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Oil & Natural Gas Corpn Ltd.

BSE: 500312 Sector: Oil & Gas
NSE: ONGC ISIN Code: INE213A01029
BSE 00:00 | 24 Apr 2020 Oil & Natural Gas Corpn Ltd
NSE 05:30 | 01 Jan 1970 Oil & Natural Gas Corpn Ltd

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OPEN 67.40
PREVIOUS CLOSE 67.30
VOLUME 2147374
52-Week high 178.95
52-Week low 51.80
P/E 4.18
Mkt Cap.(Rs cr) 85,043
Buy Price 67.20
Buy Qty 100.00
Sell Price 67.60
Sell Qty 8230.00
OPEN 67.40
CLOSE 67.30
VOLUME 2147374
52-Week high 178.95
52-Week low 51.80
P/E 4.18
Mkt Cap.(Rs cr) 85,043
Buy Price 67.20
Buy Qty 100.00
Sell Price 67.60
Sell Qty 8230.00

Oil & Natural Gas Corpn Ltd. (ONGC) - Auditors Report


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Company auditors report

To the Members of Oil and Natural Gas Corporation Limited

Report on the Audit of the Standalone Financial Statements

1. Opinion

We have audited the accompanying standalone financial statements of Oil and Natural GasCorporation Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then endedand notes to the standalone financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements").

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 the Indian Accounting Standards specified under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended (‘Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2019 and its profit(including other comprehensive income) the changes in equity and its cash flows for theyear ended on that date.

2. 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 the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion on the standalone financial statements.

3. Emphasis of Matter

We draw attention to Note 48.1.1(c) of the standalone financial statements wherein itis stated that Directorate General of Hydrocarbons (DGH) had raised a demand on all the JVpartners under the Production Sharing Contract with respect to Panna-Mukta and Mid andSouth Tapti contract areas (PMT JV) being BG Exploration and Production India Limited(BGEPIL) and Reliance Industries Limited (RIL) (together "the Claimants") andthe Company towards differential GOI share of Profit Petroleum and Royalty alleged to bepayable by contractor pursuant to Government's interpretation of the Final Partial Award(40% share of the Company amounting to USD 1624.05 million equivalent to Rs. 112400.50million including interest upto 30th November 2016). Subsequent to LondonHigh Court Orders dated 16th April 2018 and 2nd May 2018 DGH videletter dated 4th May 2018 15th May 2018 and 4th June2018 had asked for re-casting of accounts of the PMT JV and for remitting the respectivePI share of balance dues including interest till the date of remittance. As the Company isnot a party to the arbitration the details of the proceedings of arbitration and copy ofthe order of London High Court are not available with the Company. The Company hasresponded that as of now neither the Arbitral Tribunal nor the London High Court haspassed any order or quantified any amount due and payable by the Company and in thecircumstances; the demand of DGH from the Company for any sum or interest thereon ispremature and not justified. In the Company's view pending final quantification ofliabilities by the Arbitration Tribunal it is not liable to implement the Final PartialAward (FPA) being pre-mature and therefore no provision for the same has been considerednecessary and the same has been considered as contingent liability.

Our opinion on the standalone financial statements is not modified in respect of theabove matter.

4. Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of these 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 Matter How our audit addressed the matter
Evaluation of adequacy of provision for impairment for tangible and intangible assets (Refer Note 47 to the standalone financial statements) Our audit procedures included the following:
Management has assessed whether any provision needs to be recognised on account of impairment of tangible and intangible assets. We evaluated the appropriateness of management's identification of the CGUs and exploration and evaluation assets and tested the operating effectiveness of controls over the impairment assessment process including indicators of impairment.
The Company reviews the carrying amount of its tangible and intangible assets (Oil and Gas Assets Development Wells in Progress (DWIP) Property Plant & Equipment (including Capital Works-in- Progress) for the "Cash We performed testing of the mathematical accuracy of the cash flow models and validated the appropriateness of the related disclosures.
Generating Unit" (CGU) determined at the end of each reporting period to assess whether there is any indication that those assets have suffered any impairment loss. We evaluated management's assessment whether any indicators of impairment existed by comparing the recoverable amount to the carrying amounts of respective CGUs in the books of accounts.
The determination of recoverable amount being the higher of fair value less costs to sell and value- in-use requires judgement on the part of management. In case of exploration and evaluation assets based on management judgment assessment for impairment is carried out when further exploration activities are not planned in near future or when sufficient data indicate that although a development is likely to proceed the carrying amount of the exploration asset is unlikely to be recovered in full from successful development or by sale.
We have considered the measurement of impairment as Key Audit Matter as it requires significant management judgment.
Estimation of Decommissioning liability (Refer Note Our audit procedures included the following:
24.1 to the standalone financial statements)
The Company has an obligation to restore and rehabilitate the fields operated upon by the Company at the end of their use. This decommissioning liability is recorded based on estimates of the costs required to fulfill this obligation. Evaluated the approach adopted by the management in determining the expected costs of decommissioning. Identified the cost assumptions used that have the most significant impact on the provisions and tested the appropriateness of these assumptions.
The provision is based upon current cost estimates and has been determined on a discounted basis with reference to current legal requirements and technology. At each reporting date the decommissioning liability is reviewed and re- measured in line with changes in observable assumptions timing and the latest estimates of the costs to be incurred at reporting date. Reviewed the appropriateness of discount and inflation rates used in the estimation.
We have considered the measurement of decommissioning costs as Key Audit Matter as it requires significant management judgment including accounting calculations and estimates that involves high estimation uncertainty. Verified the unwinding of interest as well as understanding if any restoration was undertaken during the year.
Relied on the judgments of the internal experts for the use of technical /commercial evaluation. Performed a review to ensure that all key movements were understood corroborated and recorded correctly
Assessed the appropriateness of the disclosures made in the financial statements.
Litigations and Claims (Refer Note 48 to the standalone financial statements) Our audit procedures included the following:

Litigation and claims are pending with multiple tax and regulatory authorities and there are claims from vendors/suppliers and employees which have not been acknowledged as debt by the company (including Joint Operations).

Understood Management's process and control for determining tax litigations and other litigations and claims and its appropriate accounting and disclosure.

In the normal course of business financial exposures may arise from pending legal/regulatory proceedings and from above referred claims not acknowledged as debt by the company. Whether a claim needs to be recognized as liability disclosed as contingent liability or considered as remote in the standalone financial statements is dependent on a number of significant assumptions and judgments. The amounts involved are potentially significant and determining the amount if any to be recognized or disclosed in the financial statements is inherently subjective. We have considered Litigations and claims as Key Audit Matter as it requires significant management judgment including accounting estimates that involves high estimation uncertainty.

Tested key controls surrounding such litigations Discussed pending matters with the Company's legal department

Assessed management's conclusions through understanding precedents set in similar cases.

We have assessed the appropriateness of presentation of the most significant contingent liabilities in the standalone financial statements

5. Other Matters

i. We have placed reliance on commercial evaluation by the management in respect ofcategorization of wells as exploratory development producing and dry well allocation ofcost incurred on them proved (developed and undeveloped)/ probable hydrocarbon reservesand depletion thereof on Oil and Gas Assets impairment liability for decommissioningcosts liability for NELP and nominated blocks for under performance against agreedMinimum Work Programme.

ii. The standalone financial statements include the Company's share in the total valueof assets liabilities expenditure and income of 137 blocks under New ExplorationLicensing Policy (NELP)/ Hydrocarbon Exploration and Licensing Policy (HELP) / JointOperations (JO) accounts for exploration and production out of which:

a. 4 NELPs/ JOs accounts have been certified by other Chartered Accountants. In respectof these 4 NELPs/ JOs standalone financial statements include proportionate share inassets and liabilities as on 31st March 2019 amounting to Rs. 26142.08million and Rs. 23736.94 million respectively and revenue and profit including othercomprehensive Income for the year ended 31st March 2019 amounting to Rs.16963.56 million and Rs. 6697.93 million respectively Our opinion is based solely onthe certificate of the other Chartered Accountants

b. 13 NELPs / JOs have been certified by the management in respect of NELPs / JOsoperated by other operators. In respect of these 13 NELPs / JOs standalone financialstatements include proportionate share in assets and liabilities as on 31stMarch 2019 amounting to Rs. 87590.75 million and Rs. 44793.78 million respectively andrevenue and profit including other comprehensive Income for the year ended 31stMarch 2019 amounting to Rs. 104402.84 million and Rs. 27399.63 million respectivelyOuropinion is based solely on management certified accounts.

iii. The standalone financial statements of the Company for the year ended 31stMarch 2018 were audited by joint auditors of the Company two of which are the predecessoraudit firms and have expressed an unmodified opinion dated May 30 2018 on such financialstatements. Our opinion on the standalone financial statements is not modified in respectof above matters.

6. Information Other than the Standalone Financial Statements and Auditor'sReport Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Management Discussion and Analysis BusinessResponsibility Report and Report on Corporate Governance but does not include thestandalone financial statements and our auditors' report thereon. The above-referredinformation is expected to be made available to us after the date of this audit report.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. In connection with ouraudit of the standalone financial statements our responsibility is to read the otherinformation identified above when it becomes available and in doing so consider whetherthe other information is materially inconsistent with the standalone financial statementsor our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact.

When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take appropriate actions necessitated by the circumstances and theapplicable laws and regulations.

7. Responsibilities of Management and Those Charged with Governance for theStandalone Financial 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 changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

8. Auditor's Responsibilities for the Audit of 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. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken 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 control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such 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 concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 about thematters or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication

9. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Companies Act 2013 we give in "Annexure-1" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

2. Based on verification of books of accounts of the Company and according toinformation and explanations given to us we give below a report on the Directions issuedby the Comptroller and Auditor General of India in terms of Section 143(5) of the Act:

Directors Replies
Whether the Company has system in place to process all the accounting transactions through IT systemRs. If yes the implication on the integrity of the accounts along with the financial implications if any may be stated; Yes the Company has system in place to process all the accounting transactions through IT system namely SAP. Based on the verification carried out by us during the course of our audit and based on the information and explanations given to us we have not come across any instance having significant implications on the integrity of accounts. There are no such cases made by a lender to the company due to its inability to repay the loan during the year As per the information and explanations given to us theCompany does not have any funds received/ receivablefor specific schemes from Central/ State agencies.
Whether there is any restructuring of an existing loan or cases of waiver/ write-off of debts/ loans/ interest etc. made by a lender to the company due to the Company's inability to repay the loanRs. If yes the financial impact may be stated; Whether funds received/ receivable for specific schemes from Central/ State agencies were properlyaccounted for/ utilized as per its term and conditionsList the cases of deviation.

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;

c. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and Cash flows dealt with by this Report are inagreement with the books of account;

d. In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act;

e. As per notification number G.S.R. 463(E) dated 5th June 2015 issued by Ministry ofCorporate Affairs section 164(2) of the Act regarding the disqualifications of Directorsis not applicable to the Company since it is a Government Company; f. With respect to theadequacy of the internal financial controls with reference to financial statements of theCompany and the operating effectiveness of such controls refer to our separatereport in "Annexure 2";

g. As per notification number G.S.R. 463 (E) dated 5th June 2015 issued byMinistry of Corporate Affairs section 197 of the Act regarding remuneration to directoris not applicable to the Company since it is a Government Company; and

h. 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 48.1.1 to the standalonefinancial statements;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses- Refer Note 54 to the standalonefinancial statements;

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

For K.C. Mehta & Co. For PKF Sridhar & Santhanam LLP For Dass Gupta & Associates
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No.106237W Firm Reg. No. 003990S/S200018 Firm Reg. No. 000112N
Sd/- Sd/- Sd/-
Vishal P. Doshi V. Kothandaraman Nitesh Goel
Partner (M.No. 101533) Partner (M.No. 025973) Partner (M.No.542071)
For MKPS & Associates For G M Kapadia & Co. For R Gopal & Associates
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No: 302014E Firm Reg. No: 104767W Firm Reg. No: 000846C
Sd/- Sd/- Sd/-
Nikhil K. Agrawalla Rajen Ashar Sunil Kumar Agarwal
Partner (M.No. 157955) Partner (M.No. 048243) Partner (M.No. 093209)
New Delhi
30th May 2019

Annexure - 1 to the Auditors' Report

(Referred to in paragraph 9(1) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

i. a. The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

b. As per the information and explanations given to us and on the basis of ourexamination of the records of the Company the fixed assets having substantial valueother than those which are underground/ submerged/ under joint operations have beenphysically verified by the management in a phased manner which in our opinion isreasonable having regard to the size of Company and nature of its business. Thereconciliation of physically verified assets with the book records is in progress.Discrepancies noticed on the physical verification and consequential adjustments arecarried out on completion of reconciliation. According to information and explanationsgiven 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 thereconciliation of the available records with the books of account and considering thevoluminous nature and various locations we report that the title/lease deeds of immovableproperties are held in the name of Company except for the following where the title/leasedeeds are not available with the Company:

(Rs. in million)
Nature Number of assets Gross Block Net Block
Lease hold land 13 501.70 304.56
Free hold land 3 58.17 58.17
Building 6 154.92 54.34
Total 22 714.79 417.07

ii. According to the information and explanations given to us the inventory has beenphysically verified in phased manner at reasonable intervals (excluding inventory lyingwith third parties inventory under joint operations and material in transit) during theyear by the management which did not reveal any material discrepancies. iii. The Companyhas not granted loans secured or unsecured to any companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct.

iv. In our opinion and according to the information and explanations given to us theCompany has not advanced loans to directors / to a Company in which the Director isinterested to which provisions of section 185 of the Act apply. The provisions of section186 of the Act in our opinion are not applicable to the Company. v. In our opinion andaccording to information and explanations given to us the Company has not accepted anydeposits as per the provisions of the Act.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to theCompanies (Cost Records and Audit) Rules 2014 as amended and prescribed by the CentralGovernment under sub section(1) of section 148 of the Act and we are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. However wehave not made a detailed examination of the cost records with the view to determinewhether they are accurate or complete.

vii. a. According to records of the Company undisputed statutory dues includingProvident Fund Income Tax Sales Tax Service Tax Duty of Customs Duty of Excise ValueAdded Tax Goods and Service Tax Cess and other statutory dues have generally beenregularly deposited with the appropriate authorities. According to the information andexplanations given to us no undisputed amounts payable in respect of the aforesaid dueswere outstanding as at 31st March 2019 for a period more than six months fromthe date of becoming payable.

b. According to the information and explanations given to us there were no dues inrespect of Income Tax Duty of Excise Duty of Customs Sales Tax Service Tax ValueAdded Tax and Goods and Service Tax which have not been deposited on account of anydispute except the following:

(Rs. in million)
Name of Statute Forum where Dispute is pending Period to which the amount relates (Financial Year) 2015-17; Gross Amount Involved Amount paid under protest Amount Unpaid
Central Excise Act 1944 Commissioner Custom Excise and Service Tax Appellate Tribunal 2018-19 2001-09; 2011-15 16.37 1207.91 13.02 2.75 3.35 1205.16
1996-97;
Hon. High Court 2007-14; 383.77 4.32 379.45
2015-16
Hon. Supreme Court 2000-01 1176.60 - 1176.60
Total (A) 2784.65 20.09 2764.56
Commissioner 1987-88 331.32 - 331.32
The Customs Act 1962 Custom Excise and Service Tax Appellate Tribunal 2007-08; 2010-11 5.00 1.00 4.00
Hon. High Court 2013 463.93 - 463.93
Total (B) 800.25 1.00 799.25
Commissioner/
(Appeals) and Additional 2006-15 81243.04 75896.49 5346.55
Commissioner
Income Tax Act 1961 Income Tax Appellate
2007-12; 2018-19 37661.51 37608.91 52.60
Tribunal
Hon High Court 1994-95; 2000-01 1127.76 1118.85 8.91
Total (C) 120032.31 114624.25 q
Goods and Services Tax Hon High Court 2017-18; 2018-19 37956.78 28065.77 9891.01
Total (D) 37956.78 28065.77 9891.01
Commissioner/ 2000-02;
Joint Commissioner/ 2005-06;
Commissioner-Appeals/ 2007-08; 4924.30 21.25 4903.05
Joint Commissioner- 2009-13;
Appeals 2014-15
1993-94;
Central Sales Tax Act1956 and Re-spective States' Sales Tax Acts Appellate Tribunal/ First 1998-2000; 8349.43 66.61 8282.82

2001-07;

Appellate Authority
Hon. High Court 2011-13 1978-79; 1992-95; 51.77 26.48 25.29
2006-07;
2011-13
2002-13;
Hon. Supreme Court 11782.60 623.96 11158.64
2016-17
Total (E) 25108.10 738.30 24369.80
Commissioner/ (Appeals) Joint Comm. Additional 2004-05;
2006-13; 7926.93 5.34 7921.59
Comm. of Custom Excise and Service Tax 2015-17
Custom Excise and
Service Tax Service Tax Appellate Tribunal/ First Appellate Authority 2003-15; 2016-19 40345.36 13751.02 26594.34
2004-07;
Hon. High Court 2012-13; 222.05 2.56 219.49
2015-17
Hon. Supreme Court 2015-16 2.53 0.37 2.16
Total (F) 48496.87 13759.29 34737.58
Grand Total (A+B+C+D+E+F) 235178.96 157208.70 77970.26

viii. The Company has not defaulted in repayment of dues to banks. The Company has notissued any debentures and has not borrowed any amount from financial institutions orgovernment.

ix. In our opinion and according to the information and explanations given to us theterm loans taken by the Company have been applied for the purpose for which they wereraised. The Company has not raised any money by way of initial public offer or furtherpublic offer.

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

xi. As per notification number G.S.R. 463 (E) dated 5th June 2015 issued byMinistry of Corporate Affairs section 197 of the Act as regards the managerialremuneration 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 ofclause 3(xii) of the Order are not applicable to the Company.

xiii. According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe standalone financial statements as required by the applicable Indian accountingstandards.

xiv. According to the information and explanations given to us and on an overallexamination of the Balance Sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the year.

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

Annexure - 2 to Independent Auditors' Report

(Referred to in paragraph 9 (3) (f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date) Report on the Internal FinancialControls with reference to Financial Statements under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act")

To the Members of Oil and Natural Gas Corporation Limited

We have audited the internal financial controls with reference to financial statementsof Oil and Natural Gas Corporation Limited ("the Company") as of 31stMarch 2019 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention 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 with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing asspecified 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 with reference to financial statements was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error.

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 controls withreference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A Company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A Company's internal financialcontrol with reference to financial statements includes those policies and procedures that(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorizations of management and directors of the Company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the Company's assets that could have a material effect on thestandalone financial statements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to standalone financial statements were operating effectively asat 31st March 2019 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.


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