MANAGEMENT'S REPLY
  
  

    
To the Members of Coal India Limited
    

  
  

    
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), CGM's office at Delhi and Kolkata Marketing office which
    have been visited by us. Accounts of twelve regional Sales of fices (RSO) are included in
    the accounts of the said Kolkata marketing office on the basis of monthly returns sent by
    the RSO's. 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 Company's management. Our responsibility is to
    express an opinion on these financial statements based on ouraudit.
    

  
  

    
2. We conducted ouraudit 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 ouropinion.
    

  
  

    
3. As required by the Companies (Auditor's 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 4and5 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.
    
This being a statement of fact calls for no comments separately.
  
  

    
(b) Note No. 21(1) dealing with non-recognition of interest income from BCCLone of the
    said sickSubsidiaries.
    
This being a statement of fact calls for no comments separately.
  


 


  

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

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

  
  

    
(i) We haveobtainedalltheinformationandexplanations, whichto the best of our knowledge
    and belief were necessary for the purposes of ouraudit;
    

  
  

    
(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 RSO's 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
    at31stMarch,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.
    

  


for De Chakraborty & Sen

Chartered Accountants FR No. 303029E

Sd/-

(Hrishikesh Chakraborty) Partner

Membership No. 005660 Place: Kolkata

Date :the18th day of May, 2012.


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.
    
the few old items of fixed assets mentioned by the auditors are fully
    depreciated.
  
  

    
(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.
    
Efforts for verification of fixed assets at other locations have
    already been taken, and the same has since been carried out during 2012-13.
  
  

    
(c) No substantial part of fixed assets has been disposed of f during the year, which
    has bearing on the going concern assumption.
    
This being a statement of fact calls for no comments separately.
  
  

    
ii. (a) Physical verification of Inventory has been conducted at reasonable intervals
    during the year by the management, except for Stockyard of West Bengal Regional Sales of
    fice, the inventories of which is very old and has been provided for . the inventories
    have been measured on the basis of volumetric system.
    
the said Stockyards of West Bengal Regional Sales office are not
    operative since long. the book stock is not significant and its value has been fully
    provided for since long.
  
  

    
(b) In ouropinion, 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) Thecompanyhasnotgrantedanyloans,securedorunsecuredto 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.
    
These are 100% subsidiaries of CIL, and are sick and referred to
    BIFR. Certain interest from advances to these companies were deferred due to
  
  

    
(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
    companywhere 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.
    
uncertainties involved in realization owing to their poor financial
    condition and in certain cases such interest were waived as per their revival scheme under
    BIFR reference.
  


 

 


  

    
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 ouraudit no majorweakness 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 of ten.
    
Noted, action is being taken to adjust / reconcile the differences.
  
  

    
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 substantial revamping in respect of timeliness and teeth of
    reporting together with risk based analysis of the inadequacies.
    
Noted. Efforts will be taken to improve in the areas of inadequacies mentioned by the
    auditors.
  
  

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

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

    
xix. the Company has not issued any debentures during current or earlier year(s).
    
This being a statement of fact calls for no comments separately.
  
  

    
xx. the Company had made an Initial Public of fering (IPO) of shares in October,
    2010and 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.
    
This being a statement of fact calls for no comments separately.
  
  

    
xxi. No fraud, on or by the Company has been noticed or reported during theyear.
    
This being a statement of fact calls for no comments separately.
  


for De Chakraborty & Sen

Chartered Accountants FRNo.303029E

Sd/-

(Hrishikesh Chakraborty) Partner

Membership No. 005660 Place: Kolkata

Date : the 18th day of May, 2012.