FUTURE HPCL Auditors Report

Report on the Standalone Ind AS Financial Statements


We have audited the accompanying standalone Ind AS financial statements of HINDUSTAN PETROLEUM CORPORATION LIMITED (“the Company”), which comprise the Balance Sheet as on March 31, 2017, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information in which, is incorporated Ind AS financial statements of Visakh Refinery, audited by the branch auditor, whose report dated May 22, 2017 has been considered in preparing this report.


Management’s Responsibility for the Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of the financial position, financial performance (including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act.


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 standalone Ind AS 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 Ind AS 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 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 standalone Ind AS financial statements are free from material misstatement.


An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS 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 standalone Ind AS 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 Ind AS financial statements.


Opinion


In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 on March 31, 2017, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.


Other Matter


We refer to note no. 56 in connection with 21 Un-incorporated Jointly Controlled Entities (UJCEs) involved in exploration activities, of which majority of UJCEs are under relinquishment. The attached standalone Ind AS financial statements include Company’s proportionate share in Assets and Liabilities, Income and Expenditure amounting to Rs.20.02 crores and Rs.12.29 crores, Rs.Nil crores and Rs.15.25 crores respectively, as on March 31, 2017. In respect of these UJCEs, the audited accounts are not available with the Company. The financial information has been incorporated based on un-audited Ind AS financial statements / data received from the respective operators.


Our opinion is not modified in respect of these matters.


Report on Other Legal and Regulatory Requirements


1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable.


2. As required by the section 143(5) of the Act, we give in the Annexure II a statement on the directions / sub-directions issued by the Comptroller and Auditor-General of India.


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 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 reports on the accounts of the branch office of the Company viz. Visakh Refinery audited under section 143(8) of the Act by the branch auditor have been sent to us and have been properly dealt with by us in preparing this report;


(d) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the Statement of changes in Equity dealt with by this Report are in agreement with the books of account;


(e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with the Companies (Indian Accounting Standard) (Amendment) Rules, 2016;


(f) As per notification no. G.S.R 463(E) dated June 5, 2015, the Government companies are exempted from the provisions of section 164(2) of the Act, accordingly, we are not required to report whether any directors are disqualified in terms of provisions contained in the said section;


(g) 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 III.


(h) 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 as amended by the Companies (Audit and Auditors) Rules, 2017, 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 standalone Ind AS financial statements - Refer Note 68 to the standalone Ind AS financial statements;


(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;


(iii) There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company except minor delay involving sum of Rs.3,430, which has been regularized post the date of balance sheet; and


(iv) The Company has provided requisite disclosures in the standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the management - Refer Note 72 to the standalone Ind AS financial statements.


Annexure I - referred to in paragraph 1 under “Report on Other Legal and Regulatory Requirements” of our report of even date


(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property Plant and Equipment (fixed assets).


(b) The Property Plant and Equipment of the Company, other than LPG cylinders and pressure regulators with customers are physically verified by the Management in a phased program of three to five years cycle. In our opinion, the programme is reasonable having regard to the size of the Company and the nature of its assets. In our opinion and as per the information given by the management, the discrepancies observed were not material and have been appropriately accounted in the books of account.


(c) According to the information and explanations given to us and based on verification of records on random basis, we report that the title deeds of immovable properties held as Property Plant and Equipment, other than self-constructed properties, are held in the name of the Company, except for the following:


Rs. / Crores




















Particulars



No. Of Cases



Gross Block as on March 31, 2017



Net Block as on March 31, 2017



Remarks



Freehold Land



3



0.02



0.02



Title Deeds not available for verification



For the purpose of reporting under this clause, the title deeds of immovable properties were not available but substantial evidence like property tax payment receipts, noting in municipal records conveying the title of the Corporation over the property have not been considered.


(ii) During the year, the inventories have been physically verified at reasonable intervals by the management. The discrepancies noticed on physical verification, as compared to the book records, were not material having regards to size and nature of operations and have been properly dealt with in the books of account.


(iii) As per notification no. G.S.R 463(E) dated June 5, 2015, the Government companies are exempted from the provisions of section 188 of the Act in respect of contracts or arrangements entered into between the Government companies. The Company has not granted loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. Hence, the question of reporting under sub-clauses (a), (b) & (c) of the clause 3(iii) of the Order does not arise.


(iv) The Company has not granted any loans or provided any guarantees or security to the parties covered under section 185 of the Act. The Company has complied with the provisions of section 186 of the Act in respect of investments made or loans or guarantee or security provided to the parties covered under section 186 of the Act.


(v) The Company has not accepted any deposits from the public, within the meaning of sections 73 to 76 of the Act and the rules framed there under. We are informed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal in this regard.


(vi) We have broadly reviewed accounts and records maintained by the Company pursuant to rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act, in respect of Company’s products to which the said rules are made applicable and are of the opinion that, prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of records with a view to determine whether they are accurate.


(vii) (a) According to the information and explanations given to us and according to the records of the Company examined by us, in our opinion, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-tax, Sales Tax, Service Tax, duty of Custom, duty of Excise, Value Added Tax, Cess and any other statutory dues, wherever applicable.


According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding as on March 31, 2017 for a period of more than 6 months from the date they became payable.


(b) According to the information and explanations given to us, the particulars of statutory dues that have not been deposited on account of disputes are as under:
















































































































































Statute



Forum pending



Amount in Crores



Period to which amount relates



Customs



Tribunal**



12.45



1998 to 2011



Appellate Authority*



2.47



2007 to 2013



Total



14.92



Central Excise



Tribunal**



344.60



1994 to 2015



Adjudicating Authority ***



25.28



2004 to 2014



Revision Authority



1.09



1999 to 2012



High Court



4.21



1994 to 2008



Appellate Authority*



15.26



1996 to 2016



Total



390.43



Sales tax/ Entry tax



Board of Revenue



4.99



1999 to 2014



Appellate Authority*



1,809.73



1976 to 2015



Adjudicating Authority ***



4,100.62



1985 to 2014



Supreme Court



6.68



2002 to 2004



High Court



854.25



1979 to 2014



Objection Hearing Authority



17.89



2008 to 2012



Tribunal**



2,775.63



1985 to 2014



Total



9,569.79



Service Tax



Appellate Authority*



1.16



2005 to 2015



Tribunal**



78.81



2002 to 2015



High Court



3.75



1981 to 2013



Total



83.72



Income Tax



Tribunal**


Total



0.17


0.17



2006 to 2011



* Appellate Authority represents Assistant Commissioner (A), Deputy Commissioner (A), Joint commissioner (A), Additional Commissioner (A)


** Tribunal represents Sales Tax Appellate Tribunal, Central excise and Service tax Appellate Tribunal (CESTAT) , Income tax Appellate Tribunal (ITAT)


*** Adjudicating authority represents Assessing Officer, Additional Commissioner, Deputy Commissioner, Joint commissioner, Additional Commissioner, Chief Commissioner


(viii) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowing to financial institutions, banks, government or dues to debenture holders.


(ix) The Company has not raised money by way of initial public offer or further public offer (including debt instruments). According to the information and explanations given to us and on the basis of the records examined by us, the Company has prima facie applied the term loan for the purpose for which it was obtained.


(x) During the course of our examination of the books and records of the Corporation, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, no instances of material fraud by the Corporation or on the Corporation by its officers and employees have been noticed or reported during the year except suspected irregularity detected by the management of Rs.5.60 Crores involving employees of the Corporation. The management has taken appropriate steps and the matter is under investigation.


(xi) As per notification no. G.S.R 463(E) dated June 5, 2015, the Government companies are exempted from the provisions of section 197 of the Act, accordingly, the question of reporting whether the payment of managerial remuneration is in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act does not arise.


(xii) The Company is not a chit fund or a nidhi company. Hence, the question of reporting under clause 3(xii) of the Order does not arise.


(xiii) As per notification no. G.S.R 463(E) dated June 5, 2015, the Government companies are exempted from the provisions of section 188 of the Act in respect of contracts or arrangements entered into between the Government companies. The Company has complied with the provisions of section 177 and section 188 of the Act in respect of transactions with the related parties and the details have been disclosed in the Ind AS financial statements as required by the applicable Indian accounting standards.


(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under audit.


(xv) The Company has not entered into any non-cash transactions with directors or persons connected with him covered under the provisions of section 192 of the Act.


(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.


For G. M. Kapadia & Co. For CVK & Associates


Chartered Accountants Chartered Accountants


Firm Registration No.: 104767W Firm Registration No.: 101745W


Sd/- Sd/-


Rajen Ashar A.K. Pradhan


Partner Partner


Membership No.: 048243 Membership No.: 032156


Place: New Delhi


Dated : 26th May 2017

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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