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Hindustan Petroleum Corporation Ltd.

BSE: 500104 Sector: Oil & Gas
NSE: HINDPETRO ISIN Code: INE094A01015
BSE LIVE 15:56 | 17 Nov 414.90 2.30
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415.60

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420.00

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NSE 15:57 | 17 Nov 414.80 2.30
(0.56%)
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417.00

HIGH

420.80

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OPEN 415.60
PREVIOUS CLOSE 412.60
VOLUME 308430
52-Week high 493.00
52-Week low 273.33
P/E 10.42
Mkt Cap.(Rs cr) 63,223
Buy Price 0.00
Buy Qty 0.00
Sell Price 414.90
Sell Qty 1816.00
OPEN 415.60
CLOSE 412.60
VOLUME 308430
52-Week high 493.00
52-Week low 273.33
P/E 10.42
Mkt Cap.(Rs cr) 63,223
Buy Price 0.00
Buy Qty 0.00
Sell Price 414.90
Sell Qty 1816.00

Hindustan Petroleum Corporation Ltd. (HINDPETRO) - Auditors Report

Company auditors report

TO THE MEMBERS OF HINDUSTAN PETROLEUM CORPORATION LIMITED Report on the StandaloneFinancial Statements

We have audited the accompanying standalone financial statements of HINDUSTAN PETROLEUMCORPORATION LIMITED ("the Company") which comprise the Balance Sheet as atMarch 312016 the Statement of Profit and Loss and the Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation in which is incorporated financial statements of Visakh Refinery audited bythe branch auditor whose report has been considered in preparing this report.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act read with rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's 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 specified undersection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by Company's Directors as well as evaluating the overall presentation ofthe 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 the Companyas at March 312016 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

a) We refer to note no. 58 which indicates that the Company has less than the minimumnumber of Independent Directors required in terms of the provisions contained in theSecurities Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 and the Companies Act 2013. Pending such appointment these financialstatements have been reviewed and recommended to the Board of Directors by the AuditCommittee consisting of only one Independent Director; and

b) We refer to note no. 41 in connection with 21 Un-incorporated Joint Ventures (UJVs)involved in exploration activities of which majority of UJVs are under relinquishment.The attached financial statements include Company's proportionate share in Assets andLiabilities Income and Expenditure amounting to ' 19.98 crores and ' 123.41 crores '0.47 crores and ' 20.22 crores respectively as at March 312016. In respect of theseUJVs the audited accounts are not available with the Company. The financial informationhas been incorporated based on un-audited financial statements / data received from therespective operators.

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 ("the Order")issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure I a statement on the matters specified in paragraph 3 and 4 of the Orderto the extent applicable.

2. As required by the section 143(5) of the Act we give in the Annexure II a statementon the directions / sub-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;

(c) The reports on the accounts of the branch office of the Company viz. VisakhRefinery audited under section 143(8) of the Act by the branch auditor have been sent tous and have been properly dealt with by us in preparing this report;

(d) 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;

(e) 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;

(f) As per notification no. G.S.R 463(E) dated June 5 2015 the Government companiesare exempted from the provisions of section 164(2) of the Act accordingly we are notrequired to report whether any directors are disqualified in terms of provisions containedin the said section;

(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 III.

(h) With respect to the other matters to be included in the Auditor's 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 financial statements - Refer Note 55 to the standalone financialstatements;

(ii) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts; and

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

For G. M. Kapadia & Co. For CVK & Associates
Chartered Accountants Chartered Accountants
Firm Registration No.: 104767W Firm Registration No.: 101745W
Sd/- Sd/-
Atul Shah A.K. Pradhan
Partner Partner
Membership No.: 039569 Membership No.: 032156
Place: New Delhi
Dated : 27th May 2016

Annexure I - referred to in paragraph 1 under "Report on Other Legal andRegulatory Requirements" of our report of even date

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets of the Company other than LPG cylinders and pressure regulatorswith customers are physically verified by the Management in a phased program of three tofive years cycle. In our opinion the programme is reasonable having regard to the size ofthe Company and the nature of its assets. In our opinion and as per the information givenby the management the discrepancies observed were not material and have beenappropriately accounted in the books of account.

(c) According to the information and explanations given to us and based on verificationof records on random basis we report that the title deeds of immovable properties held asfixed assets other than self-constructed properties are held in the name of the Companyexcept for the following:

(' In Crores)

Particulars No. of Cases Gross Block as at March 31 2016 Net Block as at March 31 2016 Remarks
Freehold Land 59 5.12 5.12 Title Deeds not available for verification
Leasehold Land 4 0.30 0.13 Title Deeds not available for verification
Leasehold Land 4 195.18 145.76 Legal formalities of registration of lease deeds pending
Jointly owned land - Lease hold 1 7.21 5.31 Legal formalities of conclusion and registration of joint ownership agreement pending
Total 68 207.81 156.32
Buildings 11 4.95 3.15 Title Deeds not available for verification

(ii) During the year the inventories have been physically verified at reasonableintervals by the management. The discrepancies noticed on physical verification ascompared to the book records were not material having regards to size and nature ofoperations and have been properly dealt with in the books of account.

(iii) As per notification no. G.S.R 463(E) dated June 5 2015 the Government companiesare exempted from the provisions of section 188 of the Act in respect of contracts orarrangements entered into between the Government companies. The Company has not grantedloans secured or unsecured to companies firms limited liability partnerships or otherparties covered in the register maintained under section 189 of the Act. Hence thequestion of reporting under sub-clauses (a) (b) & (c) of the clause 3(iii) of theOrder does not arise.

(iv) The Company has not granted any loans or provided any guarantees or security tothe parties covered under section 185 of the Act. The Company has complied with theprovisions of section 186 of the Act in respect of investments made or loans or guaranteeor security provided to the parties covered under section 186 of the Act.

(v) The Company has not accepted any deposits from the public within the meaning ofsections 73 to 76 of the Act and the rules framed there under except old cases underdispute aggregating to ' 0.02 crores where the Company has complied with necessarydirections During the year the said amount has been transferred to Investor Education andProtection Fund. We are informed by the Management that no order has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any courtor any other Tribunal in this regard.

(vi) We have broadly reviewed accounts and records maintained by the Company pursuantto rules made by the Central Government for the maintenance of cost records under section148(1) of the Act in respect of Company's products to which the said rules are madeapplicable and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. We have however not made a detailed examination ofrecords with a view to determine whether they are accurate.

(vii) (a) According to the information and explanations given to us and according tothe records of the Company examined by us

in our opinion the Company is generally regular in depositing with the appropriateauthorities undisputed statutory dues including Provident Fund Employees' StateInsurance Income-tax Sales Tax Service Tax duty of Custom duty of Excise Value AddedTax Cess and any other statutory dues wherever applicable.

According to the information and explanations given to us no undisputed amountspayable in respect of aforesaid dues were outstanding as at March 312016 for a period ofmore than 6 months from the date they became payable.

(b) According to the information and explanations given to us the particulars ofstatutory dues that have not been deposited on account of disputes are as under:

Statute Forum pending Amount in Crores Period to which amount relates
Customs Tribunal** 12.16 1998 to 2011
Appellate Authority* 2.15 1996 to 2015
Supreme Court 40.78 2005 to 2007
Total 55.09
Statute Forum pending Amount in Crores Period to which amount relates
Central Excise Tribunal** 325.50 1994 to 2015
Adjudicating Authority *** 23.50 2004 to 2009
Revision Authority 1.08 1999 to 2012
High Court 3.95 1992 to 2008
Appellate Authority* 12.04 1996 to 2015
Total 366.07
Sales tax/ Entry tax Board of Revenue 3.07 2003 to 2013
Appellate Authority* 3085.13 1996 to 2015
Adjudicating Authority *** 6.65 1985 to 2008
Supreme Court 64.25 2002 to 2004 2006 to 2008
High Court 933.94 1979 to 2014
Objection Hearing Authority 18.04 2008 to 2012
Appellate & Revisional Board 0.57 2009 to 2010
Tribunal** 5315.95 1985 to 2011
Total 9427.60
Service Tax Appellate Authority* 0.80 1996 to 2015
Tribunal** 67.45 2002 to 2013
High Court 3.75 1981 to 2010
Total 72.00
Income Tax Tribunal** 0.17 2006 to 2011
Total 0.17

* Appellate Authority represents Assistant Commissioner (A) Deputy Commissioner (A)Joint commissioner (A) Additional Commissioner (A)

** Tribunal represents Sales Tax Appellate Tribunal Central excise and Service taxAppellate Tribunal (CESTAT) Income tax Appellate Tribunal (ITAT)

*** Adjudicating authority represents Assessing Officer Additional CommissionerDeputy Commissioner Joint commissioner Additional Commissioner Chief Commissioner

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowing to financial institutions banks governmentor dues to debenture holders.

(ix) The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments). According to the information and explanations given tous and on the basis of the records examined by us the Company has prima facie applied theterm loan for the purpose for which it was obtained.

(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 material fraudby the Corporation or on the Corporation by its officers and employees have been noticedor reported during the year

(xi) As per notification no. G.S.R 463(E) dated June 5 2015 the Government companiesare exempted from the provisions of section 197 of the Act accordingly the question ofreporting whether the payment of managerial remuneration is in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct does not arise.

(xii) The Company is not a chit fund or a nidhi company. Hence the question ofreporting under clause 3(xii) of the Order does not arise.

(xiii) As per notification no. G.S.R 463(E) dated June 5 2015 the Governmentcompanies are exempted from the provisions of section 188 of the Act in respect ofcontracts or arrangements entered into between the Government companies. The Company hascomplied with the provisions of section 177 and section 188 of the Act in respect oftransactions with the related parties and the details have been disclosed in the financialstatements as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under audit.

(xv) The Company has not entered into any non-cash transactions with directors orpersons connected with him covered under the provisions of section 192 of the Act.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For G. M. Kapadia & Co. For CVK & Associates
Chartered Accountants Chartered Accountants
Firm Registration No.: 104767W Firm Registration No.: 101745W
Sd/- Sd/-
Atul Shah A.K. Pradhan
Partner Partner
Membership No.: 039569 Membership No.: 032156
Place: New Delhi
Dated: 27th May 2016

Annexure II referred to in paragraph 2 under "Report on Other Legal and RegulatoryRequirements" of our report of even date

Based on the verification of records of the Company and based on information andexplanation given to us we give below a report on the directions issued by theComptroller and Auditor General of India in terms of section 143(5) of the Act.

Sr No Areas to be examined Observation /Finding
1 Whether the company has clear title / lease deeds for freehold and leasehold land respectively? If not please state the area of freehold and leasehold land for which title / lease deeds are not available. Based on the verification of the records of the Company and as reported in Annexure I para 1(c) of this report the Company does not have the original clear title deeds in respect of 68 freehold land /lease hold lands. The details of area of such land as complied by the management is as under:
Particulars No. of Cases Acres
Remarks
Freehold Land 59 294.91
Title Deeds not available for verification
Leasehold Land 4 35.86
Title Deeds not available for verification
Leasehold Land 4 306.00
Legal formalities of registration of lease deeds pending
Jointly owned land - lease hold 1 37.00
Legal formalities of conclusion and registration of joint ownership agreement pending
Total 68
2 Whether there are any cases of waiver / write off of debts / loans / interest etc. if yes the reasons there for and the amount involved. As per the process followed by the Company any waiver of debt is accounted only with the approval of Competent Authority in line with the Delegation of Authority. Interest on delayed payments is waived from Customers on merit of each case by approving authority. During the year the Company has written off ' 9.62 crores. This includes ' 6.75 crores in respect of recoveries on account of Additional Sales tax on CST sales which is not recoverable as per the determination order passed by the Office of the Commissioner of Commercial taxes West Bengal.
3 Whether proper records are maintained for inventories lying with third parties & assets received as gift / grant(s) from Government or other authorities. a. Proper records are maintained for inventories lying with third parties. b. During the year the Company has not received any assets as gifts from Government or other authorities.

 

For G. M. Kapadia & Co. For CVK & Associates
Chartered Accountants Chartered Accountants
Firm Registration No.: 104767W Firm Registration No.: 101745W
Sd/- Sd/-
Atul Shah A.K. Pradhan
Partner Partner
Membership No.: 039569 Membership No.: 032156
Place: New Delhi
Dated: 27th May 2016

Annexure III - referred to in paragraph 3(g) under "Report on Other Legal andRegulatory Requirements" of our report of even date

Report on the Internal Financial Controls over Financial Reporting under clause (i) ofsub-section 3 of section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of HINDUSTANPETROLEUM CORPORATION LIMITED ("the Company") as of March 312016 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 (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 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 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 and deemedto be prescribed 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 was 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 auditor's judgement 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 Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a 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 Company has in all material respects an adequate internalfinancial controls system over financial reporting and

such internal financial controls over financial reporting were operating effectively asat March 312016 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.

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 insofar as itrelates Visakh Refinery audited by the branch auditor appointed under section 143(8) ofthe Act is based on the report of the branch auditor which has sent to us and have beenproperly dealt with by us in preparing this report.

For G. M. Kapadia & Co. For CVK & Associates
Chartered Accountants Chartered Accountants
Firm Registration No.: 104767W Firm Registration No.: 101745W
Sd/- Sd/-
Atul Shah A.K. Pradhan
Partner Partner
Membership No.: 039569 Membership No.: 032156
Place: New Delhi
Dated: 27th May 2016