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Hindustan Petroleum Corporation Ltd.

BSE: 500104 Sector: Oil & Gas
NSE: HINDPETRO ISIN Code: INE094A01015
BSE 00:00 | 18 Jun 322.10 15.90
(5.19%)
OPEN

314.90

HIGH

325.00

LOW

313.50

NSE 00:00 | 18 Jun 322.10 15.75
(5.14%)
OPEN

314.10

HIGH

325.35

LOW

313.10

OPEN 314.90
PREVIOUS CLOSE 306.20
VOLUME 959666
52-Week high 493.00
52-Week low 272.30
P/E 7.72
Mkt Cap.(Rs cr) 49,082
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 314.90
CLOSE 306.20
VOLUME 959666
52-Week high 493.00
52-Week low 272.30
P/E 7.72
Mkt Cap.(Rs cr) 49,082
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

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 section143(11) of the Act we give in the Annexure I a statement on the matters specified inparagraph 3 and 4 of the Order to the extent applicable.

2. As required by the section 143(5) of the Act we give in theAnnexure II a statement on the directions / sub-directions issued by the Comptroller andAuditor-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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit; (b) In our opinion proper books of account as required by law have been kept bythe Company so far as it appears from our examination of those books; (c) The reports onthe accounts of the branch office of the Company viz. Visakh Refinery audited undersection 143(8) of the Act by the branch auditor have been sent to us and have beenproperly dealt with by us in preparing this report; (d) The Balance Sheet the Statementof Profit and Loss (including other comprehensive income) the Cash Flow Statement and theStatement of changes in Equity dealt with by this Report are in agreement with the booksof account; (e) In our opinion the aforesaid standalone Ind AS financial statementscomply with the Indian Accounting Standards specified under section 133 of the Act readwith the Companies (Indian Accounting Standard) (Amendment) Rules 2016; (f) As pernotification no. G.S.R 463(E) dated June 5 2015 the Government companies are exemptedfrom the provisions of section 164(2) of the Act accordingly we are not required toreport whether any directors are disqualified in terms of provisions contained in the saidsection; (g) With respect to the adequacy of the Internal Financial Controls overFinancial Reporting of the Company and the operating effectiveness of such controls referto our separate report in Annexure III.

(h) With respect to the other matters to be included in theAuditor's Report in accordance with rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended by the Companies (Audit and Auditors) Rules 2017 in our opinionand to the best of our information and according to the explanations given to us: (i) TheCompany has disclosed the impact of pending litigations on its financial position in itsstandalone Ind AS financial statements – Refer Note 68 to the standalone Ind ASfinancial statements; (ii) The Company has made provision as required under theapplicable law or accounting standards for material foreseeable losses if any onlong-term contracts including derivative contracts; (iii) There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company except minor delay involving sum of ` 3430 which has beenregularized post the date of balance sheet; and (iv) The Company has provided requisitedisclosures in the standalone Ind AS financial statements as to holdings as well asdealings in Specified Bank Notes during the period from 8th November 2016 to30th December 2016. Based on audit procedures and relying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company and as produced to us by the management – Refer Note 72 tothe standalone Ind AS financial statements.

For G. M. Kapadia & Co. For CVK & Associates
Chartered Accountants Chartered Accountants
Firm Registration No.: 104767W Firm Registration No.: 101745W
Sd/- Sd/-
Rajen Ashar A.K. Pradhan
Partner Partner
Membership No.: 048243 Membership No.: 032156
Place: New Delhi
Dated : 26th May 2017

Independent Auditors' Report

Annexure I - referred to in paragraph 1 under "Report on OtherLegal and Regulatory Requirements" of our report of even date

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant and Equipment(fixed assets).

(b) The Property Plant and Equipment of the Company other than LPGcylinders and pressure regulators with customers are physically verified by the Managementin a phased program of three to five years cycle. In our opinion the programme isreasonable having regard to the size of the Company and the nature of its assets. In ouropinion and as per the information given by the management the discrepancies observedwere not material and have been appropriately accounted in the books of account.

(c) According to the information and explanations given to us and basedon verification of records on random basis we report that the title deeds of immovableproperties held as Property Plant and Equipment other than self-constructed propertiesare held in the name of the Company except for the following:

` / Crores
Particulars No. of Gross Block Net Block Remarks
Cases as on as on
March 31 2017 March 31 2017
Freehold Land 3 0.02 0.02 Title Deeds not available for verification

For the purpose of reporting under this clause the title deeds ofimmovable properties were not available but substantial evidence like property tax paymentreceipts noting in municipal records conveying the title of the Corporation over theproperty have not been considered.

(ii) During the year the inventories have been physically verified atreasonable intervals by the management. The discrepancies noticed on physicalverification as compared to the book records were not material having regards to sizeand nature of operations 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 theGovernment companies are exempted from the provisions of section 188 of the Act in respectof contracts or arrangements entered into between the Government companies. The Companyhas not granted loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct. Hence the question of reporting under sub-clauses (a) (b) & (c) of the clause3(iii) of the Order does not arise.

(iv) The Company has not granted any loans or provided any guaranteesor security to the parties covered under section 185 of the Act. The Company has compliedwith the provisions of section 186 of the Act in respect of investments made or loans orguarantee or security provided to the parties covered under section 186 of the Act.

(v) The Company has not accepted any deposits from the public withinthe meaning of sections 73 to 76 of the Act and the rules framed there under. We areinformed by the Management that no order has been passed by the Company Law Board orNational Company Law Tribunal or Reserve Bank of India or any court or any other Tribunalin this regard.

(vi) We have broadly reviewed accounts and records maintained by theCompany pursuant to rules made by the Central Government for the maintenance of costrecords under section 148(1) of the Act in respect of Company's products to whichthe said rules are made applicable and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. We have however not made a detailedexamination of records with a view to determine whether they are accurate.

(vii) (a) According to the information and explanations given to us andaccording to the records of the Company examined by us in our opinion the Company isgenerally regular in depositing with the appropriate authorities undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Sales Tax ServiceTax duty of Custom duty of Excise Value Added Tax Cess and any other statutory dueswherever applicable.

According to the information and explanations given to us noundisputed amounts payable in respect of aforesaid dues were outstanding as on March31_2017 for a period of more than 6 months from the date they became payable.

(b) According to the information and explanations given to us theparticulars of statutory dues that have not been deposited on account of disputes are asunder:

Statute Forum pending Amount Period to which
in Crores amount relates
Customs Tribunal** 12.45 1998 to 2011
Appellate Authority* 2.47 2007 to 2013
Total 14.92
Central Excise Tribunal** 344.60 1994 to 2015
Adjudicating Authority *** 25.28 2004 to 2014
Revision Authority 1.09 1999 to 2012
High Court 4.21 1994 to 2008
Appellate Authority* 15.26 1996 to 2016
Total 390.43
Sales tax/ Entry tax Board of Revenue 4.99 1999 to 2014
Appellate Authority* 1809.73 1976 to 2015
Adjudicating Authority *** 4100.62 1985 to 2014
Supreme Court 6.68 2002 to 2004
High Court 854.25 1979 to 2014
Objection Hearing Authority 17.89 2008 to 2012
Tribunal** 2775.63 1985 to 2014
Total 9569.79
Service Tax Appellate Authority* 1.16 2005 to 2015
Tribunal** 78.81 2002 to 2015
High Court 3.75 1981 to 2013
Total 83.72
Income Tax Tribunal** 0.17 2006 to 2011
Total 0.17

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

** Tribunal represents Sales Tax Appellate Tribunal Central excise andService tax Appellate Tribunal (CESTAT) Income tax Appellate Tribunal (ITAT) ***Adjudicating authority represents Assessing Officer Additional Commissioner DeputyCommissioner Joint commissioner Additional Commissioner Chief Commissioner (viii)According to the information and explanations given to us the Company has not defaultedin repayment of loans or borrowing to financial institutions banks government or dues todebenture holders.

(ix) The Company has not raised money by way of initial public offer orfurther public offer (including debt instruments). According to the information andexplanations given to us and on the basis of the records examined by us the Company hasprima facie applied the term loan for the purpose for which it was obtained.

(x) During the course of our examination of the books and records ofthe Corporation carried out in accordance with the generally accepted auditing practicesin India and according to the information and explanations given to us no instances ofmaterial fraud by the Corporation or on the Corporation by its officers and employees havebeen noticed or reported during the year except suspected irregularity detected by themanagement of ` 5.60 Crores involving employees of the Corporation. The management hastaken appropriate steps and the matter is under investigation.

(xi) As per notification no. G.S.R 463(E) dated June 5 2015 theGovernment companies are exempted from the provisions of section 197 of the Actaccordingly the question of reporting whether the payment of managerial remuneration isin accordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act does not arise.

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

(xiii) As per notification no. G.S.R 463(E) dated June 5 2015 theGovernment companies are exempted from the provisions of section 188 of the Act in respectof contracts or arrangements entered into between the Government companies. The Companyhas complied with the provisions of section 177 and section 188 of the Act in respect oftransactions with the related parties and the details have been disclosed in the Ind ASfinancial statements as required by the applicable Indian accounting standards.

(xiv) The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year under audit.

(xv) The Company has not entered into any non-cash transactions withdirectors or persons connected with him covered under the provisions of section 192 of theAct.

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

For G. M. Kapadia & Co. For CVK & Associates
Chartered Accountants Chartered Accountants
Firm Registration No.: 104767W Firm Registration No.: 101745W
Sd/- Sd/-
Rajen Ashar A.K. Pradhan
Partner Partner
Membership No.: 048243 Membership No.: 032156
Place: New Delhi
Dated : 26th May 2017

Annexure II referred to in paragraph 2 under "Report on OtherLegal and Regulatory Requirements" of our report of even date

Based on the verification of records of the Company and based oninformation and explanation given to us we give below a report on the directions issuedby the Comptroller and Auditor General of India in terms of section 143(5) of the Act.

Sr No Areas to be examined Observation /Finding
1 Whether the company has clear title / lease deeds for freehold and leasehold land respectively? If not please state the area of freehold and leasehold land for which title / lease deeds are not available. Based on the verification of the records of the Company and as reported in Annexure I para 1(c) of this report the Company does not have the original clear title deeds in respect of 4 freehold land /lease hold lands. The details of area of such land as complied by the management is as under:
Particulars No. of Acres Remarks
Cases
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 is waived from Customers on merit of each case by approving authority. During the year the Company has waived off ` 5.26 crores being the differential tax in respect of amounts paid to the sales tax authorities consequent to availing amnesty benefit under Maharashtra Settlement of Dispute Act 2016
Sr No Areas to be examined Observation /Finding
3 Whether proper records are maintained for inventories lying with third parties & assets received as gift / grant(s) from Government or other authorities. a. Proper records are maintained for inventories lying with third parties.
b. During the year the Company has not received any assets as gifts from Government or other authorities.

 

For G. M. Kapadia & Co. For CVK & Associates
Chartered Accountants Chartered Accountants
Firm Registration No.: 104767W Firm Registration No.: 101745W
Sd/- Sd/-
Rajen Ashar A.K. Pradhan
Partner Partner
Membership No.: 048243 Membership No.: 032156
Place: New Delhi
Dated : 26th May 2017

Annexure III - referred to in paragraph 3(g) under "Report onOther Legal and Regulatory Requirements" of our report of even date Report on theInternal Financial Controls over Financial Reporting under clause (i) of sub-section 3 ofsection 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financialreporting of HINDUSTAN PETROLEUM CORPORATION LIMITED ("the Company") as of March31 2017 in conjunction with our audit of the standalone Ind AS financial statements ofthe Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI).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 including adherence to company's policies thesafeguarding 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'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company's internal financial control over financial reporting isa process 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'sinternal financial control over financial reporting includes those policies and proceduresthat (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) 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 Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as on March 31 2017 basedon the internal control over financial reporting criteria 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.

Other Matters

Our aforesaid report under section 143(3)(i) of the Act on the adequacyand operating effectiveness of the internal financial controls over financial reportinginsofar as it relates Visakh Refinery audited by the branch auditor appointed undersection 143(8) of the Act is based on the report of the branch auditor which has been sentto us and has been properly dealt with by us in preparing this report.

For G. M. Kapadia & Co. For CVK & Associates
Chartered Accountants Chartered Accountants
Firm Registration No.: 104767W Firm Registration No.: 101745W
Sd/- Sd/-
Rajen Ashar A.K. Pradhan
Partner Partner
Membership No.: 048243 Membership No.: 032156
Place: New Delhi
Dated : 26th May 2017