To,
The Members,
GOL Offshore Limited
Mumbai
Report on the Standalone Financial Statements
We were engaged to audit the accompanying standalone financial statements of M/s GOL
Offshore Limited ("the Company") which comprise the Balance Sheet as at
March 31, 2016, Profit and Loss Statement and the Cash Flow Statement for the year then
ended and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
The Company’s Board of Directors is responsible for the matters mentioned 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 the 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
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.
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
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. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of the
accounting estimates made by Company’s Directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our qualified audit opinion on the Standalone financial statements.
Basis for Qualified Opinion
The Company has investment in equity/redeemable preference shares of wholly owned
subsidiary KEI-RSOS Maritime Limited and the carrying amount as at March 31, 2016 is Rs.
21,374 Lakhs, the balance of loan outstanding is Rs. 3,502 Lakhs and a further sum of Rs
4,423 Lakhs is due as Trade Receivables including Rs. 1,164 Lakhs recognized as income in
the current year. The Company has also issued corporate guarantee to a Bank amounting to
Rs. 14,168 Lakhs against which borrowing from bank outstanding on March 31, 2016 is Rs.
3,329 Lakhs. As per the latest available audited financial statements of KEI-RSOS Maritime
Limited the net worth of the company has fully eroded and the cash flows are under stress
as some of their assets are not earning and no impairment test has been carried out for
making provision, if any required. There are disputed debtors and claims against that
company which are subject matter of arbitration proceedings for which no provision is made
in the accounts of that company. As stated in Note no 30 to the financial statements, no
provision has been made for the diminution in the value of investments, the amount of
loans and trade receivables aggregating to Rs. 29,299 Lakhs and possible liability that
may arise due to devolvement of corporate guarantee mentioned above. If due provision was
made, income from charter hire would be lower by Rs. 1, 164 Lakhs, expenses would be
higher by Rs. 28,135 Lakhs and loss for the year higher by Rs. 29, 299 Lakhs with
consequent effect on investments, receivables and long term loans and advances and
shareholder’s funds with consequent effect on cash flow statement for a like amount.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations
given to us, except for the matters described in the Basis for Qualified Opinion
paragraph, 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; and of its losses and Cash Flows for the year ended on that date;
Emphasis of Matter
We draw attention to
i. Note: 39 of the financial statements regarding the continuing default in repayment
of Loans including loans recalled and corporate guarantees invoked/ recovery and winding
up proceedings initiated for reasons stated therein. The current liabilities are in excess
of current assets by Rs. 99,036 Lakhs. The appropriateness of going concern assumption,
classification of borrowings/assets given as a security and Hedge Accounting is dependent
on the actions proposed to be taken by management/ JLF as detailed in the said note.
ii. Note nos. 34, 36 & 38 wherein the reasons and basis for making provisions
against investments in and loans to subsidiaries and provisions for impairment of fixed
assets have been detailed.
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2016 ("Order")
issued by the Central Government of India in terms of sub-section (11) of section 143 of
the Companies Act, 2013, and on the basis of such checks of the books and records of the
Company as we considered appropriate and according to the information and explanations
given to us, we give in the Annexure I, a statement on the matters specified in
Paragraphs 3 and 4 of the said Order to the extent applicable.
2. As required by section 143(3) of the Act, we report that: a) We 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 appears from our examination of those books.
c) The Balance Sheet, the Profit and Loss Statement and Cash Flow Statement dealt with
by this report are in agreement with the books of account.
d) Except to the extent mentioned in our Basis of Qualified Opinion paragraph above, 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) The matters described in the Basis for Qualified Opinion paragraph and Emphasis of
Matter paragraph and those on unpaid undisputed statutory dues and pending litigations
referred to in Para No. (i)A below may have an adverse effect on the functioning of the
Company.
f) 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.
g) Our reservation relating to the maintenance of accounts and other matters connected
therewith are as stated in the Basis for Qualified Opinion paragraph.
h) With respect to the adequacy of internal financial controls over financial reporting
of the company and the operating effectiveness of such controls, refer to our separate
report in Annexure – II and
i) 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:
A. The Company has pending litigations disclosed as contingent liabilities in its Note
No.29 in addition to recovery/winding-up proceedings by creditors as mentioned in Note 39
to the financial statements as well as in basis of Qualified Opinion paragraph, the impact
if any on the final settlement of the litigations is not ascertainable at this stage.
B. The Company has made provision, as required under the applicable law or accounting
standards as adopted, for material foreseeable losses relating to long term contracts and
derivative contracts and its appropriateness is subject to achieving matters mentioned in
the Emphasis of Matter paragraph.
C. There were no delays in transferring undisputed amounts which were required to be
transferred to the Investor Education and Protection Fund by the company during the year
except an amount of INR 4.21 Lakhs declared in 2007 and 2008 which has not been
transferred on account of legal disputes.
| For VARMA & VARMA |
For Motilal& Associates |
| Chartered Accountants |
Chartered Accountants |
| FRN 004532S |
FRN 106584W |
| Cherian K Baby |
Motilal Jain |
| Partner |
Partner |
| M. No. 16043 |
M No. 036811 |
| Mumbai, May 30, 2016 |
Mumbai, May 30, 2016 |
ANNEXURE I TO THE AUDITORS’ REPORT
Annexure referred to in paragraph 1 of our report of even date on the standalone
Financial Statement of GOL Offshore Limited for the year ended March 31, 2016 to
the extent applicable.
(i) a) The company is maintaining proper records showing full particulars, including
quantitative details and situation of fixed assets;
b) We have been informed that the major fixed assets of the company consisting of
Fleet, Rigs and I.T Equipment’s have been physically verified by the management
during the year. In our opinion, the company has a program of verification which is
reasonable having regard to the size of the company and the nature of its assets and
operations, and we have been informed that no material discrepancies were noticed on such
verification.
c) As explained to us, the title deeds of all the Immovable properties are held in the
name of the Company. Since the title deeds are lodged with lenders originals of the same
could not be verified by us.
(ii) We have been informed by the Management that the physical verification of
Inventory is conducted as per the preset cyclical programme on monthly basis during the
year on all large vessels in operation and no material discrepancies were noticed. In our
opinion the frequency of such physical verification of Inventory is reasonable. In respect
of inventory on smaller vessels a system of physical verification of inventory as of or
close to the year end is to be introduced.
(iii) 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.Therefore the provisions of clause 3(iii)(a) to
3(iii)(c) of the said Order are not applicable to the Company.
(iv) The Company has complied with the provisions of Section 185 and 186 of the
Companies in respect of the Loans, Guarantees, Investments and Securities given by it.
(v) The company has not accepted deposits in accordance with directives issued by the
Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant
provisions of the Companies Act and the rules framed there under are not applicable to the
company.
(vi) According to the information and explanations given to us, we are of the opinion
that, prima-facie, the company is not required to maintain cost records prescribed as per
the Order issued by the Central Government under section 148 (1) of the Companies Act,
2013.
(vii) (a) As per the information and explanations furnished to us and according to our
examination of the records of the Company, the Company has been generally regular in
depositing undisputed statutory dues on account of Employee State Insurance and other
statutory dues as applicable to the company with the appropriate authorities during the
year, except for Provident Fund, Profession Tax, Advance Tax,Self-Assessment Tax, TDS,
Service Tax,and Works Contract Tax where there have been serious delays in a number of
cases. Undisputed amounts payable, outstanding for a period of more than six months from
the date they became payable are as stated below:
| Name of the statute |
Nature of Dues |
Amount (INR in Lakhs) |
Period to which the amount relates |
Due Date |
Date of Payment |
| Income Tax Act, 1961 |
Self-Assessment Tax |
657.88 |
Year Ended 31st March’13 |
30.11.2013 |
Not Yet Paid |
| Income Tax Act, 1961 |
Interest on delayed payment of the above |
166.72 |
Year Ended 31st March’13 |
30.11.2013 |
Not Yet Paid |
| Income Tax Act, 1961 |
Balance Interest on the above upto 30.09.2015 |
265.91 |
Year Ended 31st March’13 |
Various Dates upto 30.09.2015 |
Not Yet Paid |
| Income Tax Act, 1961 |
Self-Assessment Tax |
1,784.15 |
Year Ended 31st March’14 |
30.11.2014 |
Not Yet Paid |
| Income Tax Act, 1961 |
Interest on delayed payment of the above |
253.33 |
Year Ended 31st March’14 |
30.11.2014 |
Not Yet Paid |
| Income Tax Act, 1961 |
Balance Interest on the above upto 30.09.2015 |
203.75 |
Year Ended 31st March’14 |
Various Dates upto 30.09.2015 |
Not Yet Paid |
| Income Tax Act, 1961 |
Tax Deducted at |
31.07 |
Year Ended |
Various |
Not Yet Paid |
|
Source |
10 |
31st March’14 |
Dates upto |
|
|
|
|
31st March’15 |
30.09.2014 |
|
|
|
42.37 |
31st March’16 |
|
|
| Income Tax Act, 1961 |
Interest on late pay- |
167.85 |
Year Ended |
Various |
Not Yet Paid |
|
ment of TDS |
32.59 |
31st March’15 |
Dates upto |
|
|
|
|
31st March’16 |
30.09.2014 |
|
| United Kingdom Corporation Tax Act, 2015 |
United Kingdom Payee Tax (excluding interest) |
120 |
April’13 to August’15 |
10th Day of subsequent month |
Not Yet Paid |
|
|
50 |
|
|
|
|
|
120 |
|
|
|
(b) According to the information and explanation given to us and as per the records of
the company examined by us, there are no unpaid disputed taxes due as on 31st
March, 2016 except for the following:
| Name of the Statue |
Nature of dues |
Amount (INR) (In Lakhs) |
Period to which the total amount relates |
Forum where dispute is pending |
| Income Tax Act, 1961 |
Income Tax including interest upto date of demand |
347.20 |
2005-06 |
Deputy Commissioner of |
|
|
29.09 |
2006-07 |
Income Tax |
|
|
512.87 |
2007-08 |
|
| Income Tax Act, 1961 |
Income Tax including interest upto date of demand |
1,660.51 |
2008-09 |
Income Tax |
|
|
84.24 |
2009-10 |
Appellate Tribunal |
|
|
600.41 |
2011-12 |
|
| Income Tax Act, 1961 |
Tax Deducted at Source including interest |
660.37 |
2008-09 to 2014- |
Deputy Commissioner of |
|
|
|
15 |
Income Tax - TDS |
| The Tamil Nadu General Sales Tax Act 1959 |
Tax u/s 3A of The Tamil Nadu General Sales Tax Act, 1959 |
100.78 |
1995-96 and |
The Sales Tax Appellate Tribunal, Chennai |
|
|
|
1996-97 |
|
| The Karnataka Sales Tax Act, 1957 |
Tax u/s 5-C of the Act |
117.96 |
1995-96 to |
Stay granted by Supreme Court |
|
|
|
2001-02 |
|
| The Karnataka Sales Tax Act, 1957 |
Sales Tax |
6.03 |
2007-08 |
Assistant Commissioner (CT) III, Enforcement Tribunal |
| The Customs Act, 1962 |
Customs Duty |
70.37 |
2001-02 |
Customs, Excise and Service Tax Appel- late Tribunal |
| The Customs Act, 1962 |
Customs Duty |
235.93 |
December 99 |
Commissioner of Customs (Import) |
| West Bengal Sales Tax Act |
Sales Tax |
41.59 |
2001-02 |
Taxation Tribunal, Kolkata |
(viii) According to information and explanation given to us and as per our verification
of the records of the company, the company has defaulted in repayment of its dues to banks
and financial institutions during the year. Following are the details of the default days
for the financial year 2015-16 in repayment of dues: (Rs. in Lakhs)
| Bank and Financial Institutation |
Delay upto 90 Days |
Delay 91-180 Days |
Delay 181-365 Days |
More than 365 Days |
| Loan |
|
|
|
|
| Axis Bank |
7975 |
|
|
|
| Central Bank of India |
454 |
|
|
|
| DBS |
141 |
|
|
|
| DVB Bank |
3,330 |
151 |
1,065 |
|
| HSBC Bank |
|
|
|
2,278 |
| ICICI Bank |
6,233 |
|
|
|
| IDBI Bank |
1,915 |
1,561 |
|
|
| Natixis |
5192 |
861 |
654 |
|
| Punjab National Bank |
|
1,809 |
|
|
| Union Bank |
|
268 |
|
|
| Total |
25,240 |
4,650 |
1,719 |
2,278 |
| Interest |
|
|
|
|
| Axis Bank |
3766 |
58 |
36 |
- |
| Bank of Baroda |
209 |
224 |
10 |
- |
| Central Bank of India |
263 |
195 |
- |
- |
| DVB Bank |
1563 |
- |
- |
- |
| Exim Bank |
- |
- |
- |
129 |
| Federal Bank |
235 |
460 |
170 |
- |
| HSBC Bank |
88 |
- |
- |
- |
| ICICI Bank |
2641 |
- |
- |
- |
| IDBI Bank |
1473 |
1155 |
- |
- |
| Natixis |
208 |
- |
- |
- |
| Punjab National Bank |
397 |
1,496 |
- |
- |
| State Bank of Hyderabad |
481 |
108 |
4 |
- |
| Union bank |
60 |
134 |
- |
- |
| Total |
11,384 |
3,830 |
220 |
129 |
During the year, Federal Bank had sold the outstanding loan amount to ARC, as result of
which the continuing default was made good and the new agreed terms have been considered
for reporting under this clause.
In addition to the above continuing defaults in payment of dues to banks and financial
institutions were noticed. The details of continuing defaults as at the balance sheet date
are given below:
(Rs. in Lakhs)
| Bank and Financial Institutation |
Delay upto 90 Days |
Delay 91-180 Days |
Delay 181-365 Days |
More than 365 Days |
| Loan |
|
|
|
|
| Axis Bank |
1,711 |
- |
- |
- |
| Bank of Baroda |
394 |
394 |
789 |
- |
| Central Bank of India |
227 |
227 |
227 |
- |
| DVB Bank |
14,445 |
- |
- |
- |
| Exim Bank |
1,292 |
1,292 |
2,584 |
7,721 |
| HSBC Bank |
- |
- |
- |
316 |
| ICICI Bank |
500 |
- |
- |
- |
| IDBI Bank |
669 |
- |
- |
- |
| Punjab National Bank |
- |
2,323 |
- |
- |
| Union Bank |
268 |
268 |
536 |
- |
| Total |
19,506 |
4,504 |
4,136 |
8,037 |
| Interest |
|
|
|
|
| Axis Bank |
1,024 |
- |
- |
- |
| Bank of Baroda |
346 |
335 |
514 |
- |
| Central Bank of India |
197 |
198 |
162 |
- |
| Exim Bank |
701 |
382 |
733 |
1,756 |
| Federal Bank |
120 |
38 |
- |
- |
| ICICI Bank |
109 |
- |
- |
- |
| IDBI Bank |
411 |
- |
- |
- |
| Punjab National Bank |
586 |
382 |
- |
- |
| State Bank of Hyderabad |
5 |
- |
- |
- |
| Union bank |
167 |
150 |
159 |
- |
| Total |
3,666 |
1,485 |
1,568 |
1,756 |
(ix) According to the information and explanation given to us on as overall basis, and
utilization certificate obtained from a Chartered Accountant in respect of two term loans
and on the basis of records verified by us nothing has come to our attention that term
loan has not been applied for the purpose for which the loans were obtained. During the
year, no monies have been raised through public offer.
(x) According to the information and explanation given to us and the records of the
company examined by us, no material fraud on or by the Company has been noticed or
reported during the course of our audit.
(xi) The company has complied with the relevant section 177 & 188 of the Companies
Act, 2013 in respect of related party transactions and details have been disclosed in the
financial statements as required in Accounting Standard 18.
(xii) The provision of clauses 3 (xi), (xii), (xiv), (xv) & (xvi) of the Order are
not applicable to the Company.
| For VARMA & VARMA |
For Motilal& Associates |
| Chartered Accountants |
Chartered Accountants |
| FRN 004532S |
FRN 106584W |
| Cherian K Baby |
Motilal Jain |
| Partner |
Partner |
| M. No. 16043 |
M. No. 036811 |
| Mumbai, May 30, 2016 |
Mumbai, May 30, 2016 |
ANNEXURE - II TO THE INDEPENDENT AUDITORS’ REPORT
Annexure referred to in para 2 (h) of our Report of even date on the standalone
financial statements of GOL Offshore Limited for the year ended March 31, 2016.
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 GOL
Offshore Limited ("the Company") as of March 31, 2016 in conjunction with
our audit of the standalone financial statements of the Company for the year ended on that
date.
Management’s Responsibility for Internal Financial Controls
The Company’s management is responsible for establishing and maintaining internal
financial controls based on the internal control over financial reporting criteria
established by the Company 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 (‘ICAI’). 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 company’s 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 Company’s 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, issued by ICAI and deemed
to be prescribed 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 auditor’s judgment, 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 Company’s internal financial controls
system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company’s 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 company’s 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 authorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s 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 criteria established by the Company 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.
Emphasis of Matter
We draw attention to Note No 42 to the financial statements regarding certain weakness/
deficiencies regarding internal control systems and how the same have been mitigated/ are
proposed to be mitigated. Our report is not qualified in respect of the above.
| For VARMA & VARMA |
For Motilal& Associates |
| Chartered Accountants |
Chartered Accountants |
| FRN 004532S |
FRN 106584W |
| Cherian K Baby |
Motilal Jain |
| Partner |
Partner |
| M. No. 16043 |
M No. 036811 |
| Mumbai, May 30, 2016 |
Mumbai, May 30, 2016 |
+91-9892691696
