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Bharat Petroleum Corporation Ltd.

BSE: 500547 Sector: Oil & Gas
NSE: BPCL ISIN Code: INE029A01011
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OPEN 638.90
PREVIOUS CLOSE 637.40
VOLUME 304944
52-Week high 694.75
52-Week low 366.10
P/E 11.54
Mkt Cap.(Rs cr) 91867.95
Buy Price 0.00
Buy Qty 0.00
Sell Price 635.25
Sell Qty 90.00
OPEN 638.90
CLOSE 637.40
VOLUME 304944
52-Week high 694.75
52-Week low 366.10
P/E 11.54
Mkt Cap.(Rs cr) 91867.95
Buy Price 0.00
Buy Qty 0.00
Sell Price 635.25
Sell Qty 90.00

Bharat Petroleum Corporation Ltd. (BPCL) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

BHARAT PETROLEUM CORPORATION LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Bharat PetroleumCorporation Limited ("the Corporation") which comprise the Balance Sheet as atMarch 31 2016 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.

Management’s Responsibility for the Standalone Financial Statements

The Corporation’s Board of Directors is responsible for the matters stated inSection 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Corporation in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Corporation and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the standalone financial statements arefree from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone financial statements. The procedures selected depend on theauditors’ judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to theCorporation’s preparation of the standalone financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Corporation’s Directors aswell as evaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of theCorporation as at March 31 2016 its profit and its cash flows for the year ended on thatdate.

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 we give in the "Annexure A" a statement on the mattersspecified in the paragraphs 3 and 4 of the Order to the extent applicable.

(2) As required by Section 143(5) of the Act we give in "Annexure B" astatement on the matters specified by the Comptroller and Auditor-General of India for theCorporation.

(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 theCorporation so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;

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

e. In view of exemption given vide notification no. G.S.R. 463(E) dated June 5 2015issued by Ministry of Corporate Affairs provisions of Section 164(2) of the Act regardingdisqualification of Directors are not applicable to the Corporation;

f. With respect to the adequacy of the internal financial controls over financialreporting of the Corporation and the operating effectiveness of such controls we give ourseparate report in "Annexure C";

g. 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 Corporation has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note 49 of the standalonefinancial statements;

ii. The Corporation has made provision as required under the applicable law oraccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts - Refer Note 50 of the standalone financial statements;

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

For CNK & ASSOCIATES LLP For HARIBHAKTI & CO. LLP
Chartered Accountants Chartered Accountants
ICAI FRN. 101961W ICAI FRN. 103523W
Sd/- Sd/-
Himanshu Kishnadwala Chetan Desai
Partner Partner
Membership No.: 37391 Membership No.: 17000
Place: Mumbai
Date: 26th May 2016

[Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements’ in the Independent Auditors’ Report of even date to the members ofBharat Petroleum Corporation Limited ("the Corporation") on the standalonefinancial statements for the year ended March 312016]

(i) (a) The Corporation has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets;

(b) As per information and explanations given to us physical verification of fixedassets (except LPG Cylinders and pressure regulators with customers) has been carried outby the Management during the year in accordance with the phased programme of verificationof all assets over three years which in our opinion is reasonable having regard to thesize of the Corporation and the nature of its assets. As informed no materialdiscrepancies were noticed on such verification;

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Corporation the title deeds of immovable properties areheld in the name of the Corporation except in cases given below:

Particulars Number of Cases Gross Block (' in Crore) Net Block (' in Crore) Remarks
Freehold land 27 132.90 132.90 Documents of title lying with Registration Authorities
Freehold land 2 2.26 2.26 Documents of title not available for verification
Leasehold Land having lease period of more than 99 years 9 1.76 1.70 Documents of title lying with Registration Authorities
Other leasehold land 1 0.23 0.09 Document of title lying with Registration Authorities

(ii) The inventory (excluding stocks with third parties and goods in transit) has beenphysically verified by the management during the year at reasonable intervals. In respectof inventory lying with third parties these have substantially been confirmed by them. Nomaterial discrepancies were noticed on physical verification of inventories carried out atthe end of the year;

(iii) As informed the Corporation has not granted any loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained under Section 189 of the Act. Accordingly paragraphs 3(iii)(a) 3(iii)(b) and3(iii)(c) of the Order are not applicable;

(iv) In our opinion and according to the information and explanations given to us theCorporation has complied with the provisions of section 185 and 186 of the Act withrespect to the loans investments guarantees and securities;

(v) In our opinion and according to the information and explanations given to us theCorporation has not accepted any deposits within the provisions of Sections 73 to 76 ofthe Act read with The Companies (Acceptance of Deposits) Rules 2014 and other relevantprovisions of the Act;

(vi) We have broadly reviewed the books of account maintained by the Corporation inrespect of products where the maintenance of cost records has been specified by theCentral Government under Section 148(1) of the Act and we are of the opinion thatprima-facie the prescribed books of account and cost records have been made andmaintained. We have not however made a detailed examination of the same with a view todetermining whether they are accurate or complete;

(vii) (a) The Corporation is generally regular in depositing with appropriateauthorities undisputed statutory dues including provident fund employees’ stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and any other material statutory dues applicable to it;

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees’ state insurance income-taxsales-tax service tax duty of customs duty of excise value added tax cess and anyother material statutory dues applicable to it were outstanding as on the last day ofthe financial year for a period of more than six months from the date they becamepayable;

(b) According to the information and explanation given to us the dues of income-taxsales-tax service tax duty of customs duty of excise value added tax have not beendeposited on account of any dispute are as per Statement 1;

(viii) According to the information and explanations given to us the Corporation hasnot defaulted in repayment of loans or borrowing to financial institutions banksgovernment or dues to debenture holders;

(ix) The Corporation did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. According to the informationand explanations given to us money raised by way of term loans have been applied for thepurpose for which those were raised;

(x) During the course of our examination of the books and records of the Corporationcarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us no instances of fraud by theCorporation or on the Corporation by its officers and employees have been noticed orreported during the year except for the following instance of fraud identified by theManagement:

Two incidents of irregularities aggregating ' 0.25 crore were noticed in vendor paymentrelating to the Retail Territory by an officer. Inquiry against the concerned officer isin progress. The dues of the vendor have been withheld;

(xi) In view of exemption given vide notification no. G.S.R. 463(E) dated June 5 2015issued by Ministry of Corporate Affairs provisions of Section 197 read with Schedule V ofthe Act regarding managerial remuneration are not applicable to the Corporation.Accordingly paragraph 3(xi) of the Order is not applicable;

(xii) In our opinion and according to the information and explanations given to us theCorporation is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable;

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Corporation all transactions entered into by theCorporation with the related parties are in compliance with Sections 177 and 188 of theAct where applicable and details of such transactions have been disclosed in the financialstatements as required by the applicable accounting standards;

(xiv) According to the information and explanations given to us and based on ourexamination of the records the Corporation has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the year.Accordingly paragraph 3(xiv) of the Order is not applicable;

(xv) According to the information and explanations given to us and based on ourexamination of the records the Corporation has not entered during the year into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable;

(xvi) The Corporation is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934.

For CNK & ASSOCIATES LLP For HARIBHAKTI & CO. LLP
Chartered Accountants Chartered Accountants
ICAI FRN. 101961W ICAI FRN. 103523W
Sd/- Sd/-
Himanshu Kishnadwala Chetan Desai
Partner Partner
Membership No.: 37391 Membership No.: 17000
Place: Mumbai
Date: 26th May 2016

Details of dues outstanding with respect to income-tax sales tax service tax dutyof customs duty of excise value added tax attached on account of any dispute:

Rs. in Crores

Name of the Statute Forum Where Dispute is pending Amount Period block to which it relates^
1 Central Excise Act 1944 Supreme Court 772.57 2000 - 2010
High Court 121.23 1995 - 2015
Appellate Tribunal * 1060.01 1985 - 2016
Appellate Authority ** 30.67 1990 - 2016
Adjudicating Authority *** 6195.35 1995 - 2016
Total 8179.83
2 Customs Act 1962 Supreme Court -
Appellate Tribunal * 81.33 1990 - 2010
Appellate Authority ** 2.83 2000 - 2005
Adjudicating Authority *** 10.54 2000 - 2016
Total 94.70
3 Income Tax Act 1961 High Court 7.65 1990 - 2005
Appellate Tribunal * 5.73 1990 - 2005
Appellate Authority ** 1.42 1995 - 2015
Total 14.80
4 Sales Tax/VAT Legislations Supreme Court 65.38 1995 - 2010
High Court 400.36 1980 - 2016
Appellate Tribunal * 1114.36 1985 - 2015
Appellate Authority ** 7834.13 1985 - 2015
Adjudicating Authority *** 225.94 1985 - 2000
Total 9640.17
5 Finance Act1994 (Service tax) Supreme Court 31.15 2000 - 2015
Appellate Tribunal * 19.60 2000 - 2016
Appellate Authority ** 148.88 2000 - 2016
Adjudicating Authority *** 168.40 2005 - 2016
Total 368.03
Grand Total: 18297.53

Dues Include Penalty & Interest wherever applicable * Appellate Tribunal includesSales Tax Tribunal CESTAT and ITAT.

** Appellate Authority includes Commissioner Appeals Assistant Commissioner AppealsDeputy Commissioner Appeals Joint Commissioner Appeals and Deputy Commissioner CommercialTaxes Appeals.

*** Adjudicating Authority includes Collector of Sales Tax Sales Tax Officer andDeputy Commissioner Sales Tax Joint/Deputy/Additional Commissioner of Commercial Taxesetc.

~ Period block shall indicate the period interval in which all the disputes under thatauthority have taken place. [Referred to in paragraph 2 under ‘Report on Other Legaland Regulatory Requirements’ in the Independent Auditors’ Report of even date tothe members of Bharat Petroleum Corporation Limited ("the Corporation") on thestandalone financial statements for the year ended March 312016]

1 Areas Examined Whether the Company has clear title/lease deeds for freehold andleasehold respectively? If not please state the area of freehold and leasehold land forwhich title/lease deeds are not available.

Observations/Findings

Particulars Area (In Acres) Remarks
Freehold land 261.82 Documents of title lying with Registration Authorities
Freehold land 877.10 Document of title not available for verification
Leasehold Land having lease period of more than 99 years 3.35 Documents of title lying with Registration Authorities
Other leasehold land 0.44 Document of title lying with Registration Authorities

 

2 Areas Examined Whether there are any cases of waiver/write off of debts/loans/interest etc. if yes with reasons there for and amount involved.
Observations/Findings The details of cases of waiver/write off of debts/loans/interest by the Corporation during the year are as under:

 

Particulars Rs. in Crores
Write off of debts 0.0012 *
Waiver of penalty & interest -
*(' 11512.58)

 

3 Areas Examined Whether proper records are maintained for inventories lying with third parties and assets received as gift/grant(s) from Government or other authorities?
Observations/Findings Proper records are maintained for inventories lying with third parties;
The Corporation has not received any assets as gift/grants from Government or other authorities.

 

For CNK & ASSOCIATES LLP For HARIBHAKTI & CO. LLP
Chartered Accountants Chartered Accountants
ICAI FRN. 101961W ICAI FRN. 103523W
Sd/- Sd/-
Himanshu Kishnadwala Chetan Desai
Partner Partner
Membership No.: 37391 Membership No.: 17000
Place: Mumbai
Date: 26th May 2016

[Referred to in paragraph 3(f) under ‘Report on Other Legal and RegulatoryRequirements’ in the Independent Auditors’ Report of even date to the members ofBharat Petroleum Corporation Limited on the standalone financial statements for the yearended March 312016]

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 BharatPetroleum Corporation Limited ("the Corporation") as of March 31 2016 inconjunction with our audit of the standalone financial statements of the Corporation forthe year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Corporation’s management is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Corporation 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 (‘ICAI’).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Corporation’s policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Corporation'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 specified under Section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting were established andmaintained and if such controls operated 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 auditor’s judgment including the assessment of the risks ofmaterial misstatement of the 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 Corporation’s internal financialcontrols system 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 financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting 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. provide reasonable assurance that transactions are recorded as necessary to permitpreparation of 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. provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company’s assets that could havea material effect on the 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 Corporation 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 312016 based on theinternal control over financial reporting criteria established by the Corporationconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For CNK & ASSOCIATES LLP For HARIBHAKTI & CO. LLP
Chartered Accountants Chartered Accountants
ICAI FRN. 101961W ICAI FRN. 103523W
Sd/- Sd/-
Himanshu Kishnadwala Chetan Desai
Partner Partner
Membership No.: 37391 Membership No.: 17000
Place: Mumbai
Date: 26th May 2016

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