not been physically verified. The inventories being very old have been provided for.

The said Stockyards of West Bengal Regional Sales Office are not operative since long. The book stock is not significant and their value has been fully provided for since long.

The inventories have been measured on the basis of volumetric system.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

This being a statement of fact calls for no comments separately.

(c) The Company has maintained proper records of inventory. No material discrepancies were noticed on physical verification.

This being a statement of fact calls for no comments separately.

iii. (a) According to the information and explanations 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 301 of The Companies Act, 1956. However, interest has been waived on loans and advances to its subsidiaries Bharat Coking Coal Limited (BCCL) and Eastern Coalfields limited (ECL). In other cases clauses 4(iii)(b) to 4(iii) (d) of the Order are not applicable.

These are 100% subsidiaries of CIL. ECL is sick and referred to BIFR. Out of certain loans to ECL and BCCL, interest on such loans to ECL were waived since 2003-04.

During the year, CIL Board approved to make such loans interest free upto 31st March, 2013 i.e. the date upto which BCCL was under BIFR.

Interest has been fully charged on such loans to BCCL for the year 2013-14.

(b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 except some surplus funds of the subsidiaries parked with this holding company where reasonable interest has been paid except for a part of such fund parked by Northern Coalfields Limited and Mahanadi Coalfields Limited, where no interest has been paid as these funds were transferred to Eastern Coalfields Limited and Bharat Coking Coal Limited for specific purposes as interest free advance. In our opinion, on the basis of explanations provided to us, the terms and conditions of these advances are not prejudicial to the interest of the Company.

BCCL has returned the non-interest bearing fund by 31.12.2013,thereafter such surplus fund parked by NCL and MCL to the extent returned by BCCL were made interest bearing.

iv. There is, in general, 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 no major weakness in internal control has been noticed except the following:

(a) The control over activities within the processing of payroll and disbursement of salary and wages in some units needs to be strengthened.

Noted, action is being taken to further strengthen the same in 2014-15.

(b) The control over procurement of service related to travelling at New Delhi office needs to be strengthened.

Noted, action is being taken to further strengthen the same in 2014-15.

v. There are no contracts and arrangements as referred to in Section 301 of the Companies Act, 1956, particulars of which needs to be entered into a register maintained under section 301 of the said Act. Accordingly, clause 4 (v) (b) of the Order is not applicable.

This being a statement of fact calls for no comments separately.

vi. The Company has not accepted any deposits from the public within the meaning of the provisions of Section 58A and 58AA or any other relevant provision of the Companies Act, 1956 and rules made there-under.

This being a statement of fact calls for no comments separately.

vii. The Company has an Internal Audit system commensurate with the size and nature of its business, but it requires continuing improvement in respect of timeliness of reporting together with risk based analysis of the inadequacies. Further, no Information System Audit has been carried out.

Noted. Efforts will be taken to improve in the areas of inadequacies mentioned by the audit.

viii. The maintenance of cost records has been prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956 vide Notification dated 3rd June, 2011 in respect of mining activities of the company. We have checked the records and are prima facie of the opinion that the same are properly maintained.

This being a statement of fact calls for no comments separately.

ix. (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor''s Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities. There were no undisputed arrears of statutory dues outstanding as on 31.03.2014 for a period of more than six months from the date they became payable.

This being a statement of fact calls for no comments separately.

(b) There are no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Excise Duty, Cess and Other Statutory dues which have not been deposited on account of any dispute except the following:

These cases are very old and pending before assessing Officer / Sales Tax Departmental Appellate Authority. Pending verdict of these appeal cases, no deposit has been made. However, these have been shown as contingent liability.

Period Forum where SL Name of the Nature of to which dispute is No Statute dues Amount Rs. relates pending

1. Provincial Sales Tax 3,86,243.13 F.Y. Assessing Sales Tax Act 1989-90 Officer

2 Provincial Sales Tax 1,79,762.00 F.Y. Additional Sales Tax Act 1990-91 Commissioner (Appeals)- 3

3 Provincial Sales Tax 48,441.00 F.Y Additional Sales Tax Act 1990-91 Commissioner (Appeals)- 3

4 Provincial Sales Tax 2,75,819.00 F.Y. Additional Sales Tax Act 1991-92 Commissioner (Appeals)- 3

5 Provincial Trade Tax 9,040.00 F.Y. Assessing Trade Tax Act. 1993-94 Officer

x. The Company does not have any accumulated losses at the end of financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

This being a statement of fact calls for no comments separately.

xi. The Company has not defaulted in repayment of dues to Financial Institutions or Banks.

This being a statement of fact calls for no comments separately.

xii. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

This being a statement of fact calls for no comments separately.

xiii. The Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund / Society.

This being a statement of fact calls for no comments separately.

xiv. The Company is not in the business of dealing or trading in shares. The Company has investments in shares of its wholly owned subsidiaries, SPV Joint Venture and in Mutual Funds only and has maintained proper records of transactions and contracts in respect thereof and timely entries have been made therein. The company, in its own name, has held all these shares.

This being a statement of fact calls for no comments separately.

xv. The terms and conditions on which the Company has given guarantees for loans taken by its subsidiaries from banks and financial institutions are not prima facie prejudicial to the interest of the Company.

This being a statement of fact calls for no comments separately.

xvi. No term loan has been availed during the year. However, the term loans availed by the Company in earlier years had been utilized for the purposes for which the said loan had been taken.

This being a statement of fact calls for no comments separately.

xvii. The funds raised on short-term basis have not been used for long-term investments.

This being a statement of fact calls for no comments separately.

xviii. During the year under audit, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

This being a statement of fact calls for no comments separately.

xxi. The Company has not issued any debentures during current or earlier year.

This being a statement of fact calls for no comments separately.

xx. The company, during the year, has not raised any money through Public Issue of shares.

This being a statement of fact calls for no comments separately.

xxi. No fraud, on or by the Company has been noticed by us during the year. However, according to the information and explanations given to us, a case of misappropriation of Company''s funds for personal gain has come to the notice of the management which is under investigation by different agencies, the impact of such misappropriation cannot be ascertained at this stage.

As stated by the Audit, the matter is under intense investigation by different agencies.

For De Chakraborty & Sen

Chartered Accountants

F.R. No. 303029E

(Srijit Chakraborty)

Place: Camp New Delhi Partner

Date : 29th May, 2014 Membership No.: 055317


Mar 31, 2013

1. Report on the Financial Statements

We have audited the accompanying financial statements of COAL INDIA LIMITED which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. These financial statements include figures in respect of HQ Kolkata, North Eastern Coalfields (NEC), CGMs office at Delhi and Kolkata Marketing Office.

2. Managements Responsibility for the Financial Statements

Management is responsible for 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 Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. This responsibility includes the design, implementation and maintenance of internal control 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,

3. Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Standards on Auditing issued by the Institute of Chartered Accountants of India. 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.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the Auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risks assessments the auditor considers internal control relevant to the Companys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, 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.

4. Without qualifying our report, attention is drawn to :

a) Notes No.11(1), 12(2) and 18 dealing with investments in and loans and advances (Short term/Long term, Current Account debit balances) to sick subsidiary of the company, that is, Eastern Coalfields Limited (ECL) which is under the Board of Industrial & Financial Reconstruction (BIFR). Revival plans have been approved by BIFR and vetted by the concerned ministry, On implementation of revival schemes the subsidiary is turning around and has started earning profits. In view of the changing circumstances, the management is of the opinion that no writing down or provisioning is required.

b) Note No. 21(1) dealing with non-recognition of income of apex charges and interest from ECL, a sick subsidiary company and also Apex Charges of BCCL (subsidiary of CIL) has been waived off by CIL Board. BCCL is still having accumulated losses, interest on other loans and advances has been deferred.

c) Note No. 10A(2) regarding non-provision against fixed assets in Dankuni Coal Complex leased to South Eastern Coalfields Limited (SECL) for lease rent of Rs. 1 per annum. In the opinion of the management the nominal income earning is a temporary policy matter and actual worth of the assets including land is much higher than the book value and as such no provision is called for.

5. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with Significant Accounting Policies and Additional Notes to Accounts as referred in Notes 33 and 34 respectively give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

(b) in the case the Statement of Profit & Loss, of the profit for the year ended on that date; and

(c) in the Cash Flow Statement, of the Cash Flows for the year ended on that date.

6. Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditors Report) Order, 2003, as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraph 4 and 5 of the Order.

(2) As required by section 227(3) of the Act, we report that:

- We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

- In our opinion proper books of accounts as required by law have been kept by the company so far as appears from our examination of those books.

- The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of accounts.

- In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3c) of section 211 of the Companies Act,1956; and

- In terms of Government of India, Department of Company Affairs Notification No.GSR 829(E) Dated 21st October,2003, Government Companies are exempted from the applicability of provisions of section 274(1)(g) of the Companies Act,1956.

- Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act,1956 nor had it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the company.

(Referred to in paragraph 6.1 of our report of even date).

On the basis of checks carried out during the course of audit and as per information and explanations furnished to us and to the best of our knowledge and belief we report that:

i. (a) The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. However, certain details as regards purchase order reference; date of commissioning and locations, identification marks are absent there in some cases of old items.

(b) Fixed Assets located at North Eastern Coalfields, the production unit of the company, has been physically verified by the management periodically in a phased manner and no material discrepancies have been noticed as confirmed by the Management. Verification of fixed assets located elsewhere was inadequate.

(c) No substantial part of fixed assets has been disposed of during the year, which has bearing on the going concern assumption.

ii. (a) Physical verification of inventory at North Eastern Coalfields has been conducted at reasonable intervals during the year by the management.

However, inventory at Stock-yard of West Bengal Regional Sales Office has not been physically verified. The inventories being very old have been provided for.

The inventories have been measured on the basis of volumetric system.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company has maintained proper records of inventory. No material discrepancies were noticed on physical verification.

iii. (a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 except advances to its subsidiaries BCCL and ECL where interest has been deferred / waived. In other cases, clause 4 (iii) (b) to (d) of the Order are not applicable.

(b) The company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 except some surplus funds of the subsidiaries parked with this holding company where reasonable interest has been paid except two cases of Northern Coalfields Limited and Mahanadi Coalfields Limited where no interest has been paid as these funds were transferred to Eastern Coalfields Limited and Bharat Coking Coal Limited for specific purposes as interest free advance. The terms and conditions of these advances are not prejudicial to the interest of the company.

iv. 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 no major weakness in internal control has been noticed except for certain old advances / receivable accounts where detail schedules are absent for a long time and the adjustments made there-against are basically effected on adhoc basis leading to the emergence of credit balances in some cases.

v. There are no contracts and arrangements as referred to in section 301 of the Companies Act, 1956, particulars of which needs to be entered into a register maintained under section 301 of the said Act. Accordingly, clause 4 (v) (b) of the Order is not applicable.

vi. The company has not accepted any deposits from the public within the meaning of the provisions of Section 58A and 58AA or any other relevant provision of the Companies Act , 1956 and rules made there under,

vii. The Company has an Internal Audit system commensurate with the size and nature of its business. But it requires substantial revamping in respect of timeliness and teeth of reporting together with risk based analysis of the inadequacies.

viii. The maintenance of cost records has been prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956 vide Notification dated 3rd June, 2011 in respect of mining activities of the company. We have checked the records and are prima facie of the opinion that the same are properly maintained.

ix. (a) The company is regular in depositing undisputed statutory dues including Provident Fund, Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities. There were no undisputed arrears of statutory dues outstanding as on 31.03.2013 for a period of more than six months from the date they became payable.

(b) There are no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Excise Duty, Cess and Other Statutory dues which have not been deposited on account of any dispute.

x. The company does not have any accumulated losses at the end of financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year,

xi. The company has not defaulted in repayment of dues to Financial Institutions or Banks.

xii. The company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. The company is not a Chit Fund or a Nidhi / Mutual Benefit Fund / Society,

xiv. The company is not in the business of dealing or trading in shares. The company has investments in shares of its wholly owned subsidiaries, SPV Joint Venture and in Mutual Funds only and has maintained proper records of transactions and contracts in respect thereof and timely entries have been made therein. The company, in its own name, has held all these shares.

xv. The terms and conditions on which the company has given guarantees for loans taken by its subsidiaries from banks and financial institutions are not prima facie prejudicial to the interest of the company,

xvi. No term loan has been availed during the year. However, the term loans availed by the company in earlier years had been utilized for the purposes for which the said loan had been taken.

xvii. The funds raised on short-term basis have not been used for long-term investments.

xviii. During the year under audit the company has not made any preferential allotment of shares.

xix. The company has not issued any debentures during current or earlier year (s).

xx. The company has not made any Initial Public offering (IPO) of shares during the year as the same was carried out during the year 2010-11.

xxi. No fraud, on or by the company has been noticed or reported during the year.

For De Chakraborty & Sen

Chartered Accountants

F.R. NO.303029E

Raktim Kumar Chattopadhyay

(Partner)

Membership No. 052225

Place: Kolkata

Date: 20th May, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of COAL INDIA LIMITED as at 31st March, 2012, the Statement of Profit and Loss and also the Cash Flow Statement of the Company for the year ended on that date annexed thereto in which are incorporated the accounts of North Eastern Coalfields (NEC), CGMs office at Delhi and Kolkata Marketing office which have been visited by us. Accounts of twelve regional Sales Offices (RSO) are included in the accounts of the said Kolkata marketing Office on the basis of monthly returns sent by the RSOs. The said Balance Sheet, Statement of Profit & Loss and the Cash Flow Statement have been signed by us under reference to this report. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, on the basis of such checks as considered appropriate and according to the information and explanations given to us during the course of the audit, we give in the Annexure hereto, a statement on the matters specified in the paragraphs 4 and 5 of the said order.

4. Without qualifying our report, attention is drawn to :

(a) Notes No.11 (1), 12(2) and 18(2) dealing with investments in and short term Loans & Advances (Current Account debit Balances) respectively to two sick Subsidiaries of the Company, that is, Bharat Coking Coal Limited (BCCL) and Eastern Coalfields Limited (ECL) which are under the Board of Industrial & Financial Reconstruction (BIFR). Revival plans have been approved by BIFR and vetted by the concerned Ministry. On implementation of revival schemes these Subsidiaries are turning around and have started earning Profit and have also started repaying old advances. In view of the changing circumstances, the management is of the opinion that no writing down or provisioning is required.

(b) Note No. 21(1) dealing with non-recognition of interest income from BCCL one of the said sick Subsidiaries.

(c) Note No. 10A (2) regarding non-provision against fixed assets in Dankuni Coal Complex leased to South Eastern Coalfields Limited (SECL) for lease rent of Rs 1 per annum. In the opinion of the management the nominal income earning is a temporary policy matter and actual worth of the assets including land is much higher than the book value and as such no provision is called for.

5. Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, 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 and proper returns adequate for the purpose of our audit have been received from the RSOs not visited by us;

(iii) The Balance Sheet, the Statement of Profit & Loss and Cash Flow statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, the Statement of Profit & Loss and Cash Flow statement read with Significant Accounting Policy and Additional Notes to Accounts as referred in Notes 33 and 34 respectively comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies act,1956.

(v) As per Notification No.GSR 829 (E) dated 21.10.2003 provisions of clause (g) of sub-section (1) to section 274 regarding disqualification of directors are not applicable to the Company.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said Statements of Account read together with Significant Accounting Policies and Additional Notes to Accounts as referred in Notes 33 and 34 respectively give the information required by the Companies Act,1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of Balance Sheet of the state of affairs of the Company as at 31st March, 2012;

(b) in the case of Statement of Profit & Loss, of the profit for the year ended on that date; and

(c) in the Cash Flow Statement, of the Cash Flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 3 of our report of even date).

On the basis of checks carried out during the course of audit and as per information and explanations furnished to us and to the best of our knowledge and belief we report that:

i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. However, certain details as regards purchase order reference, date of commissioning and locations are absent in some cases of old items.

(b) Fixed Assets located at North Eastern Coalfields, the production unit of the company, has been physically verified by the management periodically in phased manner and no material discrepancies have been noticed as confirmed by the Management. Fixed assets located elsewhere remain unverified.

(c) No substantial part of fixed assets has been disposed off during the year, which has bearing on the going concern assumption.

ii. (a) Physical verification of Inventory has been conducted at reasonable intervals during the year by the management, except for Stock- yard of West Bengal Regional Sales Office, the inventories of which is very old and has been provided for. The inventories have been measured on the basis of volumetric system.

(b) In our opinion, the procedures of physical verification of Inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The Company has maintained proper records of Inventory. No material discrepancies were noticed on physical verification.

iii (a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act,1956 except advances to its subsidiaries BCCL and ECL where interest has been deferred / waived. In other cases, clause 4 (iii) (b) to (d) of the order are not applicable.

(b) The company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies act,1956 except some surplus funds of the subsidiaries parked with this holding company where reasonable interest has been paid except two cases of Northern Coalfields Limited and Mahanadi Coalfields Limited where no interest has been paid as these funds were transferred to Eastern Coalfields Limited and Bharat Coking Coal Limited for specific purposes as interest free advance. The terms and conditions of these advances are not prejudicial to the interest of the company.

iv. 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 no major weakness in internal control has been noticed except for certain advances / receivable accounts where detail schedules are absent for a long time and the adjustments made there- against are basically effected on adhoc basis leading to the emergence of credit balances often.

v. There are no contracts and arrangements as referred to in section 301 of the Companies Act,1956, particulars of which needs to be entered into a register maintained under section 301 of the said Act. Accordingly, clause 4 (v)(b)of the order is not applicable.

vi. The Company has not accepted any deposits from the public within the meaning of the provisions of section 58A and 58AA or any other relevant provision of the Companies Act, 1956 and rules made there under.

vii. The Company has an Internal Audit system commensurate with the size and nature of its business. But it requires substantial revamping in respect of timeliness and teeth of reporting together with risk based analysis of the inadequacies.

viii. The maintenance of cost records has been prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956 vide notification dt 3rd June, 2011 in respect of mining activities of the company. We have checked the records and are prima facie of the opinion that the same are properly maintained.

ix. (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other Statutory dues with the appropriate authorities. There were no undisputed arrears of statutory dues outstanding as on 31.03.2012 for a period of more than six months from the date they became payable.

(b) There are no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Excise Duty, Cess and Other Statutory dues which have not been deposited on account of any dispute.

x. The Company does not have any accumulated losses at the end of financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

xi. The Company has not defaulted in repayment of dues to Financial Institutions or Banks.

xii. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. The Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund / Society.

xiv. The Company is not in the business of dealing or trading in shares. The Company has investments in shares of its wholly owned subsidiaries, SPV Joint Venture and in Mutual Funds only and has maintained proper records of transactions and contracts in respect thereof and timely entries have been made therein. The Company, in its own name, has held all these shares.

xv. The terms and conditions on which the Company has given guarantees for loans taken by its subsidiaries from banks and financial institutions are not prima facie prejudicial to the interest of the Company.

xvi. No term loan has been availed during the year. However, the term loans availed by the Company in earlier years had been utilized for the purposes for which the said loan had been taken.

xvii. The funds raised on short-term basis have not been used for long-term Investments.

xviii. During the year under audit the Company has not made any preferential allotment of shares.

xix. The Company has not issued any debentures during current or earlier year(s).

xx. The Company had made an Initial Public offering (IPO) of shares in October, 2010 and the shares were listed on Bombay Stock Exchange and National Stock Exchange on 04.11.2010. Since this was a divestment made by the Govt, of India, the proceeds of the same were used by Govt, of India and not by the Company.

xxi. No fraud, on or by the Company has been noticed or reported during the year.

For De Chakraborty & Sen

Chartered Accountants

FRNO.303029E

Sd/-

(Hrishikesh Chakraborty)

Partner

Membership No. 005660

Place: Kolkata

Date: the 18th day of May, 2012.


Mar 31, 2009

We have audited the attached Balance Sheet of COAL INDIA LIMITED as at 31st. March, 2009 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies ( Auditors Report ) Order, 2003 as amended by the Companies ( Auditors Report ) ( Amendment ) Order, 2004, issued by the Central Government in terms of sub-section (4A ) of section 227 of the Companies Act, 1956, we enclose as annexure, a statement on the matters specified in the paragraphs 4 and 5 of the said order.

Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

(ii) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books.

(iii) The Balance Sheet, Profit & Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of accounts.

(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement read with significant Accounting Policy and Notes to Accounts as referred in Schedule - M comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies act, 1956.

(v) As per Notification No. GSR 829 (E) dated 21-10-2003, provisions of clause (g) of sub-section (1) to Section 274 is not applicable to the company.

(vi) Subject to :

(a) Non provision for investments in, loans to and other receivables from two subsidiaries - namely, Bharat Coking Coal Limited and Eastern Coalfields Limited aggregating to Rs. 4,77,268.76 Lakhs and Rs. 5,91,021.75 Lakhs respectively as they have been declared sick under the Sick Industrial Companies (Special Provision) Act, 1985 and were referred to BIFR.

(b) As referred in item no. 13.13 of Notes to Accounts - Schedule - M, the provision against backfilling is not based on any technical evaluation.

(c) As referred in item no. 9.5 of Notes to Accounts - Schedule - M, we relied upon the actuarys certificate for disclosure of funded liability only. The actuarial liability against V.R.S (non-executives) and exgratia in lieu of employment on death in harness for employees has not been provided in the accounts. We are unable to quantify the impact in the accounts.

(d) As refer in item no. 9.7 of Notes to Accounts - Schedule - M, the information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMEDA) have not been made. In absence of non- identification of such units we are unable to quantify the impact, if any, in the accounts.

In our opinion and to the best of our information and according to the explanations given to us, the said Accounts read with the Notes in Schedule - M give the information required by the Companies Act, 1956 (as amended) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of Balance Sheet of the state of affairs of the Company as at 31st. March, 2009;

(b) in the case of Profit & loss Account of the profit for the year ended on that date; and

(c) in the Cash Flow Statement of the Cash Flows for the year ended on that date.

Annexure to The Auditors Report

1 (a) The Company has- maintained records showing full particulars including quantitative details and situation of Fixed Assets. However, certain details as purchase order reference; date of commissioning etc. are absent there. Records for the current years purchases/ sales are not incorporated in full. Reconciliation of the said Register with General Ledger is under progress.

(b) Fixed Assets located at North Eastern Coalfields, the production unit of the company, has been physically verified by the management periodically in phased manner and no material discrepancies have been noticed as confirmed by the Management. Other fixed assets located elsewhere remains unverified.

(c.) No substantial part of fixed assets has been disposed off during the year, which has bearing on the going concern assumption.

2.(a) Physical verification of Inventory has been conducted at reasonable intervals during the year by the management, except for inventories kept at stockyard of Regional Sales Offices.

(b) In our opinion, the procedures of physical verification of Inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The Company has maintained proper records of Inventory. No material discrepancies were noticed on physical verification.

3.(a) According to information and explanations 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 301 of the Companies Act, 1956. Accordingly clause 4 (III) (b) to (d) of the Order are not applicable.

(b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly clause 4 (III) (f) to (g) of the Order are not applicable.

4. On the basis of checks carried out during the course of audit and as per explanations given to us, we are of the opinion that there is 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 no major weakness in internal control has been noticed except for certain advance / receivable accounts where details/ schedules are absent for a long time and the adjustments made thereagainst are basically effected on adhoc basis leading to the emergence of credit balances often.

5. In our opinion and according to the information and explanations given to us, there are no contracts and arrangements as referred to in section 301 of the Companies Act, 1956, particulars of which need to be entered into a register maintained under section 301 of the said Act. Accordingly, clause 4 (V) (b) of the Order is not applicable.

6. The Directives issued by the Reserve Bank of India and the provisions of section 58 A or any other relevant provisions of the Companies Act, 1956 and the rules framed there under have been complied with in respect of deposits accepted from the public.

7. The Company has an Internal Audit system, the coverage whereof needs to be widened,

8. The maintenance of cost records has not been prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956, for the Company.

9.(a) According to the information and explanations given to us and on the basis of our examination of the books of accounts, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other Statutory dues with the appropriate authorities except in certain instances where the delays were noticed.

(b) According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax. Custom Duty, Wealth Tax, Excise Duty, Cess and Other Statutory dues which have not been deposited on account of any dispute.except for the following:

Particulars of Disputed Amount Forum where Dispute Libility Rs. In Lakhs is Pending

Municipal Tax 619.20 Kolkata Municipal Corpn./ Tribunal

10. The Company does not have any accumulated losses and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

11. The Company has not defaulted in repayment of dues to Financial Institutions or Banks.

12. According to information and explanations given to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund / Society.

14. The Company is not in the business of dealing or trading in shares. The Company has investments in shares of its wholly owned subsidiaries only and maintained proper records of transactions and contracts in respect thereof and timely entries have been made therein. The Company, in its own name, has held all these shares.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by its subsidiaries from banks and financial institutions are not prima facie prejudicial to the interest of the Company.

16. Based on information and explanations given to us by the management, no term loan has been applied for during the year. However, the term loans availed by the company in earlier years have been utilized for the purposes for which the said loan has been taken.

17. On the basis of our overall examination of the Cash Flow Statement, the funds raised on short-term basis have not been used for long-term Investment

18. During the year under audit the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debenture during current or earlier year (s).

20. The Company has not raised any money by way of Public Issue during the year.

21. Based upon the audit procedures performed and on the basis of information and explanations provided by the management, we report that no fraud, on or by the Company has been noticed or reported during the year.

Place : Kolkata For Mitra Kundu & Basu

Dated : The 19th June, 2009 Chartered Accountants

(S. Das)

Partner

Membership No. 051391

 
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