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Oil & Natural Gas Corpn Ltd.

BSE: 500312 Sector: Oil & Gas
NSE: ONGC ISIN Code: INE213A01029
BSE LIVE 10:27 | 11 Dec 179.95 -0.35
(-0.19%)
OPEN

180.50

HIGH

181.40

LOW

179.50

NSE 10:18 | 11 Dec 179.75 -0.50
(-0.28%)
OPEN

181.95

HIGH

181.95

LOW

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OPEN 180.50
PREVIOUS CLOSE 180.30
VOLUME 57008
52-Week high 212.00
52-Week low 155.30
P/E 13.04
Mkt Cap.(Rs cr) 230,934
Buy Price 180.00
Buy Qty 1566.00
Sell Price 180.15
Sell Qty 2204.00
OPEN 180.50
CLOSE 180.30
VOLUME 57008
52-Week high 212.00
52-Week low 155.30
P/E 13.04
Mkt Cap.(Rs cr) 230,934
Buy Price 180.00
Buy Qty 1566.00
Sell Price 180.15
Sell Qty 2204.00

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

Company auditors report

Independent Auditors' Report on Standalone FinancialStatements

To

The Members of Oil And Natural Gas Corporation Limited

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Oil and Natural GasCorporation Limited ("the Company") which comprise the Balance Sheet as atMarch 31st 2015 the Statement of Profit and Loss the Cash Flow Statement forthe year then ended and a summary of the significant accounting policies and otherexplanatory information.

2. Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 ("The Act") with respect to the preparation 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.

3. Auditor's Responsibility

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

e 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.

e 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 andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers 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 but not for the purpose of expressing anopinion on whether the company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the 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.

4. 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 31 2015 and its profit and its cash flows for the year ended on that date.

5. Emphasis of Matter

We draw attention to Note No. 44.1.1.b to the financial statements with regard to thedispute between the company and the Government of Gujarat in respect of payment of Royaltyon the crude oil produced in the State. The accrual of the additional liability ofRs117242.00 million (reduced to the extent Rs16440.00 million paid to GujaratGovernment- refer note no. 31.2 to the financial statements) against which an amount ofRs21067.60 million has been paid with effect from February 1 2014 and considered asdeposit would depend on the decision of the Hon'ble Supreme Court of India. The amount ofRs117242.00 million has been disclosed as contingent liability.

Our opinion is not modified in respect of this matter.

6. Other Matters

I. The financial statements include the Company's share in the total value ofassets liabilities expenditure and income of 134 blocks under New Exploration LicensingPolicy (NELPs)/Joint Venture (JVs) accounts for exploration and production out of which 6NELPs/JVs accounts have been certified by other Chartered Accountants and 17 NELP/JVs havebeen certified by the management in respect of NELPs/JVs operated by other operators. Ouropinion is based solely on the certificate of the other Chartered Accountants andmanagement certified accounts.

II. e have placed reliance on technical/commercial evaluation by the management inrespect of categorization of wells as exploratory development producing and dry wellallocation of cost incurred on them proved developed hydrocarbon reserves and depletionthereof on producing properties impairment liability for abandonment costs liabilityfor NELP and nominated blocks for under performance against agreed Minimum Work Programmeand allocation of depreciation on process platforms to transportation and facilities. Ouropinion is not modified in respect of these matters.

7. Report on the Other Legal and Regulatory Requirements

I. As required by the Companies (Auditors Report) Order 2015 ("theOrder") issued by the Central Government of India in terms of the section 143(11) ofthe Act we give in Annexure 1 a statement on the matters specified in the paragraphs 3and 4 of the said Order to the extent applicable.

II. Based on the verification of books of account of the Company and according toinformation and explanations given to us we give below a report on the directions issuedby the Comptroller and Auditors General of India in terms of section 143 (5) of the Act:

a. According to information and explanations given to us the company has not beenselected for disinvestment.

b. According to information and explanations given to us the cases of waiver/writeoff of debts/loans/ interest wherever applicable during the year along with the reasonsand amounts involved are stated in Annexure 2.

c. According to information and explanations given to us the company hasmaintained adequate records in respect of inventories lying with third parties and assetsreceived by the company as a gift from Government or other authorities.

d. e have carried out a review of age wise analysis of significant pendinglegal/arbitration cases based on the information and explanations made available to us andreport that the reasons for the pendency are mainly on account of adjournment and othermatters related to legal procedures. e also report that the company has in place amonitoring mechanism for expenditure incurred on such cases.

III. As required by section 143(3) of the Act we report that:

a. e have sought and obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes of our audit.

b. In our opinion proper books of account as required by law have been kept by theCompany 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. On the basis of the written representations received from the directors as on31st March 2015 taken on record by the Board of Directors none of the directors isdisqualified as on 31stMarch 2015 from being appointed as a director in terms of Section164 (2) of the Act.

f. The matter described under "Emphasis of Matters" para above in theevent of being decided unfavourably in our opinion may have an adverse impact on thefunctioning of the company.

g. ith respect to the other matters to be included in 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 the pending litigations on its financialposition in its financial statements- Refer Note 44.1.1 to the financial statements.

ii. According to information and explanations given to us the company did not haveany long term contracts including derivative contracts for which there were any materialforeseeable losses- Refer Note 51 to the financial statements.

iii. There has been no delay in transferring amounts required to be transferredto the Investor Education and protection Fund by the Company.

For G. D. Apte & Co. For Khandelwal Jain & Co. For Lodha & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No: 100515W Firm Reg. No: 105049W Firm Reg. No: 301051E
(C.M. Dixit) (Narendra Jain) (R. P. Singh)
Partner (M.No. 017532) Partner (M.No. 048725) Partner (M.No. 052438)
For Mehra Goel& Co. For Varma & Varma
Chartered Accountants Chartered Accountants
Firm Reg. No:000517N Firm Reg. No:004532S
(R. K. Mehra) (1Rs R. Prasanna Varma)
Partner (M.No. 006102) Partner (M.No.025854)

Annexure 1 to Independent Auditors' Report (Referred to in paragraph 1 under 'Report onOther Legal and Regulatory Requirements' section of our report of even date)

i. a. The Company has generally maintained proper

records showing full par ticulars including quantitative details and situation of fixedassets.

b. As per the information and explanations given to us the fixed assets havingsubstantial value other than those which are underground/submerged/under joint venturehave been physically verified by the management in a phased manner which in our opinionis reasonable 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 is not material.

ii. a. According to the information and explanations

given by the management the inventory has been physically verified in the phasedmanner (excluding inventory lying with third parties at some of the site-locationsinventory with joint ventures and intra site material in transit) during the year by themanagement. In our opinion the frequency of verification is reasonable.

b. In our opinion considering the size of the company and nature of its businessthe procedure of physical verification of inventory followed by the management needs to bestrengthened further.

c. The Company has generally maintained proper records of inventory. During theyear the management has identified certain discrepancies in the physical stock of crudeoil which has been written off as stated on Note No. 50 to the financial Statements.According to the information and explanations given by the management and in our opinionother than as stated above the discrepancies noticed on physical verification between thephysical stock and book records were not material having regard to the size of the Companyand nature of its business. In case where discrepancies noticed on physical verificationhave been identified with inventory records necessary adjustments have been carried outin the books of account. In respect of cases where the reconciliation is not complete themanagement has stated that the effect of the same on the accounts would be adjusted oncompletion of reconciliation.

iii. The Company has granted secured loans to five parties covered in the registermaintained under section 189 of the Act.

a. According to information and explanations given to us and based on ourverification of books of account the receipt of principal amount and interest areregular.

b. According to information and explanations given to us and based on ourverification of books of account we report that there was no overdue amount in respect ofsuch loans granted.

iv. In our opinion and according to the information and explanations given to usthe internal control procedures are generally adequate and commensurate with the size ofthe Company and the nature of its business with regard to purchases of inventory and fixedassets and for the sale of goods and services. During the course of our audit we have notobserved any continuing failure to correct major weaknesses in internal controls.

v. In our opinion and according to information and explanations given to us theCompany has not accepted any deposits as per the provision of the Act.

vi. e have broadly reviewed the costs records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 as amended and prescribed by theCentral Government under sub section (1) of section 148 of the Companies Act 2013 and weare of the opinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with theview to determine whether they are accurate or complete.

vii. a. According to records of the Company undisputed

statutory dues including Provident Fund Employees' State Insurance Income Tax SalesTax Service Tax ealth Tax Duty of Customs Duty of Excise Value Added Tax Cess andother statutory dues have been generally regularly deposited with the appropriateauthorities. According to the information and explanations given to us no undisputedamounts payable in respect of the aforesaid dues were outstanding as at March 31 2015 fora period more than six months from the date of becoming payable. b. According tothe information and explanations given to us there were no dues in respect of Income TaxDuty of Excise Duty of Customs Cess Sales Tax Service Tax Value Added Tax and WealthTax which have not been deposited on account of any dispute except the following:

Name of the statute Nature of Dues Forum where dispute is pending Period to which the amount relates (financial year) Gross Amount Involved Amount Paid under Protest Amount Unpaid
Central Excise Act 1944 Central excise duty/Interest/ Penalty Commissioner (Appeals) of Central Excise Custom and Ser vice Tax 2002-2007 109.20 108.54 0.66
Custom Excise and Service Tax Appellate Tribunal 2001-2013 4116.17 109.37 4006.80
Hon. High Court 1996-2015 351.33 - 351.33
Hon. Supreme Court 1980-2005 1283.30 - 1283.30
Total (A) 5860.00 217.91 5642.09
Oil Industries (Development) Act 1974 Cess/ Interest Custom Excise and Service Tax Appellate Tribunal 2004-2009 6.57 6.57
Total (B) 6.57 - 6.57
A.P Mineral Bearing Ordinance (infrastructure) Cess Rules 2005 Cess/ Interest Hon. High Court 2005-2014 2371.75 2371.75
Total (C) 2371.75 - 2371.75
The Custom Act 1962 Custom duty/ Penalty/ Interest Custom Excise and Service Tax Appellate Tribunal 2007-08 5.00 1.00 4.00
Total (D) 5.00 1.00 4.00
Income Tax Income Tax/ Commissioner (Appeals) 2006-2012 74701.19 44819.55 29881.64
Act 1961 Penalty/ Hon. High Court 2003-2010 1002.78 14.86 987.92
Interest Hon. Supreme Court

1983-1986

740.22

-

740.22

Income Tax Appellate Tribunal 1995-2011 3556.25 566.45 2989.80
Total (E) 80000.44 45400.86 34599.58
Central Sales Sales Tax/ Appellate Tribunal 1993-2000 146.95 20.92 126.03
Tax Act 1956 cinH roQnofvri\/o Turnover Tax/ Hon. High Court 1978-2013 24439.03 655.16 23783.87
and respective States Sales Tax Act enalty/ Interest Joint Commissioner/ Commissioner CT-Appeals 2000-2010 3227.65 39.38 3188.27
Total (F) 27813.63 715.46 27098.17
Finance Act 1994 Service Tax/ Interest/ Penalties Commissioner/Joint/Deputy Commissioner of Central Excise Custom and Service Tax 2004-2015 2.09 1.98 0.11
Custom Excise and Service Tax Appellate Tribunal 2005-2012 93.46 93.42 0.04
Directorate General of Central Excise Custom and Service Tax 2006-2008 637.40 637.40
Hon. High Court 2004-2007 32.48 - 32.48
Total (G) 765.43 95.40 670.03
Grand Total (A+B+C+D+E- hF+G) 116822.82 46430.63 70392.19

c. The amount required to be transferred to investor education and protection fundin accordance with the relevant provisions of the Companies Act 1956 (1 of 1956) andrules made thereunder has been transferred to such fund within time.

viii. The Company does not have accumulated losses at the end of the currentfinancial year and has not incurred cash losses either during the year or during theimmediately preceding financial year.

ix. The Company has not issued any debentures and has not borrowed any fund fromfinancial institutions. The company has not defaulted in repayment of dues to the bank.

x. In our opinion and according to the information and explanations given to usthe terms and conditions on which the Company has given guarantees for loans taken byothers from banks or financial institutions are not prima facie prejudicial to theinterest of the Company.

xi. The company has not availed any term loan during the year.

xii. According to the information and explanations given to us except for overreporting of crude oil production and inventory which is under investigation as stated innote no. 50 to the financial statements no fraud on or by the Company has been noticed orreported during the year.

For G. D. Apte & Co. For Khandelwal Jain & Co. For Lodha & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No: 100515W Firm Reg. No: 105049W Firm Reg. No: 301051E
(C.M. Dixit) (Narendra Jain) (R. P. Singh)
Partner (M.No. 017532) Partner (M.No. 048725) Partner (M.No. 052438)
For Mehra Goel& Co. For Varma & Varma
Chartered Accountants Chartered Accountants
Firm Reg. No:000517N Firm Reg. No:004532S
(R. K. Mehra) (P. R. Prasanna Varma)
Partner (M.No. 006102) Partner (M.No.025854)

Annexure 2 to Independent Auditors' Report (Referred to in paragraph ii (b) under'Report on Other Legal and Regulatory Requirements' section of our report of even date)

Cases of waiver/write off of debts/loans/Interest

The cases of waiver/write offs of debts/loans/interest wherever applicable during theyear along with the reasons and amount involved are as under:

Rs in million Reasons
26.40 Settlement of Arbitration award
0.01 Details of deposit not available
0.01 Forfeiture of Deposit
1.40 Disallowance of insurance claim
0.26 Long outstanding balance
28.08