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Indian Oil Corporation Ltd.

BSE: 530965 Sector: Oil & Gas
NSE: IOC ISIN Code: INE242A01010
BSE 00:00 | 24 Apr 2020 Indian Oil Corporation Ltd
NSE 05:30 | 01 Jan 1970 Indian Oil Corporation Ltd

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OPEN 83.10
PREVIOUS CLOSE 83.15
VOLUME 509549
52-Week high 170.40
52-Week low 74.55
P/E 6.09
Mkt Cap.(Rs cr) 76,678
Buy Price 81.45
Buy Qty 5.00
Sell Price 81.45
Sell Qty 10.00
OPEN 83.10
CLOSE 83.15
VOLUME 509549
52-Week high 170.40
52-Week low 74.55
P/E 6.09
Mkt Cap.(Rs cr) 76,678
Buy Price 81.45
Buy Qty 5.00
Sell Price 81.45
Sell Qty 10.00

Indian Oil Corporation Ltd. (IOC) - Auditors Report


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Company auditors report

To

The Members of Indian Oil Corporation Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Indian OilCorporation Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including other Comprehensive Income)Statement of Changes in Equity and Statement of Cash Flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information in which are incorporated the returns for the year endedon that date audited by the Branch Auditor of the Company’s one Branch namelyResearch & Development (R&D) division situated at Faridabad Haryana India.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the "Act") in the manner so required and give a trueand fair view in conformity with accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and profit total ComprehensiveIncome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of Act (SAs). Ourresponsibilities under those Standards are further described in the Auditors’Responsibilities for the Audit of the financial statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India ("ICAI") together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI’s Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report:

Key Audit Matters Auditors' response to Key Audit Matters
Property Plant & Equipment and Intangible Assets
There are areas where management judgement impacts the carrying value of property plant and equipment intangible assets and their respective depreciation/amortisation rates. These include the decision to capitalise or expense costs; the annual asset life review; the timeliness of the capitalisation of assets and the use of management assumptions and estimates for the determination or the measurement and recognition criteria for assets retired from active use. Due to the materiality in the context of the balance sheet of the Company and the level of judgement and estimates required we consider this to be as area of significance. We assessed the controls in place over the Axed asset cycle evaluated the appropriateness of capitalisation process performed tests of details on costs capitalised the timeliness of the capitalisation of the assets and the de-recognition criteria for assets retired from active use. In performing these procedures we reviewed the judgements made by management including the nature of underlying costs capitalised; determination of realizable value of the assets retired from active use; the appropriateness of asset lives applied in the calculation of depreciation; the useful lives of assets prescribed in Schedule II of the Companies Act 2013 and the useful lives of certain assets as per the technical assessment of the management. We have observed that the management has regularly reviewed the aforesaid judgements and there are no material changes.
Capital Work-in-Progress
The Company is in the process of executing various projects like expansion of refineries installation of new plants depots LPG bottling plants terminals pipelines etc. Since these projects take a substantial period of time to get ready for intended use and due to their materiality in the context of the balance sheet of the Company this is considered to be an area which had the significant effect on the overall audit strategy and allocation of resources in planning and completing our audit We performed an understanding and evaluation of the system of internal control over the capital work in progress with reference to identification and testing of key controls.
We assessed the progress of the project and the intention and ability of the management to carry forward and bring the asset to its state of intended use.
Provision for Direct Taxes
The Company has uncertain direct tax positions including matters under dispute which involves significant judgment relating to the possible outcome of these disputes in estimation of the provision for income tax. Because of the judgement required the area is a key audit matter for our audit. Our audit process involved assessment of the management’s underlying assumptions in estimating the tax provision (as confirmed by the Company’s tax consultants) and the possible outcome of the disputes taking into account the legal precedence jurisprudence and other rulings in evaluating management’s position on these uncertain direct tax positions. We have observed that the provision for tax estimated as above including the deferred tax has not resulted in material deviation from the applicable rate of tax after considering the exemptions deductions and disallowances as per the provisions of the Income Tax Act.
Provisions and Contingent Liabilities
The Company is involved in various taxes and other disputes for which Anal outcomes cannot be easily predicted and which could potentially result in significant liabilities. The assessment of the risks associated with the litigations is based on complex assumptions which require the use of judgement and such judgement relates primarily to the assessment of the uncertainties connected to the prediction of the outcome of the proceedings and to the adequacy of the disclosures in the financial statements. Because of the judgement required the materiality of such litigations and the complexity of the assessment process the area is a key matter for our audit. Our audit procedure in response to this key Audit Matter included among others
• Assessment of the process and relevant controls implemented to identify legal and tax litigations and pending administrative proceedings.
• Assessment of assumptions used in the evaluation of potential legal and tax risks performed by the legal and tax department of the Company considering the legal precedence and other rulings in similar cases.
• Inquiry with the legal and tax departments regarding the status of the most significant disputes and inspection of the key relevant documentation.
• Analysis of opinion received from the experts where available.
• Review of the adequacy of the disclosures in the notes to the financial statements.
Goods and Services Tax (GST)
The country has adopted goods and services tax with effect from July 1 2017. The goods and service tax is applicable only in case of certain products and services of the Company while major products are still covered under the old regime viz. excise duty and value added tax. Since the Company is covered under both the regimes the management is required to apply judgment in the interpretation with respect to input tax credit available and taxability of the products and services. Since significant judgment of the management is required the area is a key audit matter for our audit. Our audit process involved assessing the management’s judgement on the interpretations involved taking into account the advices and opinions received from indirect tax experts.
Investments in Subsidiaries. Joint Ventures and Associates
Investments in subsidiaries joint ventures and associates are valued at cost adjusted for impairment losses. In line with "IndAS 36 Impairment of assets" in case there is an indication of possible impairment the Company carries out an impairment test by comparing the recoverable amount of the investments determined according to the value in use method and their carrying amount. The valuation process adopted by management is complex and is based on a series of assumptions such as the forecast cash flows the appropriate discounting rate and the growth rate. These assumptions are by nature influenced by future expectations regarding the evolution of external market. With reference to this key audit matter we considered the following:
• Book value of the investments in subsidiaries joint venture and associates as compared to the carrying amount.
• Market capitalization in case of listed entities in which investments have been made
• The prices of crude/gas being higher than the previous year’s level in case of upstream companies where the investments have been made.
Since judgement of the management is required to determine whether there is indication of possible impairment and considering the subjectivity of the estimates relating to the determination of the cash flows and the key assumptions of the impairment test the area is considered a key audit matter for our audit. • Some of the entities are still in the construction stage and have not begun commercial operations
Based on the information and explanations obtained as above we concluded that the Management’s judgement regarding indication of impairment in certain investments during the year is appropriate. Where there is indication of impairment we examined the approach taken by management to determine the value of the investments analysed the methods and assumptions applied by management to carry out the impairment test and the reports obtained from the experts in valuation.
The following audit procedures were adopted:
• identification and understanding of the significant controls implemented by the Company over the impairment testing process; analysis of the reasonableness of the principal assumptions made to estimate their cash flows and obtaining other information from management that we deemed to be significant;
• analysis of actual data of the year and previous years in comparison with the original plan in order to assess the nature of variances and the reliability of the planning process;
• assessment of the reasonableness of the discount rate and growth rate;
• verification of the mathematical accuracy of the model used to determine the value in use of the investments.
We also examined the adequacy of the information provided by the Company about the impairment test and its consistency with the requirements of Ind AS 36.
Receivables from Airlines Customers
The Company has trade receivables from certain airlines. Our audit procedures included:
The increasing challenges over the economy and operating environment in the airline industry during the year have increased the risks of default on receivables from the Company’s airline customers if they fail to meet their contractual obligations in accordance with the contracts. • testing the management’s judgment with respect to recoverability of the dues from airline companies;
The management has determined and assessed that these amounts are good of recovery considering the dues receivable from a government airline company and financial bank guarantees received from private airlines covering the amount due from the private airline companies. • perusing the confirmations from/reconciliations with the airline customers indicating that there are no material discrepancies or disputes;
• perusing the financial bank guarantees received from private airlines covering the amount due from them.
Considering the materiality of the amount involved we considered this as a key audit matter for our audit We are also informed that the Company has invoked bank guarantee obtained from one private airline and realised the money against the dues subsequent to the Balance Sheet date.

Information Other than the Standalone Financial Statements and Auditors' Report Thereon

The Company’s Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the FinancialPerformance highlights Board’s Report including Annexures to Board’s ReportManagement Discussions and Analysis Business Responsibility Report Report on CorporateGovernance Shareholders Information and other information in Integrated Annual Report butdoes not include the standalone financial statements and our auditors’ reportthereon.

The information to the extent available relating to the standalone financialstatements which will be included in the Management discussion and Analysis and FinancialPerformance Highlights have been made available to us prior to the date of thisauditors’ report and we have not observed any misstatement.

The other information to the extent not made available to us as of the date of signingthis report is expected to be made available to us after the date of this auditors’report.

Our opinion on the standalone financial statements does not cover the other informationand we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and identified above when it becomes available and indoing so consider whether the other information is materially inconsistent with thestandalone financial statements or our knowledge obtained in the audit or otherwiseappears to be materially misstated.

If based on the work we have performed on the other information that we obtained priorto the date of auditors’ report we conclude that there is a material misstatement ofthis information we are required to report that fact. We have nothing to report in thisregard.

When we read the other information if we conclude that there is material misstatementtherein we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company’s Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and the other accounting principles generally accepted in India includingIndian Accounting Standards specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements the Board of Directors is responsiblefor assessing the Company’s ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company’s financialreporting process.

Auditors' Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors’ report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theability of the Company to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors’ report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors’ report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors’ report unless law or regulation precludes public disclosure aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

a) We did not audit the standalone financial statements/information of one Branchincluded in the standalone financial statements of the Company whose financialstatements/financial information reflect total assets of Rs899.80 crore as at March 312019 and total revenues of Rs25.22 crore for the year ended on that date as considered inthe standalone financial statements. The financial statements/information of this Branchhave been audited by the Branch Auditor whose report has been furnished to us and ouropinion in so far as it relates to the amounts and disclosures included in respect of thisBranch is based solely on the report of such Branch Auditor.

b) The standalone financial statements include the Company’s proportionate share(relating to Jointly controlled operations) in assets Rs544.39 crore liabilities Rs140.36crore income of Rs152.52 crore and expenditure Rs85.00 crore and elements making of thecash flow statement and related disclosures contained in the enclosed standalone financialstatements and our observations thereon are based on unaudited statements from theoperators to the extent available with the Company in respect of 14 blocks in India andoverseas and have been certified by the management.

We have also placed reliance on technical/commercial evaluations by the management inrespect of categorization of wells as exploratory development and dry well allocation ofcost incurred on them liability under New Exploration Licensing Policy (NELP) andnominated blocks for under-performance against agreed Minimum Work Programme.

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 ("theOrder") issued by the Central Government of India in terms of sub- section (11) ofSection 143 of the Act and on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and explanationsgiven to us we give in the "Annexure 1" a statement on the matters specified inthe paragraphs 3 and 4 of the said Order to the extent applicable.

2. We are enclosing our report in terms of Section 143 (5) of the Act on the basis ofsuch checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us in the "Annexure 2"on the 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 bestof 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 theCompany so far as it appears from our examination of those books and proper returnsadequate for the purpose of our audit have been received from the Branch not visited byus.

c) The report on the accounts of the Branch office of the Company audited under section143(8) of the Act by Branch Auditor has been sent to us and has been properly dealt withby us in preparing this report.

d) The Balance Sheet the Statement of Profit and Loss (including Other Comprehensivelncome)Statement of changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the books of account and with the returns received from theBranch not visited by us.

e) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

f) We have been informed that the provisions of Section 164(2) of the Act in respect ofdisqualification of directors are not applicable to the Company being a GovernmentCompany in terms of notification no. G.S.R.463(E) dated June 5 2015 issued by Ministry ofCorporate Affairs Government of India.

g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure 3".

h) With respect to the other matters to be included in the Auditors’ Report inaccordance with the requirements of section 197(16) of the Act as amended:

We are informed that the provisions of Section 197 read with Schedule V of the Actrelating to managerial remuneration are not applicable to the Company being a GovernmentCompany in terms of Ministry of Corporate Affairs Notification no. G.S.R. 463 (E) datedJune 5 2015.

i) With respect to the other matters to be included in the Auditors’ Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its standalone financial statements - Refer Note 36 B to the standalonefinancial statements.

ii. The Company has made provision as required under the applicable law or Indianaccounting standards for material foreseeable losses if any on long term contractsincluding derivative contracts - Refer Note 17 to standalone financial statements.

iii. There has been no delay in transferring the amount required to be transferred tothe Investor Education and Protection Fund by the Company.

For S.K. MEHTA & CO. For V SANKAR AIYAR & CO. For CK PRUSTY & ASSOCIATES For V. SINGHI & ASSOCIATES
Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants
(Firm Regn. No. 000478N) (Firm Regn. No.l09208W) (Firm Regn. No. 323220E) (Firm Regn. No. 311017E)
Sd/- Sd/- Sd/- Sd/-
(CA. ROHIT MEHTA) (CA. M.S. BALACHANDRAN) (CA. GV. JAYABAL) (CA. V. K. SINGHI)
Partner Partner Partner Partner
M. No. 091382 M. No. 024282 M. No. 015616 M. No. 050051
Place of Signature: New Delh
Date: 17th May 2019

ANNEXURE 1 TO THE INDEPENDENT AUDITORS’ REPORT

Annexure referred to in Independent Auditors' Report of even date to the members ofIndian Oil Corporation Limited on the standalone financial statements for the year endedMarch 31 2019

(i) (a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of

fixed assets.

(b) There is a regular programme of physical verification of all fixed assets otherthan LPG cylinders and pressure regulators with customers over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its fixed assets. In our opinion and as per the information given by theManagement the discrepancies observed were not material and have been appropriatelyaccounted for in the books.

(c) According to the information and explanations given to us and on the basis of ourexamination of records of the Company the title/lease deeds of the immovable propertiesare held in the name of the Company except in cases given below:

Particulars Number of cases Gross Block/Value Net Block/Value
(Rs in Crore) (Rs in Crore)
Leasehold Land- Operating leases 15 33.75 29.53
Leasehold Land- Finance leases 9 35.59 31.51
Leasehold Land- Total 24 69.34 61.04
Freehold Land 26 158.66 158.66
Building 7 5.58 4.97
Building- operating Lease 1 20.77 20.42

(ii) In our opinion and according to the information and explanations given to us theinventory (excluding inventory lying with third parties and material in transit) has beenphysically verified by the management during the year at reasonable intervals and nomaterial discrepancies were noticed on physical verification.

(iii) In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured during the year to anycompanies firms and limited liability partnerships or other parties covered in registermaintained under Section 189 of the Act.

In view of the above reporting under clause 3 (iii)(a) 3 (iii)(b) and 3 (iii)(c) ofthe Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us theCompany is exempted from the provisions of section 186 of the Act as it is engaged in thebusiness of providing infrastructure facilities as provided under Schedule-VI of the Act.There were no transactions during the year to which the provisions of section 185 of theAct were applicable.

(v) In our opinion and according to the information and explanations given to usduring the year the Company has not accepted deposits from the public in terms of theprovisions of sections 73 to 76 of the Act read with the Companies (Acceptance ofDeposits) Rules2014 as amended and other relevant provisions of the Act and no depositsare outstanding at the year end except old cases under dispute aggregating to Rs0.01crore where we are informed that the Company has complied with necessary directions.

(vi) We have broadly reviewed the accounts and records maintained by the Companypursuant to the Rules made by the Central Government for the maintenance of cost recordsunder sub-section (1) of Section 148 of the Act read with Companies (Cost Records &Audit) Rules 2014 as amended and we are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. We have not however made detailedexamination of the records with a view to determine whether they are accurate andcomplete.

(vii) (a) Undisputed statutory dues including provident fund employees’ stateinsurance income tax sales-tax value added tax service

tax duty of custom duty of excise goods and service tax cess and other statutorydues have generally been regularly deposited with the appropriate authorities and thereare no undisputed dues outstanding as on March 31 2019 for a period of more than sixmonths from the date they became payable.

(b) The disputed statutory dues that have not been deposited on account of matterspending before appropriate authorities are annexed in "Appendix A" with thisreport.

(viii) ln our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to financial institutions banksGovernment or debenture holders.

(ix) According to the information and explanations given to us the Company has appliedthe term loans for the purpose for which those were obtained. During the year the Companyhas not raised money through initial public offer or further public offer (including debtinstruments). However the Company has issued bonds for working capital requirements inthe international market and as per the information and explanations given to us thefunds were applied for the purpose for which those were raised.

(x) According to the information and explanations given to us and as represented by theManagement and based on our examination of the books and records of the Company and inaccordance with generally accepted auditing practices in India no material case of fraudsby the Company or on the Company by its officers or employees has been noticed or reportedduring the year.

(xi) The provisions of Section 197 read with Schedule V of the Act relating tomanagerial remuneration are not applicable to the Company being a Government Company interms of Ministry of Corporate Affairs Notification no. G.S.R. 463 (E) dated June 5 2015.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company and therefore the reporting under Clause 3 (xii) of theOrder is not applicable.

(xiii) ln our opinion and according to the information and explanations given by themanagement all transactions during the year with the related parties were approved by theAudit Committee and are in compliance with section 177 and 188 of the Act whereapplicable and the details have been disclosed in the standalone financial statements asrequired by the applicable Indian accounting standards.

(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year and therefore provisions of Section 42 of the Actare not applicable to the Company during the year.

(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions specified under section 192 of theAct with directors or persons connected with him.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For S.K. MEHTA & CO. For V SANKAR AIYAR & CO. For CK PRUSTY & ASSOCIATES For V. SINGHI & ASSOCIATES
Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants
(Firm Regn. No. 000478N) (Firm Regn. No.l09208W) (Firm Regn. No. 323220E) (Firm Regn. No. 311017E)
Sd/- Sd/- Sd/- Sd/-
(CA. ROHIT MEHTA) (CA. M.S. BALACHANDRAN) (CA. GV. JAYABAL) (CA. V. K. SINGHI)
Partner Partner Partner Partner
M. No. 091382 M. No. 024282 M. No. 015616 M. No. 050051
Place of Signature: New Delhi
Date: 17th May 2019

REPORTING AS PER COMPANIES (AUDITOR’S REPORT) ORDER 2016 (DISPUTED STATUTORY DUES)

Sl. No. Name of the Statute Nature of Dues Forum Where Dispute is pending Gross Amount (Rs crore) Amount Paid under Protest (Rs crore) Amount (net of deposits) (Rs crore) Period to which the Amount relates (Financial Years)
1 CENTRAL EXCISE ACT 1944 CENTRAL EXCISE Supreme Court 67.70 12.74 54.96 1989 to 2007
High Court 251.50 0.76 250.74 1996 to 2018
Tribunal 3308.58 29.00 3279.58 1980 to 2018
Revisionary 14.78 0.10 14.68 2000 to 2016
Authority
Appellate 173.92 0.50 173.42 1988 to 2018
Authority
(Below
Tribunal)
Total 3816.48 43.10 3773.38
2 CUSTOMS ACT 1962 CUSTOMS DUTY Supreme Court 11.04 2.00 9.04 1998 to 2001
High Court 2.10 2.05 0.05 2004 to 2017
Tribunal 59.78 1.02 58.76 1994 to 2006
Revisionary 0.13 0.01 0.12 2010-11
Authority
Appellate 14.23 0.14 14.09 2003 to 2017
Authority
(Below
Tribunal)
Total 87.28 5.22 82.06
3 SALES TAX/VAT LEGISLATIONS SALES TAX/VAT/ TURNOVER TAX Supreme Court 25.19 - 25.19 1986 to 2005
High Court 1317.69 82.30 1235.39 1978 to 2017
Tribunal 4063.93 950.15 3113.78 1984 to 2018
Revisionary 544.69 103.49 441.20 1979 to 2011
Authority
Appellate 1758.81 192.50 1566.31 1989 to 2018
Authority
(Below
Tribunal)
Total 7710.31 1328.44 6381.87
4 INCOME TAX ACT 1961 INCOME TAX Supreme Court
High Court 428.31 427.69 0.62 1986 to 2006
Tribunal 2346.17 1984.96 361.21 2003 to 2014
Appellate 2184.72 645.50 1539.22 2007 to 2016
Authority
(Below
Tribunal)
Total 4959.20 3058.15 1901.05
5 FINANCE ACT 1994 SERVICE TAX Tribunal 26.62 0.64 25.98 1996 to 2017
Appellate 17.06 0.33 16.73 2004 to 2017
Authority
(Below
Tribunal)
Total 43.68 0.97 42.71
6 STATE LEGISLATIONS ENTRY TAX Supreme Court 5534.02 36.59 5497.43 1991 to 2018
High Court 255.17 165.68 89.49 1999 to 2018
Tribunal 38.12 25.38 12.74 2001 to 2015
Revisionary Authority 1.44 0.20 1.24 1999 to 2013
Appellate Authority (Below Tribunal) 9.41 4.10 5.31 1998 to 2015
Total 5838.16 231.95 5606.21
7 OTHER CENTRAL/STATE LEGISLATIONS OTHERS COMMERCIAL TAX etc. Supreme Court 2.64 - 2.64 2010-11
High Court 90.42 10.38 80.04 2001 to 2019
Appellate Authority (Below Tribunal) 8.78 1.27 7.51 1999 to 2009
Total 101.84 11.65 90.19
GRAND TOTAL 22556.95 4679.48 17877.47

Note: Dues include penalty and interest wherever applicable.

(Referred to in Paragraph 2 under "Other legal and regulatory requirements"of our report of even date)

Sl. No. Directions Action Taken Impact on financial statements
1. Whether the company has system in the place to process all the accounting transactions through it system? If yes the implications of processing of accounting transaction outside IT system on the integrity of the accounts along with the financial implications if any may be stated. Company has a robust ERP system (SAP) to process all the accounting transactions through IT system. Some manual intervention is necessitated for valuation of inventories; however accounting entries for the same are also processed through ERP. NIL
2. Whether there is any restructuring of an existing loan or cases of wavier/write off of debts/loans/interest etc. made by a lender to the company due to the company’s inability to repay the loan? If yes financial impact may be stated Company has been regular in discharging its principal and interest obligations on various loans during 2018-19. Therefore there are no cases of restructuring of any loan or cases of waiver/write off of debts/loans/interest etc. made by any lender due to the company’s inability to repay the loan. NIL
3. Whether funds received/receivable for specific schemes from central/state agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation. The Company has properly accounted for/ utilized funds received/receivable for specific schemes from central/state agencies as per its term and conditions NIL

 

For S.K. MEHTA & CO. For V SANKAR AIYAR & CO. For CK PRUSTY & ASSOCIATES For V. SINGHI & ASSOCIATES
Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants
(Firm Regn. No. 000478N) (Firm Regn. No.l09208W) (Firm Regn. No. 323220E) (Firm Regn. No. 311017E)
Sd/- Sd/- Sd/- Sd/-
(CA. ROHIT MEHTA) (CA. M.S. BALACHANDRAN) (CA. GV. JAYABAL) (CA. V. K. SINGHI)
Partner Partner Partner Partner
M. No. 091382 M. No. 024282 M. No. 015616 M. No. 050051
Place of Signature: New Delhi
Date: 17th May 2019

ANNEXURE 3 TO THE INDEPENDENT AUDITORS’ REPORT

Annexure referred to in Independent Auditors’ report of even date to the membersof Indian Oil Corporation Limited on the standalone financial statements for the yearended March 31 2019

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Indian OilCorporation Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company’s policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI andprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting were established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors’ judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company’s internal financial controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of standalone financial statements for external purposes in accordancewith the generally accepted accounting principles. A company’s internal financialcontrol over financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company’s assets that could have a material effect on thestandalone financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.

Other Matters

Our aforesaid report under section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting in so far as itrelates to one Branch audited by the Branch Auditor is based on the corresponding reportof the Branch Auditor.

For S.K. MEHTA & CO. For V SANKAR AIYAR & CO. For CK PRUSTY & ASSOCIATES For V. SINGHI & ASSOCIATES
Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants
(Firm Regn. No. 000478N) (Firm Regn. No.l09208W) (Firm Regn. No. 323220E) (Firm Regn. No. 311017E)
Sd/- Sd/- Sd/- Sd/-
(CA. ROHIT MEHTA) (CA. M.S. BALACHANDRAN) (CA. GV. JAYABAL) (CA. V. K. SINGHI)
Partner Partner Partner Partner
M. No. 091382 M. No. 024282 M. No. 015616 M. No. 050051
Place of Signature: New Delhi
Date: 17th May 2019


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