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Hindustan Petroleum Corporation Ltd.

BSE: 500104 Sector: Oil & Gas
NSE: HINDPETRO ISIN Code: INE094A01015
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VOLUME 241833
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OPEN 235.00
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VOLUME 241833
52-Week high 332.40
52-Week low 200.00
P/E
Mkt Cap.(Rs cr) 33,336
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 Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of HindustanPetroleum Corporation Limited ("the Company") which comprise the BalanceSheet as at March 31 2022 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowsfor the year then ended and notes to the standalone financial statements including asummary of significant accounting policies and other explanatory information in which areincluded the standalone financial statements for the year ended on that date audited bythe branch auditor of the Visakh Refinery Located at Visakhapatnam (hereinafter referredto as the "standalone financial statements").

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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 312022 and its profit totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing ("SAs") specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the "Auditors'Responsibilities for the Audit of the Standalone Financial Statements" section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India ("ICAI") together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report:

Sr. No. Key Audit Matters Auditors' Response
1 Property plant and equipment and capital work in progress Principal Audit Procedures Performed
• The Company is in the process of executing various projects like expansion of refineries installation of new plants depots LPG bottling plants terminals pipelines etc. Since these projects take a substantial period of time to get ready for intended use and due to their materiality in the context of the Balance Sheet of the Company this is considered to be an area with significant effect on the overall audit strategy and allocation of resources in planning and completion our audit; • We performed an understanding and evaluation of the system of internal control process over the projects and those included in capital work in progress with reference to identification and testing of key controls.
• We assessed the progress of the project and the intention and ability of the management to carry forward and bring the asset to its state of intended use.
• Review of Board minutes relating to approvals of the projects and changes in estimates thereof.
• With regard to above capital projects management has identified specific expenditure including employee costs and other overheads relating to each of the assets in the above capital projects and has applied judgement to assess if the costs incurred in relation to these assets meet the recognition criteria of Property Plant and Equipment in accordance with Ind AS 16. This has been determined as a key audit matter due to the significance of the capital expenditure during the year and the risk that the elements of costs that are eligible for capitalization are not appropriately capitalised in accordance with the recognition criteria provided in Ind AS 16. • Understood evaluated and tested the design and operating effectiveness of key controls relating to capitalisation of various costs incurred;
• Tested the direct and indirect costs capitalised on a sample basis with the underlying supporting documents to ascertain nature of costs and basis for allocation where applicable and evaluated whether they meet the recognition criteria provided in the Indian Accounting Standard (Ind AS) 16 Property Plant and Equipment;
• Ensured adequacy of disclosures in the standalone financial statements.
2 Evaluation of uncertain indirect tax positions Principal Audit Procedures Performed
• The Company has material uncertain indirect tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes. The Company has disputes pending at various levels of tax authorities over the past several years. (Refer Note No.53 and para (vii) (b) Annexure I of this report). • We have evaluated the appropriateness of the design and tested the operating effectiveness of the management's controls over the tax litigation matters;
• Obtained from the management and perused details of completed tax assessments and demands for the year ended March 312022;
• Reviewed the management's underlying assumptions in estimating the tax provision the possible outcome of the disputes legal precedence and other rulings in evaluating management's position on these uncertain tax positions;
• Relied upon the management judgements industry level deliberations and estimates for possible outflow and opinion of internal experts of the Company in relation to such disputed tax positions;
3 Evaluation of disputed claims against the company under various non-tax matters and Recoverability of pre-deposits related thereto Principal Audit Procedures Performed
The company has disputed claims against it which are pending at various courts/forums and are at various stages in the judicial process. The company also have pre-deposits related thereto with various adjudicating authorities that are pending for/relating to cases pending for more than 3 years. The management has exercised significant judgement in assessing the possible outflow in such matters. (Refer Note No. 53). • Read and analyzed select key correspondences internal/external legal opinions / consultations by management for key disputed non tax matters.
• Reviewed and verified other legal pronouncements wherever available in similar matters in the case of the company/other corporates.
• Discussed and reviewed the nature of the amounts recoverable vis-a-vis the underlying cases. We further discussed the sustainability of the cases on a sample basis and the likelihood of recoverability or otherwise upon final resolution from the respective authorities.
• Assessed management's estimate of the possible outcome of the disputed cases and relied on the management judgements in such cases.

Information other than the Financial Statements and Auditors' Report thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Directors' Report including Annexures to the Directors' ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditors' report thereon. The other information as above isexpected to be made available to us after the date of this auditors' report.

Our opinion on the standalone financial statements does not cover the other informationand we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained during the course of our audit orotherwise appears to be materially misstated.

When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

Responsibilities of Management and those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the accountingStandards specified under section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgements and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors' report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Other Matters

a) We did not audit the financial statements and other financial information of VisakhRefinery which is considered as a branch whose financial statements reflect total assetsof Rs.35757.06 Crore as at March 31 2022 and total revenues of Rs.57464.87 Crore totalnet profit before tax of Rs.1905.61 Crore and total comprehensive income of Rs.1926.98Crore for year ended March 312022 as considered in the branch's standalone financialstatements. The financial statements of the Visakh Refinery of the Company have beenaudited by the Branch Auditors of the Company. The Branch Auditors' report dated April 292022 has been furnished to us and our opinion in so far as it relates to the amounts anddisclosures included in respect of this branch is based solely on the report of suchbranch auditor.

b) We refer to Note No. 50 in respect of 17 unincorporated Joint Operations involved inexploration activities of which majority are under relinquishment. The standalonefinancial statements include Company's proportionate share in Assets and Liabilities as onMarch 312022 amounting to Rs.6.34 Crore and Rs.35.36 Crore and Income and Expenditurefor the year ended March 312022 Rs.1.86 Crore and Rs.8.68 Crore respectively which havebeen included based on unaudited financial information. Our opinion in respect thereof issolely based on the management certified information.

We have placed reliance on technical/commercial evaluation by the management in respectof categorization of wells allocation of cost incurred on them liability fordecommissioning costs liability for NELP and nominated blocks for under performanceagainst agreed Minimum Work Programme.

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 2020 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein "Annexure I" a statement on the matters specified in paragraphs 3 and4 of the Order to the extent applicable.

2. As required under section 143(5) of the Act based on our audit as aforesaid wegive in the "Annexure II" a report on the directions includingadditional directions issued by the Comptroller and Auditor General of India action takenthereon and its impact on the accounts and standalone financial statements of the company.

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 and proper returnsadequate for the purposes of our audit have been received from branch not visited by us;

c) The report dated April 29 2022 on the accounts of the Visakh Refinery of theCompany issued under section 143(8) of the Act by the Branch Auditors upon their audit ofthe books of accounts of Visakh Refinery has been forwarded to us and have been properlydealt with by us in preparing our report in the manner considered necessary by us;

d) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the books of account;

e) In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under section 133 of the Act read with Companies (IndianAccounting Standard) Rules 2015 as amended.

f) As per notification no. G.S.R 463(E) datedJune 5 2015 the Government Companies areexempted from the provisions of section 164(2) of the Act accordingly we are notrequired to report whether any of the directors of the Company is disqualified in terms ofprovisions contained in the said section;

g) With respect to the adequacy of the internal financial controls with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure III";

h) With respect to the other matters to be included in the Auditors' Report inaccordance with the requirements of section 197(16) of the Act as amended we report that:

As per Notification number G.S.R. 463 (E) dated June 5 2015 issued by Ministry ofCorporate Affairs section 197 of the Act regarding remuneration to directors is notapplicable to the Government Company; and hence we are not required to report as towhether the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

i) 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 financial statements (Refer Note No.53 of the standalonefinancial 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 (Refer Note No.54 to the standalone financial statements);

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

iv. a) The Management has represented that to the best of its knowledge and belief nofunds have been advanced or loaned or invested (either from borrowed funds or sharepremium or any other sources or kind of funds) by the Company to or in any other person orentity including foreign entity ("Intermediaries") with the understandingwhether recorded in writing or otherwise that the Intermediary shall whether directlyor indirectly lend or invest in other persons or entities identified in any mannerwhatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provideany guarantee security or the like on behalf of the Ultimate Beneficiaries;

b) The Management has represented that to the best of its knowledge and belief nofunds have been received by the Company from any person or entity including foreignentity ("Funding Parties") with the understanding whether recorded in writingor otherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf of the Ultimate Beneficiaries; and

c) Based on such audit procedures that have been considered reasonable and appropriatein the circumstances nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (i) and (ii) of Rule 11(e) as provided under (a) and(b) above contain any material misstatement.

v. The final dividend paid by the Company during the year in respect of the samedeclared for the previous year is in accordance with section 123 of the Act to the extentit applies to payment of dividend.

As stated in Note No. 48 to the financial statements the Board of Directors of theCompany have proposed final dividend for the year which is subject to the approval of themembers at the ensuing Annual General Meeting. The dividend declared is in accordance withsection 123 of the Act to the extent it applies to declaration of dividend.

For R. Devendra Kumar & Associates For C N K & Associates LLP
Chartered Accountants Chartered Accountants
FRN: 114207W FRN:101961W/W- 100036
sd/- sd/-
Anand Golas Vijay Mehta
Partner Partner
Membership No. 400322 Membership No. 106533
UDIN: 22400322AJGCNP4079 UDIN: 22106533AJGBLP8643
Place: Mumbai
Date: May 19 2022

Annexure I to the Independent Auditors' Report

(Referred to in paragraph 1 under "Report on Other Legal and RegulatoryRequirements" of our report of even date to the Members of Hindustan PetroleumCorporation Limited (the "Company"))

To the best of our information and according to the explanations provided to us by theCompany and the books of accounts and records examined by us in the normal course ofaudit we state that:

i) In respect of the Company's Property Plant and Equipment and Intangible Assets:

a) A) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment;

B) The Company has maintained proper records showing full particulars of intangibleassets;

b) The Company has a program of physical verification of Property Plant and Equipmentother than LPG cylinders and pressure regulators with customers so to cover all the assetsonce in every three years which in our opinion is reasonable having regard to the sizeof the Company and the nature of its business. Pursuant to the program certain PropertyPlant and Equipment were due for verification during the year and were physically verifiedby the Management during the year and no material discrepancies were noticed on suchverification and have been properly dealt with in the books of account;

c) Based on our examination we report that title deeds of all immovable properties(other than properties where the company is the lessee and the lease agreements are dulyexecuted in favour of the lessee) disclosed in the financial statements included underProperty Plant and Equipment are held in the name of the Company as at the balance sheetdate other than as disclosed in Note No.3(12) of the standalone financial statements.

For the purpose of above reporting registered sale deed/ transfer deed/conveyance deedand other substantive evidences such as allotment letters Court orders noting inmunicipal / revenue records property tax receipts etc. conveying title to the Companyover the property has been taken into consideration by the management and relied upon byus.

Further there are certain leasehold immovable properties under the continuouspossession control and use of the company the lease agreements of which have expired.These have not been recognized as right of use assets;

d) The Company has not revalued any of its Property Plant and Equipment (includingright- of-use assets) and intangible assets during the year;

e) As disclosed in Note No. 72.5 of the standalone financial statements the Companydoes not have any proceedings initiated or pending for holding any benami property underthe Benami Transactions (Prohibition) Act 1988 (45 of 1988) and rules made thereunder;

ii) a) The Management has conducted physical verification of inventory exceptgoods-in-transit at reasonable intervals. In our opinion considering the size of theCompany the coverage of verification is reasonable and the procedures are adequate.

The discrepancies noticed on physical verification were not material and the same havebeen properly dealt with in the books of account;

b) As disclosed in Note No.72.1 of the standalone financial statements and based on ourexamination of the relevant documents the Company has working capital limits sanctionedfrom banks or financial institutions exceeding Rs.5 Crore during the year and thequarterly returns / statements filed by the Company are materially in agreement with thebooks of accounts except in respect of quarter ended March 312022 where such quarterlyreturn is yet to be filed;

iii) The Company has made investments in provided guarantees granted loansadvances in the nature of loans secured or unsecured to companies and other partiesduring the year in respect of which:

a) The Company has provided loans or advances in the nature of loans or stood guarantorto its Subsidiaries and other entities during the year the details of which are as under:

(Rs./Crore)
Particulars Loans
Aggregate amount granted /Provided during the year
Subsidiaries 60.00
Others 127.85
Balance outstanding as at the Balance Sheet date in respect of above cases Subsidiaries 60.00
Others 121.60

b) In our opinion the investments made guarantees provided and the terms andconditions of the grant of loans during the year are prima facie not prejudicial to theCompany's interest;

c) In respect of loans granted by the Company the schedule of repayment of principaland payment of interest has been stipulated and the repayments of principal amounts andreceipts of interest have generally been regular as per stipulation except in case of loangiven to a wholly owned subsidiary where repayment due during the year amounting to Rs.10Crore has been deferred to next year and another loan amounting to Rs.60 Crore has beengranted where no repayment terms have been stipulated. The loan granted during the yearhas subsequent to reporting date been approved to be converted into equity.

d) In respect of loans granted by the Company there is no overdue amount for more thanninety days remaining outstanding as at the Balance Sheet date. In respect of loan ofRs.60 Crores granted to a subsidiary during the year where no terms of repayment havebeen specified the same has subsequent to reporting date been approved to be convertedinto equity.

e) The Company had granted loan to its wholly owned subsidiary where repayment ofinstallment amounting to Rs.10 Crore was due during the year for which extension of periodfor repayment has been agreed to by the Company which constitutes 0.71% of the aggregateof the total loans or advances in the nature of loans granted during the year.

f) The Company has granted during the year a loan to its wholly owned subsidiaryamounting to Rs.60 Crore without specifying any terms or period of repayment whichconstitutes 4.24% of total loans granted and 26.67% of loans granted to promoters relatedparties as defined in section 2(76) of the Act. This loan has been approved to beconverted into equity subsequent to reporting date.

iv) The Company has complied with the provisions of section 185 and 186 of the Actwith respect to the loans investments guarantees and security to the extent applicable;

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 the books of account maintained by the Companypursuant to the Rules made by the Central Government for the maintenance of cost recordsunder section 148 of the Act in respect of Company's products to which the said rules areapplicable and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. We however have not made a detailed examination of therecords with a view to determine whether they are accurate or complete;

vii) a) On the basis of our examination of records and according to the informationand explanations given to us the Company has generally been regular in depositingundisputed statutory dues including Goods and Services tax Provident Fund Employees'State Insurance Income Tax Sales Tax Service Tax duty of Custom duty of Excise ValueAdded Tax Cess and any other statutory dues applicable to it with the appropriateauthorities.

There were no undisputed amounts payable in respect of Goods and Service tax ProvidentFund Employees' State Insurance Income Tax Sales Tax Service Tax duty of Custom dutyof Excise Value Added Tax Cess and any other statutory dues in arrears as at March 312022 for a period of more than six months from the date they became payable;

b) On the basis of our examination of records and according to the information andexplanations given to us the particulars of statutory dues that have not been depositedon account of any dispute as under:

(Rs./Crore)
Name of the Statute Nature of Dues Amount Period to which amount relates Forum where dispute is pending
Central Excise Act1944 Excise Duty 2.48 2000-2017 - Appellate Authority
0.02 2016-2017
35.25 1994-2013
1409.25 1997-2019
1563.41 1998-2020 Customs Excise and Service
389.67 2004-2018 Tax Appellate Tribunal
3.12 2001-2008
0.31 2013-2014
196.43 2007-2019 Supreme Court
Sales Tax/VAT/GST Legislations Sales Tax/Entry Tax/CST/VAT/ " GST 2609.18 1985-2018 Appellate Authority
5195.49 1988-2018 Sales Tax Appellate Tribunal
887.78 1994-2017 High Court
1.03 1998-2003 Supreme Court
Finance Act 1994 (Service Tax) Service Tax 0.16 2017-2018 - Appellate Authority
3.18 2015-2018
21.16 2012-2017 Customs Excise and Service
3.56 2005-2015 Tax Appellate Tribunal
0.66 2004-2006 High Court
18.19 2005-2012 Supreme Court
Income Tax Act 1961 Income Tax 406.91 2002-2004 Commissioner of Income Tax (Appeals)
Customs Act 1962 Customs Duty 3.56 1998-2020 Customs Excise and Service Tax Appellate Tribunal

viii) As disclosed in Note No.72.10 of the standalone financial statements thereare no transactions which are not recorded in the books of account and have beensurrendered or disclosed as income during the year in the tax assessments under the IncomeTax Act 1961 (43 of 1961);

ix) On the basis of our examination of records and according to the information andexplanations given to us:

a) The Company has not defaulted in repayment of loans or other borrowings or in thepayment of interest thereon to any lender;

b) As disclosed in Note No.72.6 of the standalone financial statements the Company isnot declared willful defaulter by any bank or financial institution or other lender;

c) On an examination of records of the Company we report that the funds of terms loanshave been utilized for the purpose for which loans were obtained;

d) On an overall examination of the financial statements of the Company funds raisedon short- term basis have prima facie not been used during the year for long-termpurposes by the Company;

e) The Company has not taken any funds from any entity or person on account of or tomeet the obligations of its subsidiaries associates or joint ventures;

f) The company has not raised loans during the year on the pledge of securities held inits subsidiaries joint ventures or associate companies;

x) a) The Company has not raised money by way of initial public offer or furtherpublic offer (including debt instruments) during the year and hence reporting under clause3(x)(a) of the Order is not applicable to the Company;

b) The Company has not made any preferential allotment or private placement of sharesor convertible debentures (fully or partly or optionally) during the year and hence thereporting under clause 3(x)(b) of the Order is not applicable to the Company;

xi) a) There are no instances of material fraud by the Company or on the Companynoticed or reported during the year;

b) No report under sub-section (12) of section 143 of the Act has been filed in FormADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules 2014 with theCentral Government during the year and up to the date of this report;

c) We have taken into consideration the whistle blower complaints received by theCompany during the year (and up to the date of this report) while determining the naturetiming and extent of our audit procedures;

xii) The Company is not a Nidhi Company and hence reporting under clause 3(xii) ofthe Order is not applicable to the Company;

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. In our opinionthe Company is in compliance with Section 177 and 188 of the Act with respect toapplicable transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards;

xiv) a) In our opinion the Company has an adequate internal audit systemcommensurate with the size and the nature of its business;

b) We have considered internal audit reports for the year under audit issued to theCompany during the year and till date in determining the nature timing and extent of ouraudit procedures;

xv) The Company has not entered into any non-cash transactions with its Directorsor persons connected with directors and hence provisions of section 192 of the Act are notapplicable;

xvi) a) In our opinion the Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934. Hence reporting under clause 3(xvi)(a) (b)and (c) of the Order is not applicable to the Company;

b) In our opinion there is no core investment company within the Group (as defined inthe Core Investment Companies (Reserve Bank) Directions 2016) and accordingly reportingunder clause 3(xvi)(d) of the Order is not applicable to the Company;

xvii) The Company has not incurred cash losses during the financial year covered byour audit and the immediately preceding financial year;

xviii) There has been no resignation of the statutory auditors of the Companyduring the year;

xix) On the basis of the financial ratios ageing and expected dates of realisationof financial assets and payment of financial liabilities other information accompanyingthe financial statements and our knowledge of the Board of Directors and Management plansand based on our examination of the evidence supporting the assumptions nothing has cometo our attention which causes us to believe that any material uncertainty exists as onthe date of the audit report indicating that Company is not capable of meeting itsliabilities existing at the date of balance sheet as and when they fall due within aperiod of one year from the balance sheet date.

We however state that this is not an assurance as to the future viability of theCompany. We further state that our reporting is based on the facts up to the date of theaudit report and we neither give any guarantee nor any assurance that all liabilitiesfalling due within a period of one year from the balance sheet date will get dischargedby the Company as and when they fall due;

xx) a) There are no unspent amounts towards Corporate Social Responsibility (CSR)other than ongoing projects requiring a transfer to a Fund specified in Schedule VII tothe Companies Act in compliance with second proviso to sub-section (5) of Section 135 ofthe said Act. Accordingly reporting under clause 3(xx)(a) of the Order is not applicablefor the year;

b) The Company has transferred unspent CSR amount at the end of the financial year inrespect of ongoing projects to a Special Account within a period of 30 days from the endof the financial year in compliance with the provision of section 135(6) of the Act.

For R. Devendra Kumar & Associates For C N K & Associates LLP
Chartered Accountants Chartered Accountants
FRN: 114207W FRN:101961W/W- 100036
sd/- sd/-
Anand Golas Vijay Mehta
Partner Partner
Membership No. 400322 Membership No. 106533
UDIN: 22400322AJGCNP4079 UDIN: 22106533AJGBLP8643
Place: Mumbai
Date: May 19 2022

Annexure II to the Independent Auditors' Report

(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 Hindustan Petroleum Corporation Limited (the"Company") and based on information and explanations given to us we give belowa report on the directions including additional directions issued by the Comptroller andAuditor General of India ("C&AG") in terms of the section 143(5) of the Act:

Sr. No. Directions under section 143(5) of the Act Auditors' Comment
1. Whether the Company has system in place to process all the accounting transactions through IT system? 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 • As per the information and explanations furnished to us the company has an Enterprise Resource Planning ("ERP") system in the name of "JD Edwards (JDE)" to process the accounting transactions. There are large number of other applications including workflow applications and portals to address specific requirements. Most of these applications/ modules have real time integration with ERP (JDE) system for smooth accounting / recording of transactions. As a part of our general review of IT controls we have carried out the review of major controls in existence in the applications with regard to integrity of data flowing to JDE. Basis our sample verification nothing significant has come to our attention that causes us to believe that there are material gaps pertaining to IT controls.
• Further we have also relied on the exercise conducted by the management with the help of consultant to check the design of internal controls and its operating effectiveness including the IT systems and control.
• Further management has conducted the system audit with the help of the consultants which has not reported any significant gaps.
• Apart from above there are few other accounting processes being undertaken through excel spreadsheet like inventory valuation interest calculation of treasury funding activities matching of open credits in the case of trade accounts receivables matching of suppliers accounts ageing of capital work in progress wherein sufficient controls for data integrity have been observed in our review of general IT controls. There is however a need of automation of such processes to ensure complete data integrity.
2. 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? If yes the financial impact may be stated. Whether such cases are properly accounted for? There are no such instances have been noticed during the financial year 2021-22.
3. Whether funds (grants/subsidy etc.) received/ receivable for specific schemes from Central/ State Government of its agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation As per the information and explanations furnished to us the funds received /receivable by the company for specific schemes from Central/State agencies to the extent these are recorded in the books of accounts and records produced before us were properly accounted. We are informed that in the case of schemes of Central Government i.e. PMUY DBTL other subsidies etc. claims for reimbursements duly certified by Chartered Accountants are filed with Petroleum Planning and Analysis Cell ("PPAC") for reimbursement and hence these are not considered as Grants and no utilisation certificates are filed. In the case of certain state specific scheme utilisation certificates are furnished by the Company separately to the respective agencies. During the course of our test checks of the records available at Head Office of the Company in respect of such claims for reimbursement recorded in the books which are approved by PPAC nothing has come to our notice that causes us to believe that there has been any violation of terms and conditions in relation to these claims. The separate audit of these claims filed with PPAC is carried out by separate firms of Chartered Accountants.
For R. Devendra Kumar & Associates For C N K & Associates LLP
Chartered Accountants Chartered Accountants
FRN:114207W FRN:101961W/W- 100036
sd/- sd/-
Anand Golas Vijay Mehta
Partner Partner
Membership No. 400322 Membership No. 106533
UDIN: 22400322AJGCNP4079 UDIN: 22106533AJGBLP8643
Place: Mumbai
Date: May 19 2022

Annexure III to the Independent Auditors' Report

(Referred to in paragraph 3(g) under "Report on Other Legal and RegulatoryRequirements" of our report of even date)

Report on the Internal Financial Controls with reference to Standalone FinancialStatements under clause (i) of subsection 3 of section 143 of the Companies Act 2013("the Act")

We have audited the internal financial controls with reference to standalone financialstatements of Hindustan Petroleum Corporation Limited ("the Company") asof March 31 2022 in conjunction with our audit of the standalone financial statements ofthe Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting ("the Guidance Note") issued by the Institute of Chartered Accountantsof India ("the ICAI"). These responsibilities include the design implementationand maintenance of adequate internal financial controls with reference to standalonefinancial statements of the Company that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements of the Company based on ouraudit. We conducted our audit in accordance with the Guidance Note issued by the ICAI andthe Standards on Auditing prescribed under Section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to standalone financial statements were established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of internal financialcontrols over financial reporting assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditors' judgement includingthe assessment of the risks of material misstatement of the standalone financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion on the Company's internal financial controls withreference to standalone financial statements.

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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlswith reference to standalone financial statements and such internal financial controlswith reference to standalone financial statements were operating effectively as at March312022 based on the criteria for internal financial control over financial reportingestablished by the Company considering the essential components of internal control statedin the Guidance Note.

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 Statements inso far as it relates to 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 datedApril 29 2022 of the branch auditor which has been sent to us and has been properly dealtwith in preparing this report in the manner considered necessary by us. Our opinion is notmodified in respect of this matter.

For R. Devendra Kumar & Associates For C N K & Associates LLP
Chartered Accountants Chartered Accountants
FRN:114207W FRN: 101961W/W- 100036
sd/- sd/-
Anand Golas Vijay Mehta
Partner Partner
Membership No. 400322 Membership No. 106533
UDIN: 22400322AJGCNP4079 UDIN: 22106533AJGBLP8643
Place: Mumbai
Date: May 19 2022

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