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Updated:18 Sep, 2020, 15:59 PM IST

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Updated:18 Sep, 2020, 16:01 PM IST

INDEPENDENT AUDITORS' REPORT ON STANDALONE FINANCIAL STATEMENTS

TO THE MEMBERS OF OIL AND NATURAL GAS CORPORATION LIMITED

1. Report on the Standalone Financial Statements

e have audited the accompanying standalone financial statements of Oil and Natural Gas Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31st 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.

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 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 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 controls 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's Directors, as well as evaluating the overall presentation of the financial statements.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

4. 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 March 31, 2015, and its profit and its cash flows for the year ended on that date.

5. Emphasis of Matter

e draw attention to Note No. 44.1.1.b to the financial statements with regard to the dispute between the company and the Government of Gujarat in respect of payment of Royalty on the crude oil produced in the State. The accrual of the additional liability of Rs.117,242.00 million, (reduced to the extent Rs.16,440.00 million paid to Gujarat Government– refer note no. 31.2 to the financial statements), against which an amount of Rs.21,067.60 million has been paid with effect from February 1, 2014 and considered as deposit, would depend on the decision of the Hon'ble Supreme Court of India. The amount of Rs.117,242.00 million has been disclosed as contingent liability.

Our opinion is not modified in respect of this matter

6. Other Matters

I. The financial statements include the Company's share in the total value of assets, liabilities, expenditure and income of 134 blocks under New Exploration Licensing Policy (NELPs)/Joint Venture (JVs) accounts for exploration and production out of which 6 NELPs/JVs accounts have been certified by other Chartered Accountants and 17 NELP/JVs have been certified by the management in respect of NELPs/JVs operated by other operators. Our opinion is based solely on the certificate of the other Chartered Accountants and management certified accounts.

II. e have placed reliance on technical/commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry well, allocation of cost incurred on them, proved developed hydrocarbon reserves and depletion thereof on producing properties, impairment, liability for abandonment costs, liability for NELP and nominated blocks for under performance against agreed Minimum ork Programme and allocation of depreciation on process platforms to transportation and facilities. Our opinion is not modified in respect of these matters.

7. Report on the Other Legal and Regulatory Requirements

I. As required by the Companies (Auditors Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of the section 143(11) of the Act, we give in Annexure 1 a statement on the matters specified in the paragraphs 3 and 4 of the said Order, to the extent applicable.

II. Based on the verification of books of account of the Company and according to information and explanations given to us, we give below a report on the directions issued by the Comptroller and Auditors General of India in terms of section 143 (5) of the Act:

a. According to information and explanations given to us, the company has not been selected for disinvestment.

b. According to information and explanations given to us, the cases of waiver/write off of debts/loans/ interest wherever applicable during the year along with the reasons and amounts involved are stated in Annexure 2.

c. According to information and explanations given to us, the company has maintained adequate records in respect of inventories lying with third parties and assets received by the company as a gift from Government or other authorities.

d. e have carried out a review of age wise analysis of significant pending legal/arbitration cases based on the information and explanations made available to us and report that the reasons for the pendency are mainly on account of adjournment and other matters related to legal procedures. e also report that the company has in place a monitoring mechanism for expenditure incurred on such cases.

III. As required by section 143(3) of the Act, we report that:

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

b. In our opinion, 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 the written representations received from the directors as on 31st March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31stMarch 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

f. The matter described under "Emphasis of Matters" para above in the event of being decided unfavourably, in our opinion, may have an adverse impact on the functioning of the company.

g. ith respect to the other matters to be included in 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 the pending litigations on its financial position in its financial statements– Refer Note 44.1.1 to the financial statements.

ii. According to information and explanations given to us, the company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses– Refer Note 51 to the financial statements.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and protection Fund by the Company

Annexure 1 to Independent Auditors' Report (Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

i. a. The Company has generally maintained proper

records showing full par ticulars including quantitative details and situation of fixed assets.

b. As per the information and explanations given to us, the fixed assets having substantial value, other than those which are underground/submerged/under joint venture have been physically verified by the management in a phased manner, which in our opinion is reasonable, having regard to the size of company and nature of its business. The reconciliation of physically verified assets with the book records is in progress. Discrepancies noticed on the physical verification and consequential adjustments are carried out on completion of reconciliation. According to information and explanations given by the management and in our opinion, the same is not material.

ii. a. According to the information and explanations  given by the management, the inventory has been physically verified in the phased manner (excluding inventory lying with third parties, at some of the site–locations, inventory with joint ventures and intra site material in transit) during the year by the management. In our opinion, the frequency of verification is reasonable.

b. In our opinion, considering the size of the company and nature of its business, the procedure of physical verification of inventory followed by the management needs to be strengthened further.

c. The Company has generally maintained proper records of inventory. During the year, the management has identified certain discrepancies in the physical stock of crude oil which has been written off as stated on Note No. 50 to the financial Statements. According to the information and explanations given by the management and in our opinion, other than as stated above the discrepancies noticed on physical verification between the physical stock and book records were not material having regard to the size of the Company and nature of its business. In case where discrepancies noticed on physical verification have been identified with inventory records, necessary adjustments have been carried out in the books of account. In respect of cases where the reconciliation is not complete, the management has stated that the effect of the same on the accounts would be adjusted on completion of reconciliation.

iii. The Company has granted secured loans to five parties covered in the register maintained under section 189 of the Act.

a. According to information and explanations given to us and based on our verification of books of account, the receipt of principal amount and interest are regular.

b. According to information and explanations given to us and based on our verification of books of account we report that, there was no overdue amount in respect of such loans granted.

iv. In our opinion, and according to the information and explanations given to us, the internal control procedures are generally adequate and commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and for the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal controls.

v. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits as per the provision of the Act.

vi. e have broadly reviewed the costs records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub section (1) of section 148 of the Companies Act, 2013 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with the view to determine whether they are accurate or complete.

vii. a. According to records of the Company, undisputed  statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Service Tax, ealth Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2015 for a period more than six months from the date of becoming payable.

b. According to the information and explanations given to us, there were no dues in respect of Income Tax, Duty of Excise, Duty of Customs, Cess, Sales Tax, Service Tax, Value Added Tax and Wealth Tax which have not been deposited on account of any dispute except the following:

c. The amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

viii. The Company does not have accumulated losses at the end of the current financial year and has not incurred cash losses either during the year or during the immediately preceding financial year.

ix. The Company has not issued any debentures and has not borrowed any fund from financial institutions. The company has not defaulted in repayment of dues to the bank.

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 others from banks or financial institutions are not prima facie prejudicial to the interest of the Company.

xi. The company has not availed any term loan during  the year.

xii. According to the information and explanations given to us, except for over reporting of crude oil production and inventory which is under investigation as stated in note no. 50 to the financial statements, no fraud on or by the Company has been noticed or reported during the year.

For G. D. Apte & Co.  

Chartered Accountants

Firm Reg. No: 100515W

(C.M. Dixit)

Partner (M.No. 017532)

For Khandelwal Jain & Co.  

Chartered Accountants

Firm Reg. No: 105049W

(Narendra Jain)

Partner (M.No. 048725)

For Lodha & Co.

Chartered Accountants

Firm Reg. No: 301051E

(R. P Singh)

Partner (M.No. 052438)

For Mehra Goel& Co.  

Chartered Accountants

Firm Reg. No:000517N  

R. K. Mehra)

Partner (M.No. 006102)

For Varma & Varma

Chartered Accountants

Firm Reg. No:004532S

 (P R. Prasanna Varma)

Partner (M.No.025854)

Date : May 28, 2015

Place : New Delhi

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