To the Members of Cairn India Limited
Report on the Financial Statements
We have audited the accompanying standalone financial statements of Cairn India Limited
("the Company"), which comprise the Balance Sheet as at March 31, 2016, 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.
Managements Responsibility for the Financial Statements
The Companys 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
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 and Companies (Accounting Standards) Amendment Rules, 2016. This
responsibility also includes maintenance of adequate accounting records in accordance with
the provisions of the Act for safeguarding of 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
the design, implementation and maintenance of adequate internal financial control 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
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 thereunder. We conducted our audit in
accordance with the Standards on Auditing, issued by the Institute of Chartered
Accountants of India, as 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 disclosures in the financial statements. The procedures selected depend on the
auditors 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 Companys preparation of the
financial statements that give a true and fair view 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 the Companys 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 standalone
financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations
given to us, the 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 March
31, 2016, its profit, and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors report) Order, 2016 ("the Order")
issued by the Central Government of India in terms of sub-section (11) of section 143 of
the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3
and 4 of the Order.
2. As required by section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the 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, 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 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,
2016, and taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 2016, from being appointed as a director in terms of section 164 (2) of
the Act;
(f) With respect to the adequacy of the internal financial controls over financial
reporting of the Company and the operating effectiveness of such controls, refer to our
separate Report in "Annexure 2" to this report;
(g) 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, 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 32 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 were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E
per Naman Agarwal
Partner
Membership Number: 502405
Place: Gurgaon
Date: 22 April 2016
Annexure 1 referred to in paragraph 1 under the heading "Report on other legal and
regulatory requirements" of our report of even date Re: Cairn India Limited (the
Company)
(i) (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
(b) All fixed assets have not been physically verified by the management during the
year but there is a regular programme of verification which, in our opinion, is reasonable
having regard to the size of the Company and the nature of its assets. No material
discrepancies were noticed on such verification.
(c) According to information and explanations given by the management, the title deeds
of immovable properties, included under fixed assets, are held in the name of the Company
except for title deeds of immovable properties in oil and gas blocks, jointly owned with
other joint venture partners, which are held in the name of the licensee off the block.
The written down value of such immovable properties in the accompanying financial
statements aggregates to Rs. 267.39 crore.
(ii) The management has conducted physical verification of inventory at reasonable
intervals during the year and no material discrepancies were noticed on physical
verification.
(iii) According to the information and explanations given to us, the Company has not
granted any loans, secured or unsecured to companies, firms, Limited Liability
Partnerships or other parties covered in the register maintained under section 189 of the
Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the
Order are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us,
provisions of section 186 of the Companies Act 2013 in respect of investments made have
been complied with by the Company. In our opinion and according to the information and
explanations given to us, there are no loans, guarantees and securities granted in respect
of which provisions of section 185 and 186 of the Companies Act 2013 are applicable and
hence not commented upon.
(v) The Company has not accepted any deposits from the public.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant
to the rules made by the Central Government for the maintenance of cost records under
section 148(1) of the Companies Act, 2013, related to the extraction of crude oil and
natural gas, and are of the opinion that prima facie, the specified accounts and records
have been made and maintained. We have not, however, made a detailed examination of the
same.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputed
statutory dues including provident fund, income-tax, sales-tax, service tax, duty
of customs, duty of excise, value added tax, cess and other material statutory dues
applicable to it. The provisions relating to employees state insurance are not applicable
to the Company.
(b) According to the information and explanations given to us, no undisputed amounts
payable in respect of provident fund, income-tax, service tax, sales-tax, duty of customs,
duty of excise, value added tax, cess and other material statutory dues were outstanding,
at the year end, for a period of more than six months from the date they became payable.
The provisions relating to employees state insurance are not applicable to the Company.
(c) According to the records of the Company, the dues outstanding of income-tax,
sales-tax, wealth-tax, service tax, duty of customs, duty of excise, value added
tax and cess on account of any dispute, are as follows:
| Name of the statute |
Nature of dues |
Amount (in Rs. crore)1 |
Financial year to which it relates |
Forum where dispute is pending |
| Income Tax Act,1961 |
Additional Income Tax demand |
85.57 |
1999-00, 2008-09, 2009-10, 2010-11 |
Not applicable as application filed for rectification |
| Income Tax Act,1961 |
Additional Income Tax demand |
28.73 |
2008-09, 2009-10 |
Commissioner of Income Tax (Appeals) |
| Income Tax Act,1961 |
Additional Income Tax demand & penalty |
570.212 |
2002-03, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 |
Income Tax Appellate Tribunal |
| Income Tax Act,1961 |
Withholding Tax demand |
20,494.73 |
2006-07 |
Commissioner of Income Tax (Appeals) |
| Central Excise Act, 1944 |
Oil Cess and NCCD demand |
0.21 |
2002-03 to 2006-07 |
Central Excise and Service Tax Appellate Tribunal |
| Central Excise Act, 1944 |
Excise Duty demand |
0.06 |
June 13 to October 14 |
Commissioner Appeals |
| Finance Act, 1994 |
Service Tax demand |
23.57 |
2002-03 to 2013-14 |
Central Excise and Service Tax Appellate Tribunal |
| Customs Act,1962 |
Custom Duty demand |
0.16 |
2007-08 |
Commissioner Appeals |
| Andhra Pradesh VAT Act, 2005 |
Value Added Tax demand |
0.01 |
2011-12 |
Deputy Commissioner |
1 Represents the Companys share in gross liability after adjusting amounts paid
under protest. 2 Includes Rs. 274.45 crore for which the revenue department has
gone in for an appeal.
(viii) According to the information and explanations given by the management, the
Company did not have any outstanding dues in respect of a bank, financial institution,
government or debenture holders during the year.
(ix) According to the information and explanations given by the management, the Company
has neither raised any monies by way of initial public offer or further public offer
(including debt instruments) and term loans during the year nor did it have any such
unutilized monies outstanding at the start of the year. Hence, reporting under clause (ix)
is not applicable to the Company and hence not commented upon.
(x) Based upon the audit procedures performed for the purpose of reporting the true and
fair view of the financial statements and as per the information and explanations given by
the management, we report that no fraud by the Company or material fraud on the Company by
its officers or employees has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, we report
that the managerial remuneration has been paid / provided in accordance with the requisite
approvals mandated by the provisions of section 197 read with Schedule V to the Companies
Act, 2013.
(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of
clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management,
transactions with the related parties are in compliance with section 177 and 188 of
Companies Act, 2013 where applicable and the details have been disclosed in the notes to
the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall
examination of the balance sheet, the Company has not made any preferential allotment or
private placement of shares or fully or partly convertible debentures during the year
under review and hence, reporting requirements under clause 3(xiv) are not applicable to
the Company and, not commented upon. .
(xv) According to the information and explanations given by the management, the Company
has not entered into any non-cash transactions with directors or persons connected with
him as referred to in section 192 of the Companies Act 2013.
(xvi) According to the information and explanations given to us, the provisions of
section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E
per Naman Agarwal
Partner
Membership Number: 502405
Place of Signature: Gurgaon
Date: 22 April 2016
Annexure 2 referred to in paragraph 2 (f) under the heading "Report on other legal
and regulatory requirements" of our report of even date
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 ("the Act")
We have audited, the internal financial controls over financial reporting of Cairn
India Limited ("the Company") as of March 31, 2016 which is based on criteria
established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO 2013
criteria) in conjunction with our audit of the standalone financial statements of the
Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys Management is responsible for establishing and maintaining internal
financial controls based on the internal control over financial reporting criteria
established under the COSO 2013 criteria, which considers the essential components of
internal control stated in the Guidance Note on Audit of Internal Financial Controls Over
Financial Reporting issued by the Institute of Chartered Accountants of India. These
responsibilities include the design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring the orderly and efficient
conduct of its business, including adherence to the Companys policies, the safeguarding
of its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable financial
information, as required under the Companies Act, 2013.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial
controls over financial reporting based on our audit. We conducted our audit in accordance
with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting
(the "Guidance Note") and the Standards on Auditing as specified under section
143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal
financial controls, both applicable to an audit of Internal Financial Controls and, both
issued by the Institute of Chartered Accountants of India. Those Standards and the
Guidance Note require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether adequate internal financial controls
over financial reporting was established and maintained and if such controls operated
effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of
the internal financial controls system over financial reporting and their operating
effectiveness. Our audit of internal financial controls over financial reporting included
obtaining an understanding of internal financial controls over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the internal financial controls system over
financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal financial control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorisations of
management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorised acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial
reporting, including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may occur and not be detected.
Also, projections of any evaluation of the internal financial controls over financial
reporting to future periods are subject to the risk that the internal financial control
over financial reporting may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal
financial controls system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at March 31, 2016, based on the
internal control over financial reporting in COSO 2013 criteria, considering the essential
components of internal control stated in the Guidance Note on Audit of Internal Financial
Controls Over Financial Reporting issued by the Institute of Chartered Accountants of
India.
Explanatory paragraph
We also have audited, in accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India, as specified under Section 143(10) of the
Act, the standalone financial statements of the Company, which comprise the Balance Sheet
as at March 31, 2016, and the related 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, and our report of even date expressed an unqualified opinion
thereon.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E
per Naman Agarwal
Partner
Membership Number: 502405
Place: Gurgaon
Date: 22 April 2016
+91-9892691696
