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You can view full text of the latest Auditor's Report for the company.

BSE: 500312ISIN: INE213A01029INDUSTRY: Oil Drilling And Exploration

BSE   ` 193.60   Open: 193.50   Today's Range 191.65
195.95
-0.45 ( -0.23 %) Prev Close: 194.05 52 Week Range 155.30
212.00
Year End :2017-03 

1. Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Oil and Natural Gas Corporation Limited (‘the Company’), which comprise the Balance Sheet as at 31st March, 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 the significant accounting policies and other explanatory information.

2. 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) prescribed 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 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.

3. 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 of the standalone Ind AS financial statements 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 the 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 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 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.

4. 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 including the Ind AS, of the financial position of the Company as at 31st March, 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

5. Other Matters

i. The comparative financial information of the Company for the year ended 31st March, 2016 and the transition date opening balance sheet as at 1st April, 2015 prepared in accordance with Ind AS included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor joint auditors whose report for the year ended 31st March, 2016 and 31st March, 2015 dated 26th May, 2016 and 28th May, 2015 respectively expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.

ii. The standalone Ind AS 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 Operations (JOs) accounts for exploration and production out of which 5 NELPs / JOs accounts have been certified by other Chartered Accountants and 10 NELPs / JOs have been certified by the management in respect of NELPs / JOs operated by other operators. Our opinion is based solely on the certificate of the other Chartered Accountants and management certified accounts.

iii. We 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 Oil and Gas Assets, impairment, liability for decommissioning costs, liability for NELP and nominated blocks for under performance against agreed Minimum Work Programme.

Our opinion is not modified in respect of these matters.

6. 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 in terms of 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 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. 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 are not available with the Company:

(Rs. in million)

Nature

Number of assets

Gross Block

Net Block

Lease hold land

14

632.03

399.87

Free hold land

36

88.89

88.89

Total

50

720.92

488.76

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 gift/grants from Government or other authorities.

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 including Other Comprehensive Income, the Cash flows Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books ofaccount;

d. in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act;

e. as per notification number G.S.R. 463(E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 164(2) of the Act regarding 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”; and

g. with respect to the other matters to be included in the Auditors’ 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 pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 49.1 to the standalone Ind AS 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 55.1 to the standalone Ind AS financial statements;

iii. there has been delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company in case of Dividend declared on 18th December, 2009 where the unpaid amount aggregating to Rs.13.79 million was transferred on 9th March, 2017 as against the due date of 17th January, 2017; and

iv. the Company has provided requisite disclosures in its 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 the books of accounts maintained by the Company and as produced to us by the management. Refer Note 18.1 to the standalone Ind AS financial statements.

Annexure - 1 to the Auditors’ Report (Referred to in paragraph 6(i) 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 particulars, including quantitative details and situation of fixed assets.

b. As per the information and explanations given to us and on the basis ofour examination of the records of the Company, the fixed assets having substantial value, other than those which are underground/ submerged/ under joint operations 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 million)

Nature

Number of assets

Gross Block

Net Block

Lease hold land

14

632.03

399.87

Free hold land

36

88.89

88.89

Building

12

280.08

61.10

Total

62

1001.00

549.86

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 under joint operations 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 further 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 ofCustoms, Duty ofExcise, 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 31st March, 2017 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 ofIncome 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 million)

Name of 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 2009 - 2012 2014 - 2015

119.36

108.82

10.54

Custom , Excise and Service Tax Appellate Tribunal

2001 - 2016

8,611.46

367.74

8,243.72

Hon. High Court

1996 - 2016

648.57

258.40

390.17

Hon. Supreme Court

2000 - 2005 2011 - 2012

1,185.20

2.87

1,182.33

Total (A)

10,564.59

737.83

9,826.76

Central Sales Tax Act,1956 and

respective states Sales Tax Act

Sales Tax / Turnover Tax / Penalty / Interest

Commissioner of Sales Tax

2010 - 2012 2013 - 2014

1,657.99

0.14

1,657.85

Joint Commissioner/ Commissioner CT-Appeals

2000 - 2005 2006 - 2007 2009 - 2012

3,748.01

44.54

3,703.47

Appellate Tribunal

1993 - 1995 1998 - 2000 2007 - 2008 2011 - 2012

441.06

73.79

367.27

Hon. High Court

1978 - 2013

3,427.42

22.60

3,404.82

Hon. Supreme Court

2002 - 2009 2012 - 2013

7,685.84

623.96

7,061.88

Total(B)

16,960.32

765.03

16,195.29

Income Tax Act, 1961

Income Tax / Interest / Penalty

Asst Commissioner of Income Tax/ ACIT (TDS)

2007 - 2008 2010 - 2011

2,591.86

2,586.90

4.96

Commissioner (Appeals)

2006 - 2013

72,788.32

53,452.00

19,336.32

Income Tax Appellate Tribunal

1994 - 2010

12,019.75

4,136.47

7,883.28

Total(C)

87,399.93

60,175.37

27,224.56

The

Customs Act, 1962

Custom Duty / Interest / Penalty

Commissioner/ (Appeals) of Custom, Excise and Service Tax

1987 - 1988

258.44

-

258.44

Custom , Excise and Service Tax Appellate Tribunal

2007 - 2008 2010 - 2011

6.50

1.11

5.39

Total (D)

264.94

1.11

263.83

Finance Act 1994 (Service Tax)

Service Tax / Interest / Penalty

Commissioner/ (Appeals)/ Joint/ Deputy/ Additional Commissioner of Central Excise, Custom and Service Tax

2004 - 2016

8,405.09

-

8,405.09

Custom , Excise and Service Tax Appellate Tribunal

2006 - 2008 2009 - 2015

827.62

12.55

815.07

Hon. High Court

2012 - 2017

3.39

2.56

0.83

Hon. Supreme Court

2015 - 2016

4.80

0.37

4.43

Total(E)

9,240.90

15.48

9,225.42

Wealth Tax Act, 1957

Interest

Asstt. Commissioner of Wealth Tax

2014-15

0.47

-

0.47

Total(F)

0.47

-

0.47

Grand Total (A B C D E F)

1,24,431.15

61,694.82

62,736.33

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 offer 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 5th June, 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 standalone Ind AS 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.

xv. 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, 1934.

For Lodha & Co For MKPS & Associates For Khandelwal Jain & Co.

Chartered Accountants Chartered Accountants Chartered Accountants

Firm Reg. No: 301051E Firm Reg. No: 302014E Firm Reg. No: 105049W

(H K Verma) (Mahendra K. Agrawala) (Narendra Jain)

Partner (M.No.055104) Partner (M.No. 051764) Partner (M. No. 048725)

For K. C. Mehta & Co. For PKF Sridhar & For Dass Gupta & Associates

Chartered Accountants Santhanam LLP Chartered Accountants

Firm Reg. No.106237W Chartered Accountants Firm Reg. No. 000112N

Firm Reg. No.003990S/S200018

(Vishal P. Doshi) (V. Kothandaraman) (Naresh Kumar)

Partner (M. No.101533) Partner (M. No 025973) Partner (M. No.082069)

New Delhi

26th May, 2017