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Bharat Petroleum Corporation Ltd.

BSE: 500547 Sector: Oil & Gas
NSE: BPCL ISIN Code: INE029A01011
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OPEN 316.30
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VOLUME 190924
52-Week high 503.00
52-Week low 293.50
P/E 7.88
Mkt Cap.(Rs cr) 69,665
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 316.30
CLOSE 312.70
VOLUME 190924
52-Week high 503.00
52-Week low 293.50
P/E 7.88
Mkt Cap.(Rs cr) 69,665
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bharat Petroleum Corporation Ltd. (BPCL) - Auditors Report

Company auditors report

TO THE MEMBERS OF BHARAT PETROLEUM CORPORATION LIMITED

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

1. We have audited the accompanying standalone Indian Accounting Standards ("IndAS") Financial Statements of Bharat Petroleum Corporation Limited ("theCorporation") which comprise the Balance Sheet as at March 312021 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Cash Flows andthe Statement of Changes in Equity for the year ended on that date and a summary of theSignificant Accounting Policies and other explanatory information (hereinafter referred toas "the Standalone Ind AS Financial Statements ").

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS Financial Statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended and other accounting principles generally accepted in India of thestate of affairs (financial position) of the Corporation as at March 312021 the profitand total comprehensive income its cash flows and changes in equity for the year ended onthat date.

Basis for Opinion

3. We conducted our audit of the Standalone Ind AS Financial Statements in accordancewith the Standards on Auditing ("SAs") specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in theAuditor’s Responsibilities for the Audit of the Standalone Ind AS FinancialStatements section of our report. We are independent of the Corporation in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI)together with the independence requirements that are relevant to our audit of theStandalone Ind AS Financial Statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI’s Code of Ethics. We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our audit opinion onthe Standalone Ind AS Financial Statements.

Emphasis of Matter

4. We draw attention to Note 71 in the the Standalone Ind AS Financial Statementsregarding the impact of Covid 19 pandemic and assessment made by the Management on itsbusiness and financial activities. This assessment and the outcome of the pandemic is asmade by the Management and dependent on future circumstances.

Our opinion is not modified in respect of this matter.

Key Audit Matters

5. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS Financial Statements of the currentperiod. These matters were addressed in the context of our audit of the Standalone Ind ASFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters:

Sr.No. Key Audit Matter Auditors’ Response
1. Valuation of Investment in E&P Subsidiary:
The Corporation has an investment of Rs. 6276.37 Crores in 100% subsidiary Bharat Petro Resources Ltd (BPRL). The following procedures were carried out in this regard:
This subsidiary alongwith its step down subsidiaries JVs & Associates holds participating interest in various oil/ gas blocks for exploration & evaluation development and production activities (E&P). • We evaluated the design and implementation of key controls in relation to the annual impairment testing activity carried out by the Corporation for its investments in Subsidiaries.
The Corporation’s realisation from these E&P investments is dependent on the continued successful operations/ development of reserves resulting in expected earnings and revenue growth of the respective companies. • We reviewed the audited consolidated Ind AS Financial Statements of BPRL for FY 2020-21 and the independent auditor’s report thereon to ascertain if there are any signs of permanent dimunition in the Corporation’s investments therein.
The continuing COVID-19 pandemic may have impact on global economy and consequently on crude prices. Further during FY 2020-21 BPRL has relinquished or impaired certain oil and gas blocks on account of changes in circumstances and prospects of the blocks. • We assessed the Management’s explanation regarding key factors which have led to significant dimunition in value of BPRL’s assets vis-a-vis the previous year and consequent trigger for impairment of the Corporation’s investment in the same.
The above factors have impacted the value in use of BPRL’s assets and consequently the Corporation’s impairment analysis in respect of its Investment in BPRL. • We evaluated the impairment analysis carried out by the Corporation which included comparison of externally assessed value in use of BPRL’s Net Assets with carrying cost of investment in BPRL in the Corporation’s Books of Accounts.
2. Computation of Expected Credit Loss (ECL):
Trade receivables and loans granted under the Pradhan Mantri Ujwala Yojana (PMUY) scheme constitute a significant component of the total current assets of the Corporation. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
At each reporting date the Corporation recognizes Lifetime ECL on Trade Receivables using a ‘simplified approach’ and 12 month ECL on loans granted under the PMUY scheme which rely on Management’s estimates regarding probability of default rates linked to age-wise bucketing of the corresponding asset. The COVID 19 pandemic may also have an impact on the Management’s estimate of probability of default as on March 31 2021. • In respect of loans granted under PMUY the Corporation along with other few industry peers have derived a common methodology for calculating ECL based on the broad category of active and inactive consumers and last refill date with expected loan recovery period. We checked the working of the same and it was in line with the common methodology document shared with us.
• We have evaluated the methodology for age-wise bucketing of trade receivables and key assumptions underlying the probability of default estimates on the same to ascertain that the same were broadly in-line with the Corporation’s historical default rates and have considered available information regarding the current economic scenario.
• We selected a few sample outstanding receivable cases having different overdue periods and checked that the computation of ECL has been appropriately carried out in line with the Corporation’s policy.
3. Evaluation of Contingent Liabilities:
The Corporation has material uncertain positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Contingent liabilities are not recognized in the Standalone Ind AS Financial Statements but are disclosed unless the possibility of an outflow of economic resources is considered remote. Contingent liabilities disclosed are in respect of items which in each case are above the threshold limit. The following audit procedures were carried out in this regard:
• We examined sample items above the threshold limit for determination of contingent liabilities and obtained details of completed Excise VAT/ Sales Tax/ Entry Tax assessments demands as well as other disputed claims against the Corporation as on March 31 2021. The Corporation has obtained opinion from tax consultants in various disputed matters. We have relied upon such opinions and litigation history where the Corporation has concluded that possibility of cash outflow is remote while preparing its Standalone Ind AS Financial Statements.
• We have assessed the Management’s underlying assumptions in estimating the possible outcome of such disputed claims/ cases against the Corporation based on records and judicial precedents made available.
4. Inventories:
Verification and valuation of Inventories is a significant area requiring Management’s judgment of estimates and application of accounting policies that have significant effect on the amounts recognized in the Standalone Ind AS Financial Statements. Our audit approach involved the following combination of test of control design and substantive testing in respect of verification and valuation of inventories:
• We evaluated the system of inventory monitoring and control. It was observed that inventory has been physically verified by the Management during the year at reasonable intervals.
• Our audit teams have also physically verified on sample basis the Inventories at various locations and compliance with cut off procedures. However since physical verification at certain locations was not possible for us in such cases we have relied on the physical verification of inventory carried out by the Management.
• In respect of inventory lying with third parties we have ascertained that these have substantially been confirmed by them. We also examined the system of records maintenance for stocks lying at third party locations.
• We have also tested the values considered in respect of Net realisable value cost of products and verified these on sample basis with the inventory valuation and accounting entries posted in this regard.
5. Property Plant & Equipment:
Estimates of useful lives and residual value of Property Plant and Equipment is a significant area requiring Management judgment of estimates and application of accounting policies that have significant effect on the amounts recognized in the Standalone Ind AS Financial Statements. Our audit approach involved the following combination of test of control design and substantive testing in respect of verification and recording of Property Plant & Equipment:
• We examined whether the Corporation has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
• The physical verification of Property Plant and Equipment (except LPG Cylinders and pressure regulators with customers) has been carried out by the Management in accordance with the phased program of verification of all assets and necessary accounting entries based on such physical verification have been appropriately posted which were verified by us.
• Changes in the useful life and residual value of class of assets was adopted based on internal evaluation and was also comparable with other entities in the same industry.
• We have tested the computation of depreciation on sample basis.

Information Other than the Standalone Ind AS Financial Statements and Auditors’Report Thereon

6. The Corporation’s Board of Directors is responsible for the preparation of theother information. The other information comprises the information included in theManagement Discussion and Analysis Board’s Report including Annexures toBoard’s Report Business Responsibility Report Corporate Governance andShareholder’s Information but does not include the Standalone Ind AS FinancialStatements and our audit report thereon.

7. Our opinion on the Standalone Ind AS Financial Statements does not cover the otherinformation and we do not express any form of assurance thereon.

8. In connection with our audit of the Standalone Ind AS Financial Statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Standalone Ind AS FinancialStatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.

9. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management’s Responsibility for the Standalone Ind AS Financial Statements

10. The Corporation’s Board of Directors is responsible for the matters stated insection 134(5) of the Act with respect to the preparation of these Standalone Ind ASFinancial Statements that give a true and fair view of the financial position financialperformance total comprehensive income cash flows and changes in equity of theCorporation in accordance with the Ind AS and other accounting principles generallyaccepted in India. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCorporation and for preventing and detecting frauds and other irregularities; selectionand application of appropriate accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Ind AS Financial Statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

11. In preparing the Standalone Ind AS Financial Statements management is responsiblefor assessing the Corporation’s ability to continue as a going concern disclosingas applicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Corporation or to ceaseoperations or has no realistic alternative but to do so.

12. The Corpoartions’s Board of Directors management is responsible for overseeingthe Corporation’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Standalone Ind AS FinancialStatements

13. Our objectives are to obtain reasonable assurance about whether the Standalone IndAS Financial Statements as a whole are free from material misstatement whether due tofraud or error and to issue an auditor’s report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Ind AS FinancialStatements .

14. 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 Standalone Ind ASFinancial 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 financial controls 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 theCorporation has adequate internal financial controls system in place and the operatingeffectiveness 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 concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCorporation’s ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor’s report to therelated disclosures in the Standalone Ind AS Financial Statements or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors’ report. However future events or conditionsmay cause the Corporation to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the Standalone IndAS Financial Statements including the disclosures and whether the Standalone Ind ASFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

15. Materiality is the magnitude of misstatements in the Standalone Ind AS FinancialStatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.

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

17. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

18. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the Standalone Ind ASFinancial Statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor’s report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

19. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government in terms of Section 143(11) of the Act andon the basis of such checks of the books and records of the Corporation as we consideredappropriate and according to the information and explanations given to us we give in "AnnexureA" a statement on the matters specified in paragraphs 3 and 4 of the Order to theextent applicable.

20. As required by Section 143(5) of the Act we give in "Annexure B"a statement on the matters specified by the Comptroller and Auditor-General of India forthe Corporation.

21. As required by Section 143(3) of the Act based on our audit 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 including Other ComprehensiveIncome the Statement of Cash Flow and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.

d) In our opinion the aforesaid Standalone Ind AS Financial Statements comply with theInd AS specified under Section 133 of the Act.

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 refer toour separate 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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Corporation has disclosed the impact if any of pending litigations on itsfinancial position in its standalone Ind AS Standalone Ind AS Financial Statements. (ReferNote 63 of the Standalone Ind AS Financial 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.

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

For CVK & Associates For Borkar & Muzumdar
Chartered Accountants Chartered Accountants
ICAI FRN 101745W ICAI FRN 101569W
Sd/- Sd/-
A K Pradhan Kaushal Muzumdar
Partner Partner
Membership No. 032156 Membership No. 100938
UDIN: 21032156AAAAAS8621 UDIN: 21100938AAAAAW6386
Place: Mumbai
Date: 26th May 2021

ANNEXURE A TO INDEPENDENT AUDITORS’ REPORT

[Referred to in paragraph 19 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 Standalone IndAS Financial Statements as of and for the year ended March 312021]

(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 Net Block (Rs.in Crores) Remarks
Freehold Land 20 91.58 Documents of title not available for verification
Freehold Land 11 8.77 Documents of title lying with registration authorities as informed
Freehold Land 12 144.53 Mutation Pending as informed

(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 Section 186 of the Actwith respect 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 from public within the provisions of Sections 73to 76 of the Act read with The Companies (Acceptance of Deposits) Rules 2014 and otherrelevant provisions 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 the rules framed there under and weare of the opinion that prima-facie the prescribed books of account and cost records havebeen made and maintained. We have not however made a detailed examination of the samewith a view to determining 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 Goods and Service tax (GST) Customs Duty Excise DutyValue Added 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 GST Customs Duty Excise Duty Value Added Tax Cess and any other materialstatutory dues applicable to it were outstanding as on the last day of the financialyear for a period of more than six months from the date they became payable;

(b) According to the information and explanation given to us the dues outstanding withrespect to income-tax sales-tax service tax duty of customs duty of excise valueadded tax and have not been deposited on account of any dispute are as per Statement1;

(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 during the year have beenapplied for the purpose 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;

(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 theStandalone Ind AS Financial Statements as required by the applicable Indian AccountingStandards;

(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. Accordingly paragraph 3(xvi) of the Order is notapplicable.

For CVK & Associates For Borkar & Muzumdar
Chartered Accountants Chartered Accountants
ICAI FRN 101745W ICAI FRN 101569W
Sd/- Sd/-
A K Pradhan Kaushal Muzumdar
Partner Partner
Membership No. 032156 Membership No. 100938
UDIN: 21032156AAAAAS8621 UDIN: 21100938AAAAAW6386
Place: Mumbai
Date: 26th May 2021

Statement 1 (Refer Clause vii (b) of Annexure A)

Rs. in Crores
Sr.No Name of the Statute Nature of Dues Forum Where Dispute is pending Amount Period block to which it relates A
1. Central Excise Act 1944 Duty interest and penalty for cases relating to Determination of Assessable value Cenvat Credit etc. Supreme Court 3006.75 2000-2010
High Court 30.56 1995-2015
Appellate Tribunal* 14306.04 1990-2021
Appellate Authority** 53.38 1995-2021
Total 17396.73
2. Customs Act 1962 Duty interest and penalty for cases relating to Determination of Valuation etc. Appellate Tribunal* 4.33 2005-2010
3. Income Tax Act 1961 Tax interest and penalty demands towards various Income tax disputes Appellate Authority** 498.93 2005-2021
4. Sales Tax/VAT Legislations Tax interest and penalty demand towards Sales tax/VAT/GST disputes Supreme Court 23.15 1995-2005
High Court 677.11 1980-2021
Appellate Tribunal* 3871.01 1985-2015
Appellate Authority** 1465.78 1985-2021
Adjudicating Authority*** 283.68 2000-2015
Total 6320.73
5. Finance Act 1994 (Service Tax) Duty interest and penalty for cases relating to Service tax disputes Supreme Court 35.44 2005-2015
Appellate Tribunal* 32.66 2005-2020
Appellate Authority** 2.32 2000-2020
Total 70.42
Grand Total 24291.14

Remarks

Dues Include Penalty & Interest wherever applicable.

* Appellate Tribunal includes Sales 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.

A Period block shall indicate the period interval in which all the disputes under thatauthority have taken place.

ANNEXURE B TO INDEPENDENT AUDITORS’ REPORT

[Referred to in paragraph 20 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 Standalone IndAS Financial Statements as of and for the year ended 31st March 2021]

Directions for the year 2020-21

1. Area examined Whether the company has system in place to process all the accounting transactions through IT system Rs. If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated.
Observations/ Findings The Corporation has a system in place to process all the accounting transactions through its implemented IT system SAP. As such we have not come across any accounting transactions processed outside IT system which would have an impact on the integrity of the accounts or any financial implications.
2. Area examined 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 loan Rs. If yes the financial impact may be stated.
Observations/ Findings Based on our examination of relevant records of the Corporation and the information and explanations received from the Management there were no cases of restructuring of an existing loan or cases of waiver/write off of debts/loans / interest by any of the lenders of the Corporation due to inability to repay the loan.
3 Area examined Whether funds received/receivable for specific schemes from central/ state agencies were properly accounted for/ utilized as per its term and conditions Rs. List the cases of deviation.
Observations/ Findings Based on our examination of relevant records of the Corporation and the information and explanations received from the Management Funds received/receivable for specific schemes from central/state agencies were properly accounted for/utilised as per terms and conditions and applicable Ind AS.

 

For CVK & Associates For Borkar & Muzumdar
Chartered Accountants Chartered Accountants
ICAI FRN 101745W ICAI FRN 101569W
Sd/- Sd/-
A K Pradhan Kaushal Muzumdar
Partner Partner
Membership No. 032156 Membership No. 100938
UDIN: 21032156AAAAAS8621 UDIN: 21100938AAAAAW6386
Place: Mumbai
Date: 26th May 2021

ANNEXURE C TO INDEPENDENT AUDITORS’ REPORT

[Referred to in paragraph 21(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 Ind AS Financial Statements for theyear ended March 312021]

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 2021 inconjunction with our audit of the Standalone Ind AS Financial Statements of theCorporation for the 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 Rs.).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 safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Corporation’s internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing specified underSection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both issued by the ICAI. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wereestablished and maintained and if such controls operated effectively in all materialrespects.

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 to the best of our information and according to the explanations givento us the Corporation has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2021 based on the internalcontrol over financial reporting criteria established by the Corporation considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the ICAI.

For CVK & Associates For Borkar & Muzumdar
Chartered Accountants Chartered Accountants
ICAI FRN 101745W ICAI FRN 101569W
Sd/- Sd/-
A K Pradhan Kaushal Muzumdar
Partner Partner
Membership No. 032156 Membership No. 100938
UDIN: 21032156AAAAAS8621 UDIN: 21100938AAAAAW6386
Place: Mumbai
Date: 26th May 2021

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