FUTURE ONGC Auditors Report

To


The Members of Oil and Natural Gas Corporation Limited


1. Report on the Standalone Financial Statements


We have audited the accompanying standalone financial statements of Oil and Natural Gas Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016 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. 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 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. 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. 2016, and its profit and its cash flows for the year ended on that date.


5. Emphasis of Matter


We draw attention to Note No. 45.1.1.b to the standalone 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 reduced in the State. The accrual of the additional ability of Rs. 117,864.64 million, against which an amount of Rs. 21,690.24 million has been paid with effect from February 2014 and considered as deposit, would depend on the decision of the Hon''''ble Supreme Court of India. The amount of Rs. 117,864.64 million has been disclosed as contingent liability.


We draw attention to Note no. 45.1.1.C to the standalone financial statements with regard to similar dispute before High Court of Guwahati where Government of Assam has claimed royalty on the crude oil produced in the state. This amount of demand including interest there on Rs. 30,857.82 million is 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 135 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 11 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. We have placed reliance on technical/commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry wells, allocation of costs incurred on them, proved developed hydrocarbon reserves and depletion thereof on Oil and Gas Assets, impairment, liability for abandonment costs, liability for NELP and nominated blocks for under performance against agreed Minimum Work Programme.


Our opinion is not modified in respect of these mat ters.


7. Report on Other Legal and Regulatory Requirements


i. As required by the Companies (Auditor''''s Report) Order, 2016 ("the Order"), issued by the Central Government ol 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 ex tent 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/ Additional Sub-Directions issued by the


(Rs, in millions)






























Nature



Number of assets



Gross Block



Net Block



Lease hold land



15



1,903.98



1.679.02



Free hold land



158



184.61



184.61



Total



173



2.088.59



1,863.63




Comptroller and Auditor General of India in terms of section 143 (5) of the Act:


a. On the basis of the information to the extent compiled by the Company pending the reconciliation of the available records with the books of account and considering the voluminous nature and various locations, we report that the title/lease deeds for free hold/lease hold land are held in the name of Company except for the following where the title deeds and area details for the same are not available with the Company:


Pending compilation by the management of the complete details covering all the units, area under respective line items for the above could not be given.


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 amount 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/grants from Government or other authorities.


d. We have verified ceiling test calculation for all oil and gas fields/Cash Generating Units for determination of impairment provision of Fixed Assets of the Company.


iii. 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 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 ot the Act, read with Rule 7 of the Companies (Accounts) Rules 2014.


e. As per notification number G.S.R. 463 (E) dated June 5, 2015 issued by Ministry of Corporate Affairs, section 164(2) as regards the disqualifications of Directors is not applicable to the Company, since it is a Government Company.


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 3" to this Report.


g. The matter described under “Emphasis of Matters" para above in the event of being decided unfavorably, in our opinion, may have an adverse impact on the functioning of the Company.


h. With 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 45.1.1 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 50 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.


i a. The Company has generally maintained proper records showing full particulars 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 are not material,


c. On the basis of the information to the extent compiled by the Company pending the reconciliation of the available records with the books of account and considering the voluminous nature and various locations, we report that the title/lease deeds of immovable properties are held in the name of Company except for the following where the title/lease deeds are not available with the Company:


(Rs, in millions)




































Nature



Number of assets



Gross Block



Net Block



Lease hold land



15



1.903.98



1,679.02



Free hold land



158



184.61



184.61



Building



12



280.14



64.94



Total



185



2,368.73



1,928.57




ii. According to the information and explanations given to us, the inventory has been physically verified in phased manner at reasonable intervals (excluding inventory lying with third parties, at some of the site-locations, inventory with joint ventures and material in transit) during the year by the management which did not reveal any material discrepancies. However, in our opinion, procedures for physical verification of Stores and Spare parts, ascertainment of discrepancies and carrying out of consequent accounting adjustments need to be made compliant with internal guidelines of the Company and strengthened so as to make the same commensurate with the size of the Company and the nature of its business.


iii. The Company has not granted secured loans to any companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act.


iv. In our opinion and according to the information and explanations given to us, the Company has not advanced loans to directors / to a Company in which the Director is interested to which provisions of section 185 of the Act apply. The provisions of section 186 of the Act, in our opinion, are not applicable to the Company.


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


vi. We have broadly reviewed the cost 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 Act 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, Duty of Customs, Duty of Excise, Value Added Tax. Cess and other statutory dues have generally been 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. 2016 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, Sales Tax. Service Tax and Value Added Tax which have not been deposited on account of any dispute except the following:











































































































































































































(Rs, in millions)



Name of the statute



Nature of Dues



Forum where dispute is pending



Period to which the amount relates (financial year)



Gross Amount Involved



Amount Paid under Protest



Amount


Unpaid



CENTRAL EXCISE ACT, 1944



Central Excise Duty / Interest/ Penalty



Commissioner (Appeals) of Custom. Excise and Service Tax



2002 - 2003 2014-2015



109.81



108.54



1.27



Custom , Excise and Service Tax Appellate Tribunal



2001 -2016



6,288.10



346.73



5,941.37



Hon. High Court



1996-2000 2007 - 2015



351.33



4.32



347.01



Hon. Supreme Court



2000 2005



1,176.60



1.176.60



Total (A)



7,925.84



459.59



7.466.25



CENTRAL SALES TAX ACT.1956 AND RESPECTIVE STATES SALES TAX ACT



Sales Tax / Turnover Tax / Penalty / Interest



Commissioner of Sales Tax



2005 - 2006 2010-2012 2013-2014



1.586.49



10.68



1,575.81



Joint Commissioner/ Commissioner CT-Appeals



2000 - 2005


2006 - 2007 2009-2012



3,727.50



44.54



3.682.96



Appellate Tribunal



1993- 1995 1998 - 2000 2001 -2003 2007 - 2008



329.84



47.22



282.62



Hon. High Court



1978-1995 2006 - 2007 2009-2013



3,927.87



35.04



3,892.83



Hon. Supreme Court



1997-2009



20,511.16



623.96



19.887.20



Total (B)



30,082.86



761.44



29,321.42



INCOME TAX ACT. 1961



Income Tax/ Interest / Penalty



Asst Commissioner of Income Tax



2008 - 2009 2010-2011



2,630.50



2,618.13



12.37



Commissioner (Appeals)



2006-2012



66,338.09



49.902.78



16.435.31



Income Tax Appellate Tribunal



1994 - 1995 1999-2001 2005 - 2011



3,527.41



548.05



2,979.36



Hon. High Court



2000 - 2001 2009-2010



62.68



14.86



47.82



Total (C)



72,558.68



53.083.82



19,474.86



THE CUSTOMS ACT, 1962



Custom Duty/ Interest1 Penalty



Custom . Excise and Service Tax Appellate Tribunal



2007 - 2008 2010 - 2011



6.50



1.11



5.39



Total (D)



6.50



1.11



5.39



Finance Act 1994 (Service Tax)



Service Tax/ Interest / Penalty



Commissioner /Joint / Deputy Commissioner of Central Excise Custom and Service Tax



2004 - 2005 2008-2010 2011 -2016



95.71



94.90



0.81



Commissioner (Appeals) of Custom. Excise and Service Tax



2006 - 2007



0.66



0.66



Custom. Excise and Service Tax Appellate Tribunal



2003-2015



452.54



12.85



439.69



Director General



2006 - 2008



637.40



-



637.40



Hon. High Court



2004 - 2005



26.08



-



26.08



Total(E)



1,212.39



107.75



1.104.64



Grand Total (A B C D E)



1,11,786.27



54,413.71



57,372.56



viii. The Company has not issued any debentures and has not borrowed any fund from financial institutions, banks and government during the year. The Company has not defaulted in repayment of dues to the bank,


ix. Based on our audit procedures performed and according to the information and explanations given by the management, the Company has not raised any money by way of initial public offer or further public of fer and term loan.


x. According to the information and explanations given to us, no fraud on the Company by its officers or employees or by the Company has been noticed or reported during the year.


xi. As per notification number G.S.R. 463 <E) dated June


5, 2015 issued by Ministry of Corporate Affairs, section 197 as regards the managerial remuneration is not applicable to the Company, since it is a Government Company.


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.


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.


x v. According to the information and explanations given by the management, the Company has not entered into any non-cash transactions specified under section 192 of the Act with directors or persons connected with him. xvi. In our opinion, the Company is not required to register under section 45-IA of the Reserve Bank of India Act, 1934.


To the Members of Oil and Natural Gas Corporation Limited


We have audited the internal financial controls over financial reporting of Oil and Natural Gas Corporation 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. 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 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 Act.


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 as specified under section 143(10) of the Act. 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 were 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 of feet 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.


Other Matters


In respect of 17 NELPs/ JVs which are operated by others, there are no reports from Chartered Accountants in respect of Internal Financial Control system over financial reporting and hence, these NELPs/ JVs are not covered in this report.


For G. D. Apte & Co. For Khandelwal Jain & Co. For Lodha & Co.


Chartered Accountants Chartered Accountants Chartered Accountants Firm Reg. No:100515E Firm Reg. No: 105049W Firm Reg. No: 301051E


(U,S Abhyankar) (Narendra Jain) (R.P Singh)


Partner (M.No. 113053) Partner (M.No. 048725) Partner (M.No. 052438)



For P.K.F Sridhar & Santhanam LLP For Dass Gupta & Associates For K C Mehta & Co.


Chartered Accountants Chartered Accountants Chartered Accountants


Firm Reg. No.003990S/S200018 Firm Reg. No.000112N Firm Reg. No.106237W


(V. Kothandaraman) (Raaja Jindal) (Vishal P Doshi)


Partner (M. No 025973) Partner (M. No.504111) Partner (M. No.101533)


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.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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