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Hindustan Petroleum Corporation Ltd.

BSE: 500104 Sector: Oil & Gas
NSE: HINDPETRO ISIN Code: INE094A01015
BSE 00:00 | 16 Nov 243.20 -6.15
(-2.47%)
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NSE 00:00 | 16 Nov 243.65 -5.45
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OPEN 246.10
PREVIOUS CLOSE 249.35
VOLUME 521314
52-Week high 447.00
52-Week low 163.45
P/E 5.69
Mkt Cap.(Rs cr) 37,059
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 246.10
CLOSE 249.35
VOLUME 521314
52-Week high 447.00
52-Week low 163.45
P/E 5.69
Mkt Cap.(Rs cr) 37,059
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Hindustan Petroleum Corporation Ltd. (HINDPETRO) - Auditors Report

Company auditors report

TO THE MEMBERS OF HINDUSTAN PETROLEUM CORPORATION LIMITED Report on the Standalone IndAS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of HINDUSTANPETROLEUM CORPORATION LIMITED (‘the Company') which comprise the Balance Sheet as onMarch 31 2018 the Statement of Profit and Loss (including other comprehensive income)the Statement of Changes in Equity and the Cash Flow Statement for the year then endedand a summary of significant accounting policies and other explanatory information inwhich is incorporated Ind AS financial statements of the branch office viz. VisakhRefinery audited by the branch auditor whose report dated May 18 2018 has beenconsidered in preparing this report.

Management's Responsibility

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 Ind AS financial statements that give a true and fair view of thefinancial position financial performance (including other comprehensive income) cashflows and changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder section 133 of the Act read with Companies (Indian Accounting Standards) Rules2015 as amended.

This responsibility also includes maintenance of adequate accounting records inaccordance 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 standalone Ind AS financial and fair view and are free from material misstatementwhether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based 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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone Ind AS financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the standalone Ind AS financial statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal financial control relevant to theCompany's preparation of the standalone Ind AS 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 Company's Directors as well asevaluating the overall presentation of the standalone Ind AS 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 Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the standalone Ind AS financial statements give the information required bythe 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 on March 31 2018 and its profit (including other comprehensive income) the changesin equity and its cash flows for the year . ended onthat date

Other Matter

We refer to note no. 49 in connection with 21 Un-incorporated Jointly ControlledEntities (‘UJCEs') involved in exploration activities of which majority of UJCEs areunder relinquishment. The standalone Ind AS financial statements include Company'sproportionate share in Assets and Liabilities as on March 31 2018 and Income andExpenditure for the year ended on March 31 2018 amounting to ` 22.62 crores and ` 16.90crores ` 10.15 crores and ` 7.63 crores respectively. In respect of these UJCEs theaudited accounts are not available with the Company. The financial information has beenincorporated based on data received from the respective operators.

The standalone Ind AS financial statements of the Company for the year ended March 312017 were auditedby the joint auditors of the Company one of which is the predecessoraudit firm and have expressed an unmodified opinion dated May 26 2017 on such financialstatements.

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. Visakh Refineryaudited under section 143(8) of the Act by the branch auditor have been sent to us andhave been properly dealt with by us in preparing this report;

d) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account;

e) In our opinion the attached standalone Ind AS financial statements comply with theIndian Accounting Standards specified under section 133 of the Act read with theCompanies (Indian Accounting Standard) Rules 2015 as amended;

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 of the Company are disqualified in terms ofprovisions contained in the said section;

g) With respect to the adequacy of the Internal Financial Controls with reference toFinancial Statements of the Company and the operating effectiveness of such controlsrefer to our separate report in Annexure III; and

h) With respect to the other matters to be included in the Auditors' Report inaccordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements - Refer Note 55 to the standaloneInd AS financial statements;

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 to theInvestor Education and Protection Fund by the Company

For G. M. Kapadia & Co. For M. P. Chitale & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.:104767W Firm Registration No.: 101851W
Sd/- Sd/-
Atul Shah Anagha Thatte
Partner Partner
Membership No.: 039569 Membership No.: 105525
Place : New Delhi
Dated : May 22 2018

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 Property Plant and Equipment (fixed assets).

(b) The Property Plant and Equipment of the Company other than LPG cylinders andpressure regulators with customers are physically verified by the Management in a phasedprogram of three to five years cycle. In our opinion the programme is reasonable havingregard to the size of the Company and the nature of its assets. In our opinion and as perthe information given by the management the discrepancies observed were not material andhave been appropriately 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 asProperty Plant and Equipment other than self-constructed properties are held in the nameof the Company except for the following:

(` In Crores)
Particulars No. of Cases Gross Block as on March 31 2018 Net Block as on March 31 2018 Remarks
Freehold Land 3 0.02 0.02 Title deeds / other evidence not available for verification
Leasehold Land 1 0.01 Lease deed / other evidence not available for verification

For the purpose of reporting under this clause where ever title deeds of immovableproperties were not available we have relied on substantive evidences such as propertytax payment receipts noting in municipal records conveying title to the Company over theproperty.

(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. We are informed by theManagement that no order has been passed by the Company Law Board or National Company LawTribunal or Reserve Bank of India or any court or 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 of therecords 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 generallyregular in depositing with the appropriate authorities undisputed statutory dues includingProvident Fund Employees' State Insurance Income-tax Sales Tax Service Tax Goods& Service Tax duty of Custom duty of Excise Value Added Tax Cess and any otherstatutory dues wherever applicable.

According to the information and explanations given to us no undisputed amountspayable in respect of aforesaid dues were outstanding as on March 31 2018 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 Period to which amount relates Amount (` in Crores)
Customs Appellate Authority* 2007-2013 2.15
Tribunal** 1998-2013 9.64
Total 11.79
Central Excise Appellate Authority* 1994-2017 17.74
Tribunal** 1994-2017 353.56
Adjudicating Authority*** 2004-2014 26.39
Revision Authority 1999-2012 1.10
High Court 1994-2014 4.76
Total 403.55
Sales Tax/Entry Tax Board of Revenue 1999-2014 5.05
Appellate Authority* 1976-2016 1685.32
Tribunal** 1976-2015 2592.87
Adjudicating Authority*** 1976-2015 1679.52
High Court 1979-2015 956.96
Objection Hearing Authority 2008-2012 17.89
Supreme Court 2002-2004 6.68
Total 6944.29
Service Tax Appellate Authority* 2005-2015 1.59
Tribunal** 2002-2015 75.91
High Court 1981 - 2013 3.75
Total 81.25
Income tax Tribunal** 2006-2011 0.17
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 Companycarried 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 Company or on the Company by its officers and employees have been noticed orreported 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 by the Company is in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Act 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 thestandalone Ind AS financial statements as required by the applicable Indian AccountingStandards.

(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 M. P. Chitale & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.:104767W Firm Registration No.: 101851W
Sd/- Sd/-
Atul Shah Anagha Thatte
Partner Partner
Membership No.: 039569 Membership No.: 105525
Place : New Delhi
Dated : May 22 2018

Independent Auditors' Report

AnnexuRe II - referred to in paragraph 2 under "Report on Other Legal andRegulatory Requirements" of our report of even date

Based on the verification of records of the Company and based on information andexplanations given to us we give below a report on the directions issued by theComptroller and Auditor General of India in terms of the 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 on random basis and as reported in para 1(c) of the Annexure I of this report the Company does not have the original clear title deeds in respect of 4 freehold land/lease hold land. The details of area of such land as compiled by the management are as under:
Particulars no. of cases Acres Remarks
Freehold Land 3 0.75 Title deeds not available for verification
Leasehold Land 1 0.31 Lease deeds not available for verification
Total 4
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 from Customers is waived on merit of each case by approving authority. During the year the Company has written off ` 65.96 crores being the provisions made in earlier years on account of legacy and migrated balances customers' balances legal cases including disputed cases investments.
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 M. P. Chitale & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.:104767W Firm Registration No.: 101851W
Sd/- Sd/-
Atul Shah Anagha Thatte
Partner Partner
Membership No.: 039569 Membership No.: 105525
Place : New Delhi
Dated : May 22 2018

Independent Auditors' Report

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 with reference to Financial Statements underclause (i) of sub-section 3 of section 143 of the Companies Act 2013 ("theAct")

We have audited the Internal Financial Controls with reference to Financial Statementsof HINDUSTAN PETROLEUM CORPORATION LIMITED (‘the Company') as of March 31 2018 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining InternalFinancial Controls with reference to Financial Statements established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India (ICAI). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficientconduct of its business includingadherence to company's policies the 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 audit of Internal Financial Controls with reference to Financial Statementsincludes assessing the risk that a material weakness exists and testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the standalone Ind AS financial statements whether dueto fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's Internal Financial Controls withreference to Financial Statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A Company's Internal Financial Controls with reference to Financial Statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone Ind AS Financial Statements for externalpurposes in accordance with generally accepted accounting principles. A company's InternalFinancial Control over Financial Reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone Ind AS Financial Statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the company's assets that could have a material effect on thestandalone Ind AS Financial Statements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

Because of the inherent limitations of Internal Financial Controls with reference toFinancial Statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the Internal Financial Controls withreference to Financial Statements to future periods are subject to the risk that theInternal Financial Control with reference to Financial Statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate InternalFinancial Controls with reference to Financial Statements and such Internal FinancialControls with reference to Financial Statements were operating effectively as on March 312018 based on the criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

Other Matters

Our aforesaid report under section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the Internal Financial Controls with reference to Financial Statementsinsofar as it relates branch office of the Company viz. Visakh Refinery audited by thebranch auditor appointed under section 143(8) of the Act is based on the report of thebranch auditor which has been sent to us and has been properly dealt with by us inpreparing this report.

For G. M. Kapadia & Co. For M. P. Chitale & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.:104767W Firm Registration No.: 101851W
Sd/- Sd/-
Atul Shah Anagha Thatte
Partner Partner
Membership No.: 039569 Membership No.: 105525
Place : New Delhi
Dated : May 22 2018