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Oil & Natural Gas Corpn Ltd.

BSE: 500312 Sector: Oil & Gas
NSE: ONGC ISIN Code: INE213A01029
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VOLUME 2151211
52-Week high 128.45
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P/E 23.41
Mkt Cap.(Rs cr) 151,404
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OPEN 124.90
CLOSE 125.00
VOLUME 2151211
52-Week high 128.45
52-Week low 64.15
P/E 23.41
Mkt Cap.(Rs cr) 151,404
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company auditors report

To the Members of Oil and Natural Gas Corporation Limited

Report on the Audit of the Standalone Financial Statements

1. Opinion

We have audited the accompanying Standalone Financial Statements of Oiland Natural Gas Corporation Limited ("the Company") which comprise theBalance Sheet as at 31st March 2020 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 (hereinafterreferred to as "the Standalone Financial Statements"). In our opinion and to thebest of our information and according to the explanations given to us the aforesaidStandalone Financial Statements give the information required by the Companies Act 2013("the Act") in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2020 and its profit (including othercomprehensive income) the changes in equity and its cash flows for the year ended on thatdate.

2. Basis for Opinion

We conducted our audit of the Standalone

Financial Statements in accordance with the Standards on Auditing (SAs)specified under section 143(10) of the Act. Our responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of theStandalone

Financial Statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on theStandalone Financial Statements.

3. Emphasis of Matter i. We draw attention to Note No. 31.3 of theStandalone Financial Statements regarding outbreak of COVID-19 and the impact assessmentmade by the management on its business and operations. As stated in the said Note theunfolding events could infact may end up being different but it is anticipated the sameare unlikely to materially affect the oil and gas production/off-take etc. ii. We drawattention to Note No. 49.1.1(b) of the Standalone Financial Statements with respect todemand orders served on various work centres of the company by tax authorities underService Tax (ST) and Goods & Service Tax (GST) demanding ST and GST on Royalty inrespect of Crude Oil and Natural Gas. Based on the legal opinion the company iscontesting such demands and estimated amounts worked out towards ST and GST (includinginterest and penalty upto March 31 2020) of Rs 39001.85 million and Rs 61041.86 millionrespectively (TotalRs 100043.71 million) which has been considered as contingentliability. As a measure of abundant caution the company has deposited ST and GST alongwith interest under protest amounting to Rs 13509.56 million and Rs 45531.20 millionrespectively (Total Rs 59040.76 million). iii. We draw attention to Note 49.1.1(e) of theStandalone Financial Statements wherein it is stated that Directorate General ofHydrocarbons (DGH) had raised a demand on all the JV partners under the Production SharingContract with respect to Panna-Mukta and Mid and South Tapti contract areas (PMT

JV) being BG Exploration and Production India Limited (BGEPIL) andReliance Industries Limited (RIL) (together "the Claimants") and the Company(all three together referred to as "Contractors") towards differential GOIshare of Profit Petroleum and Royalty alleged to be payable by contractors pursuant toGovernment's interpretation of the Final Partial Award of Arbitral Tribunal (40%share of the Company amounting to USD 1624.05 million equivalent to Rs 122583.29 millionincluding interest upto 30th November 2016). Subsequent to Tribunal Orders dated October12 2016 DGH vide letters dated May 25 2017 June 4 2018 and January 14 2019 had askedcontractor for re - casting of accounts of the PMT JV and for remitting the respective PIshare of balance dues including interest till the date of remittance. As the company isnot a party to the arbitration the details of the proceedings of arbitration and copy ofthe order of London High Court are not available with the company. The Company hasresponded that The English high Court has delivered its final verdict on May 2 2018following which the Arbitral Tribunal re-considered some of its earlier findings from the2016 FPA (Revised Award); Pending finalization of the decision of the Arbitral Tribunalthe Company has indicated in its letters to DGH that the final recasting of the accountsis premature and the issues raised by DGH may be kept in abeyance and therefore noprovision for the same has been considered necessary and the same has been considered ascontingent liability.

Our opinion on the Standalone Financial Statements is not modified inrespect of these matters.

4. Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of these Standalone Financial Statements of thecurrent period. These matters were addressed in the context of our audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report:

Key Audit Matter How our audit addressed the matter
Modified Audit Procedures necessitated pursuant to outbreak of COVID-19 pandemic:
Due to spread of COVID-19 pandemic during the period of Nation-wide lockdown and travel restrictions imposed by Central / State Government / Local Authorities till date extended from time to time commencing from the last fortnight of March 2020 the audit could not be carried by visiting the respective Assets/ Basins/ Plants/ Units/ Offices / other Business areas/Corporate Office of the company. Accordingly this extraordinary situation due to Covid-19 has necessitated modification of our audit procedures so as to carry out the audit remotely through online access/receipt of digital documents. Due to the said travel and other related restrictions during the continuing lock down the audit processes were carried remotely by us from our respective places.
In view of this extraordinary situation due to Covid-19 we have identified such modified audit procedures as a Key Audit Matter. The company has provided/shared with us the necessary books of accounts records documents etc. through digital medium such as e-mails file sharing through Video Conferencing and remote/ VPN access over secured network to SAP WEB-ICE BI platform IFCR Portal etc. To this extent the audit processes were carried out on the basis of verification of such books of accounts records documents etc. made available to us as above which were relied upon as audit evidence for conducting the audit and reporting for the current period.
Accordingly we modified our audit procedures as follows:
a. Conducted verification of necessary books of accounts records documents etc. maintained by the respective Assets/ Basins/ Plants/ Units/ Offices / other Business areas/Corporate Office of the company through digital medium and remote electronic access as mentioned above.
b. Carried out verification of scanned copies of the documents evidences deeds certificates and the related records made available to us by the company through aforesaid digital medium.
c. Making enquiries and gathering necessary audit evidence through Video Conferencing dialogues and discussions over phone calls e-mails and similar communication channels.
d. Resolution of our audit observations through electronic and other telecommunication media instead of a face-to-face interaction with the designated officials.
e. We have also relied upon and performed our audit procedures in accordance with the Advisories and Key considerations issued by the Institute of Chartered Accountants of India on the various Accounting and Auditing aspects impacted by COVID19.
Evaluation of adequacy of provision for impairment for tangible and intangible assets (Refer Note 48 to the Standalone Financial Statements) Management has assessed whether any provision needs to be recognised on account of impairment of tangible and intangible assets. The Company reviews the carrying amount of its tangible and intangible assets (Oil and Gas Assets including Capital Work-in-Progress (CWIP) & Development Wells in Progress (DWIP) Other Property Plant & Equipment (including Capital Works-in-Progress Right of Use Assets) for the "Cash Generating Unit" (CGU) determined at the end of each reporting period to assess whether there is any indication that those assets have suffered any impairment loss. Oil and Gas price assumptions have a significant impact on CGU impairment assessments and are inherently uncertain. Furthermore oil and gas prices are subject to increased uncertainty given climate change and the global energy transition. The management's assumptions for prices of oil and gas in future are judgemental and may not be reflective of above factors leading to a risk of material misstatement. Given the long timeframes involved certain recoverable amounts of assets are sensitive to the discount rate applied. Since the determination of appropriate discount rate is judgemental there is a risk that discount rates may not reflect the return required by the market and the risks inherent in the cash flows being discounted which may lead to a material misstatement. A key input to impairment assessments and valuations is the production forecast in turn closely related to the Company's reserves estimates production profile and field development assumptions w.r.t Oil and Gas. The determination of recoverable amount being the higher of fair value less costs to sell and value- in-use is based on the factors as discussed above necessitating judgement on the part of management. Our audit procedures included the following: We evaluated the appropriateness of management's identification of the CGUs and exploration and evaluation assets and tested the operating effectiveness of controls over the impairment assessment process including indicators of impairment. We reviewed the reasonableness of the judgments and decisions made by the management regarding assumptions for Oil and Gas prices in future to identify whether there are indicators of possible management bias and accordingly relied upon the management's assumptions for Oil and Gas prices in future. We reviewed the appropriateness of discount rates used in the estimation. We relied on the technical assessment of the Management with regard to the Reserves and the Production profile of Oil and Gas as shown to us by the management. We performed testing of the mathematical accuracy of the cash flow models and checked the appropriateness of the related disclosures. We evaluated management's assessment and related calculations of impairment including comparison of the recoverable amount with the carrying amounts of respective CGUs in the books of accounts. We perused the future plans related to exploration activities. Further we have relied upon management's assessment that the ML/ PML shall be regranted wherever expired/ is expiring in near future.
Key Audit Matter How our audit addressed the matter
In case of exploration and evaluation assets based on management's judgement assessment for impairment is carried out when further exploration activities are not planned in near future or when sufficient data indicate that although a development is likely to proceed the carrying amount of the exploration asset is unlikely to be recovered in full from successful development or by sale. Based on the above factors we have considered the measurement of impairment as Key Audit Matter.
Estimation of Decommissioning liability Our audit procedures included the following:
(Refer Note 25.1 to the Standalone Financial Statements) Evaluated the approach adopted by the management in determining the expected costs of decommissioning.
The Company has an obligation to restore and rehabilitate the fields operated upon by the Company at the end of their use. This decommissioning liability is recorded based on estimates of the costs required to fulfill this obligation. Identified the cost assumptions used that have the most significant impact on the provisions and tested the appropriateness of these assumptions.
The provision is based upon current cost estimates and has been determined on a discounted basis with referencetocurrentlegalrequirementsandtechnology. Reviewed the appropriateness of discount and inflation rates used in the estimation. Verified the unwinding of interest as well as understanding if any restoration was undertaken during the year.
At each reporting date the decommissioning liability is reviewed and re-measured in line with changes in observable assumptions timing and the latest estimates of the costs to be incurred at reporting date. We have considered the measurement of decommissioning costs as Key Audit Matter as it requires significant management judgment including accounting calculations and estimates that involves high estimation uncertainty. We have relied upon the technical assessment w.r.t the Production Profile as estimated by the management based on which the Terminal year of the filed for decommissioning has been considered.
We have relied upon management's assessment that the ML/ PML shall be regranted wherever expired/ is expiring in near future.
Relied on the judgments of the internal/ external experts for the use of technical /commercial evaluation.
Performed a review to ensure that all key movements were understood corroborated and recorded correctly.
Assessed the appropriateness of the disclosures made in the financial statements.
Key Audit Matter How our audit addressed the matter
Litigations and Claims (Refer Note 49 to the Standalone Financial Statements) Litigation and claims are pending with multiple tax and regulatory authorities and there are claims from vendors/suppliers and employees which have not been acknowledged as debt by the company (including Joint Operations). In the normal course of business financial exposures may arise from pending legal/regulatory proceedings and from above referred claims not acknowledged as debt by the company. Whether a claim needs to be recognized as liability disclosed as contingent liability in the Standalone Financial Statements or considered as remote is dependent on a number of significant assumptions and judgments. The amounts involved are potentially significant and determining the amount if any to be recognized or disclosed in the financial statements is inherently subjective. We have considered Litigations and claims as Key Audit Matter as it requires significant management judgment including accounting estimates that involves high estimation uncertainty. Our audit procedures included the following: Understood Management's process and control for determining tax litigations and other litigations and claims and its appropriate accounting and disclosure. Tested key controls surrounding such litigations. Discussed pending matters with the Company's legal department. Assessed management's conclusions through understanding precedents set in similar cases including placing reliance upon the expert opinions obtained by the management. We have assessed the appropriateness of presentation of the contingent liabilities in the Standalone Financial Statements.
Key Audit Matter How our audit addressed the matter
Adoption of Ind AS 116 Leases (Refer Note 7 23 & 42 to the Standalone Financial Statements) Our audit procedures on adoption of Ind AS 116 included the following:
As described in Note 42 to the Standalone Financial Statements during the current year the Company has adopted Ind AS 116 Leases (‘Ind AS 116') the new standard on lease accounting. The application and transition to this accounting standard is complex and is an area of focus in our audit as the Company has a large number of leases with different contractual terms. Verified the "Operating Leases" covered under the previously applicable standard and ascertaining the leases to which the new standard is applicable and reviewing the residual lease obligations.
For new / modified leases tested the lease accounting and estimates/ judgments used by the Management.
Ind AS 116 introduces a new lease accounting model wherein lessees are required to recognize a right- of-use (ROU) asset and a lease liability arising from a lease on its balance sheet. The lease liabilities are initially measured by discounting future lease payments during the lease term as per the contract/ arrangement. Adoption of this standard involves significant judgements and estimates including determination of the discount rates and the lease term. Corroborated by performing a check of the information used for determining assets and liabilities related to lease contracts with underlying contractual data. We assessed the key terms and conditions of the leases with the underlying lease contracts evaluated computation of lease liabilities.
Evaluated broadly the design and implementation of the processes and internal controls relating to implementation of the new lease standard.
Based on our evaluation of the contractual agreements entered into and our knowledge of the business assessed the appropriateness of the leases identified by the Management.
The Company adopted the modified retrospective approach method to transition to Ind AS 116 consequently comparative financial information was not restated. Reviewed the assumptions made by the Management including benchmark for low value assets not considered for determination of ROU.
Additionally the standard mandates detailed disclosures with respect of transition. Reviewed the appropriateness of discount rates used in the estimation and computing the lease liabilities.
Relied upon the management's assessment/ judgement relating to the extension/ cancellation of lease period beyond/ before expiry of original lease period.
Evaluated the appropriateness of the accounting policy disclosures provided under the new lease standard and assessed the completeness and arithmetical calculations of the relevant disclosures including those related to transition.

5. Other Matters

i. We have placed reliance on technical/ commercial evaluation by themanagement in respectofcategorizationofwellsasexploratory development producing and drywell allocation of cost incurred on them production profile proved (developed andundeveloped)/ probable hydrocarbon reserves and depletion thereof on Oil and Gas Assetsimpairment liability for decommissioning costs liability for NELP and nominated blocksfor under performance against agreed Minimum Work Programme.

ii. As mentioned in Note No. 47.1.3 the Standalone FinancialStatements include the Company's share in the total value of assets liabilitiesexpenditure and income of 160 blocks under New Exploration Licensing Policy (NELP)/Hydrocarbon Exploration and Licensing Policy (HELP) / Joint Operations (JO) accounts forexploration and production out of which: a. 9 NELPs/ JOs accounts have been certified byother Chartered Accountants. In respect of these 9 NELPs/ JOs Standalone FinancialStatements include proportionate share in assets and liabilities as on 31st March 2020amounting to Rs 81281.88 million and Rs 46948.63 million respectively and revenue andprofit including other comprehensive Income for the year ended 31st March 2020 amountingto Rs 95188.66 million and Rs 20482.91 million respectively Our opinion is based solelyon the certificate of the other Chartered Accountants.

b. 9 NELPs / JOs have been certified by the management in respect ofNELPs / JOs operated by other operators. In respect of these 9 NELPs / JOs StandaloneFinancial Statements include proportionate share in assets and liabilities as on 31stMarch 2020 amounting to Rs 2470.87 million and Rs 4041.38 million respectively andrevenue and profit including other comprehensive Income for the year ended 31st March2020 amounting to Rs 83.37 million and Rs (21.87) million respectively Our opinion isbased solely on management certified accounts.

iii. We audited the adjustments as disclosed in Note No. 54 to theStandalone Financial Statements which have been made to the comparative StandaloneFinancial Statements presented for the years prior to year ended 31 March 2020 inaccordance with the requirement of applicable Ind AS. In our opinion such adjustments areappropriate and have been properly applied.

iv. The Standalone Financial Statements of the Company for the yearended 31st March 2019 were audited by joint auditors of the Company three of which arethe predecessor audit firms and have expressed an unmodified opinion dated May 30 2019on such financial statements.

Our opinion on the Standalone Financial Statements is not modified inrespect of above matters.

6. Information Other than the Standalone Financial Statementsand Auditor's Report Thereon

The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Board's Report including Annexures to Board's Report ManagementDiscussion and Analysis Business Responsibility Report and Report on Corporate Governancebut does not include the Standalone Financial Statements and our auditors' reportthereon. The above-referred information is expected to be made available to us after thedate of this audit report.

Our opinion on the Standalone Financial Statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the Standalone Financial Statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact.

When we read the other information if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance and take appropriate actions necessitated by the circumstances and theapplicable laws and regulations.

7. Responsibilities of Management and Those Charged withGovernance for the Standalone Financial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act withrespecttothepreparationoftheseStandalone FinancialStatements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Indian 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 of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments 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 the Board ofDirectors is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

8. Auditor's Responsibilities for the Audit of StandaloneFinancial Statements

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

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of theStandalone Financial Statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such controls.

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

Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors' report to therelated disclosures in the Standalone Financial Statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors' report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of theStandalone Financial Statements including the disclosures and whether the StandaloneFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the StandaloneFinancial Statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the Standalone FinancialStatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the Standalone FinancialStatements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

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

9. 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 subsection(11) of section 143 of the Companies Act 2013 we give in "Annexure-1" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.

2. Based on verification of books of accounts of the Company andaccording to information and explanations given to us we give below a report on theDirections and Sub-directions issued by the Comptroller and Auditor General of India interms of Section 143(5) of the Act:

Directions/ Sub-directions u/s 143(5) of the Act for year 2019-20 Directions Auditor's reply on the action taken on the directions
1) Whether the Company has system in place to process all the accounting transactions through IT system? If yes the implication of processing of accounting transaction outside IT System on the integrity of the accounts along with the financial implications if any may be stated; Yes the Company has system in place to process all the accounting transactions through IT system namely SAP. Based on the audit procedures carried out and as per the information and explanations given to us no accounting transactions have been processed/carried outside the IT system. Accordingly there are no implications on the integrity of the accounts.
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; Based on the audit procedures carried out and as per the information and explanations given to us there are no such cases of restructuring or waivers / write-off of debts/ loans/ interest etc. by any lender to the company due to the company's inability to repay the loan during the year.
3) Whether funds received/ receivable for specific schemes from Central/ State agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation. Based on the audit procedures carried out and as per the information and explanations given to us the Company does not have any funds received/ receivable for specific schemes from Central/ State agencies.
Sub-Directions
1) The records of title deed/ lease deeds/legal documents of all the land acquired/ possessed under freehold and leasehold by the Company may be reviewed and its depiction in the accounts suitably may be ensured. We have reviewed the records of title deed/lease deeds/ legal documents of all the land acquired/ possessed under freehold and leasehold by the Company on the basis of audit procedures carried out and the information to the extent compiled by the Company pending the reconciliation of the available records with the books of account and also considering the voluminous nature and various locations we have observed that such lands have been suitably depicted in the accounts (Refer Note No. 6 & 7 of Standalone Financial Statements) Cases of non-availability of clear title deeds/ lease deeds/ legal documents of land acquired/ possessed under freehold and leasehold by the Company are provided in the table below.
Nature Number of assets Gross Block (Rs in millions) Net Block (Rs in millions)
Freehold land 2 1322.28 1322.28
Leasehold land 14 595.34 389.98

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 beenkept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Statement of Changes in Equity and Cash flows dealt with by thisReport are in agreement with the books of account;

d. In our opinion the aforesaid Standalone Financial Statements complywith the Ind AS specified under Section 133 of the Act;

e. As per notification number G.S.R. 463(E) dated 5th June 2015 issuedby Ministry of Corporate Affairs section 164(2) of the Act regarding thedisqualifications of Directors is not applicable to the Company since it is a GovernmentCompany;

f. With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate report in "Annexure 2";

g. As per notification number G.S.R. 463 (E) dated 5th June 2015issued by Ministry of Corporate Affairs section 197 of the Act regarding remuneration todirector is not applicable to the Company since it is a Government Company; and h. Withrespect to the other matters to be included in the Auditors' Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its Standalone Financial Statements – Refer Note 49.1.1 to theStandalone Financial Statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses- Refer Note 56to the Standalone Financial Statements;

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

For MKPS & Associates For G.M. Kapadia & Co. For R. Gopal & Associates
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No. 302014E Firm Reg. No. 104767W Firm Reg. No. 000846C
Sd/- Sd/- Sd/-
(Narendra Khandal) (Rajen Ashar) (Sandeep Kumar Sawaria)
Partner (M. No. 065025) Partner (M. No. 048243) Partner (M. No. 061771)
UDIN: 20065025AAAAFI1012 UDIN: 20048243AAAAFL2804 UDIN: 20061771AAAACA3059
Place: Mumbai Place: Mumbai Place: Kolkata
For Kalani & Co. For SARC & Associates For R.G.N. Price & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No: 000722C Firm Reg. No. 006085N Firm Reg. No.002785S
Sd/- Sd/- Sd/-
(Vikas Gupta) (Pankaj Sharma) (Rangarajan Raghavan Iyengar)
Partner (M. No. 077076) Partner (M. No. 086433) Partner (M. No. 041883)
UDIN: 20077076AAAAAG5689 UDIN: 20086433AAAAAD2300 UDIN: 20041883AAAAAB6754
Place: Jaipur Place: New Delhi Place: Mumbai
June 30 2020

Annexure - 1 to the Independent Auditors' Report

(Referred to in paragraph 9(1) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

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

b. As per the information and explanations given to us and on the basisof our examination of the records of the Company the fixed assets (PPE) havingsubstantial value other than those which are underground/ submerged/ under jointoperations have been physically verified by the management in a phased manner to cover allitems over a period of three years which in our opinion is reasonable having regard tothe size of Company and nature of its business. The reconciliation of physically verifiedassets with the book records is in progress. Discrepancies noticed on the physicalverification and consequential adjustments are carried out on completion ofreconciliation. According to information and explanations given by the management and inour opinion the same are not material.

c. On the basis of the information to the extent compiled by theCompany pending the reconciliation of the available records with the books of account andalso considering the voluminous nature and various locations we report that thetitle/lease deeds of immovable properties are held in the name of Company except for thefollowing where the title/lease deeds are not available with the Company:

(Rs in million)
Nature Number of Assets Gross Block Net Block
Lease hold land 14 595.34 389.98
Free hold land 2 1322.28 1322.28
Building 6 279.65 51.22
Total 22 2197.27 1763.48

ii. According to the information and explanations given to us theinventory (excluding inventory lying with third parties inventory under joint operationsand material in transit) has been physically verified by the management in a phased mannerat reasonable intervals to cover all items over a period of three years which in ouropinion is reasonable having regard to the size of Company and nature of its business.Such verification did not reveal any material discrepancies. iii. The Company has notgranted loans secured

or unsecured to any companies firms limited liability partnerships orother parties covered in the register maintained under section 189 of the Act. iv. In ouropinion and according to the information and explanations given to us the Company has notadvanced loans to directors / to a Company in which the Director is interested to whichprovisions of section 185 of the Act apply. The provisions of section 186 of the Act inour opinion are not applicable to the Company. v. In our opinion and according toinformation

and explanations given to us the Company has not accepted any depositsfrom the public and hence provisions of Sections 73 to 76 and other relevant provision ofthe Companies Act 2013

& Companies (Acceptance of Deposits) Rules 2014 are notapplicable. vi. We have broadly reviewed the cost records maintained by the Companypursuant to the Companies (Cost Records and Audit) Rules 2014 as amended and prescribedby the Central Government under sub section(1) of section 148 of the Act and we are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with theview to determine whether they are accurate or complete. vii. a. According to records ofthe Company undisputed statutory dues including

Provident Fund Income Tax Sales Tax Service Tax Duty of CustomsDuty of Excise Value Added Tax Goods and Service Tax Cess and other statutory dues havegenerally been regularly deposited with the appropriate authorities. According to theinformation and explanations given to us no undisputed amounts payable in respect of theaforesaid dues were outstanding as of 31st March 2020 for a period more thansix months from the date of becoming payable. b. According to the information andexplanations given to us there were no dues in respect of Income Tax Duty of ExciseDuty of Customs Sales Tax Service Tax Value Added Tax and Goods and Service Tax whichhave not been deposited on account of any dispute except the following:

(Rs in million)
Name of Statute Forum where Dispute is pending Period to which the amount relates (Financial Year) Gross Amount Involved Amount paid under protest Amount Unpaid
Commissioner 2018-19 2.37 - 2.37
Custom Excise and Service 2005-06; 2014-15; 36.61 16.95 19.66
Central Tax Appellate Tribunal
2018-19
Excise Act 1944 Hon. High Court 2012-15 6204.65 - 6204.65
Hon. Supreme Court 2001-02; 2006-09 517.54 - 517.54
Total (A) 6761.17 16.95 6744.22
Commissioner 1987-88 331.32 - 331.32
Custom Excise and Service 2007-08 5.00 1.00 4.00
The Customs Tax Appellate Tribunal
Act 1962 Hon. High Court 2012-13; 2015-16 64.17 - 64.17
Total (B) 400.49 1.00 399.49
Commissioner/ (Appeals) and Additional Commissioner/ ITO 2006-07; 2009-16; 2017-18 166296.99 123022.49 43274.51
Income Tax Income Tax Appellate Tribunal 2001-12 243410.85 189384.17 54026.68
Act 1961
Hon. High Court 1994-95; 2000-01 1127.76 1118.85 8.91
Total (C) 410835.61 313525.51 97310.10
Name of Statute Forum where Dispute is pending Period to which the amount relates (Financial Year) Gross Amount Involved Amount paid under protest Amount Unpaid
Goods and Services Tax 2017-18 1632.30 1597.69 34.61
Appellate Tribunal
Goods and Services Tax Hon. High Court 2017-18' 61949.99 43939.76 18010.23
Total (D) 2018-19 63582.29 45537.45 18044.84
Commissioner/ Joint Commissioner/ 2000-02;
Commissioner -Appeals/ Joint 2005-08; 5330.78 21.25 5309.53
Commissioner- Appeals 2009-13;
2014-15
1996-97;
Central Sales Appellate Tribunal/ First Appellate 1998-2000; 9013.90 68.11 8945.79
Tax Act 1956 and Respective States' Sales Tax Acts Authority 2001-07;
2011-14
1978-79;
1992-95;
Hon. High Court 51.77 26.48 25.29
2006-07;
2011-13
Hon. Supreme Court 2002-13; 2016-17 11883.72 623.96 11259.76
Total (E) 26280.17 739.80 25540.37
Commissioner/ (Appeals) Joint 2006-08;
Comm. Additional Comm. of Custom 2009-10;
10607.19 0.49 10606.70
Excise and Service Tax Director 2011-17;
General 2019-20
2003-04;
Finance Act Custom Excise and Service Tax 2005-13;
1994 (Service Tax) Appellate Tribunal/ First Appellate 41892.28 13560.69 28331.59
2014-18;
Authority
2019-20
2005-06;
Hon. High Court 2012-13; 201.67 2.56 199.11
2015-16
Total (F) 52701.14 13563.74 39137.40
Grand Total (A+B+C+D+E+F) 560560.87 373384.45 187176.42

viii. In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans or borrowings dues toBanks and Financial Institutions or dues to Debenture (Bond) Holders. The Company has notborrowed any amount from Government. ix. In our opinion and according to the informationand explanations given to us the term loans taken by the Company have been generallyapplied for the purpose for which they were raised. The Company has not raised any moneyby way of initial public offer or further public offer. x. According to the informationand explanations given to us no material fraud on the Company by its officers oremployees or by the Company has been noticed or reported during the year. xi. As pernotification number G.S.R. 463 (E) dated 5th June 2015 issued by Ministry of CorporateAffairs section 197 of the Act as regards the managerial remuneration is not applicableto the Company since it is a Government Company. xii. In our opinion the Company is nota Nidhi

Company. Therefore the provisions of clause

3(xii) of the order are not applicable to the Company. xiii. Accordingto the information and explanations given by the management transactions with the relatedparties are in compliance with section 177 and 188 of the Act where applicable and thedetails have been disclosed in the notes to the Standalone Financial Statements asrequired by the applicable Indian Accounting Standards. xiv. According to the informationand explanations given to us and on an overall examination of the Balance Sheet theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year. xv. According to the information andexplanations given by the management the Company has not entered into any non-cashtransactions specified under section 192 of the Act with directors or persons connectedwith him. xvi. In our opinion the Company is not required to register under section 45-IAof the Reserve Bank of India Act 1934.

For MKPS & Associates For G.M. Kapadia & Co. For R. Gopal & Associates
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No. 302014E Firm Reg. No. 104767W Firm Reg. No. 000846C
Sd/- Sd/- Sd/-
(Narendra Khandal) (Rajen Ashar) (Sandeep Kumar Sawaria)
Partner (M. No. 065025) Partner (M. No. 048243) Partner (M. No. 061771)
UDIN: 20065025AAAAFI1012 UDIN: 20048243AAAAFL2804 UDIN: 20061771AAAACA3059
Place: Mumbai Place: Mumbai Place: Kolkata
For Kalani & Co. For SARC & Associates For R.G.N. Price & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No: 000722C Firm Reg. No. 006085N Firm Reg. No.002785S
Sd/- Sd/- Sd/-
(Vikas Gupta) (Pankaj Sharma) (Rangarajan Raghavan Iyengar)
Partner (M. No. 077076) Partner (M. No. 086433) Partner (M. No. 041883)
UDIN: 20077076AAAAAG5689 UDIN: 20086433AAAAAD2300 UDIN: 20041883AAAAAB6754
Place: Jaipur Place: New Delhi Place: Mumbai
June 30 2020

Annexure - 2 to Independent Auditors' Report

(Referred to in paragraph 9 (3) (f) under ‘Report on Other Legaland Regulatory Requirements' section of our report of even date) Report on theInternal Financial Controls with reference to Standalone Financial Statements under Clause(i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

To the Members of Oil and Natural Gas Corporation Limited

We have audited the internal financial controls with reference toStandalone Financial Statements of Oil and Natural Gas Corporation Limited ("theCompany") as of 31st March 2020 in conjunction with our audit of the StandaloneFinancial Statements of the 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the 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 with reference to Standalone Financial Statements based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting (the "Guidance Note") and theStandards on Auditing as specified 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 with reference to Standalone Financial Statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to Standalone FinancialStatements and their operating effectiveness. Our audit of internal financial controlswith reference to Standalone Financial Statements included obtaining an understanding ofinternal financial controls with reference to Standalone Financial Statements assessingthe risk that a material weakness exists and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the Standalone Financial Statements whether due to fraud orerror.

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 with reference to Standalone Financial Statements.

Meaning of Internal Financial Controls with reference to StandaloneFinancial Statements

A Company's internal financial control with reference toStandalone Financial Statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of StandaloneFinancial Statements for external purposes in accordance with generally acceptedaccounting principles. A Company's internal financial control with reference toStandalone

Financial Statements 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 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 unauthorised acquisitionuse or disposition of the Company's assets that could have a material effect on theStandalone Financial Statements.

Inherent Limitations of Internal Financial Controls with reference tofinancial statements

Because of the inherent limitations of internal financial controls withreference to Standalone Financial Statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls with reference to Standalone Financial Statements to future periods aresubject to the risk that the internal financial control with reference to StandaloneFinancial Statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls with reference to Standalone Financial Statements and suchinternal financial controls with reference to Standalone Financial Statements wereoperating effectively as at 31st March 2020 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.

For MKPS & Associates For G.M. Kapadia & Co. For R. Gopal & Associates
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No. 302014E Firm Reg. No. 104767W Firm Reg. No. 000846C
Sd/- Sd/- Sd/-
(Narendra Khandal) (Rajen Ashar) (Sandeep Kumar Sawaria)
Partner (M. No. 065025) Partner (M. No. 048243) Partner (M. No. 061771)
UDIN: 20065025AAAAFI1012 UDIN: 20048243AAAAFL2804 UDIN: 20061771AAAACA3059
Place: Mumbai Place: Mumbai Place: Kolkata
For Kalani & Co. For SARC & Associates For R.G.N. Price & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No: 000722C Firm Reg. No. 006085N Firm Reg. No.002785S
Sd/- Sd/- Sd/-
(Vikas Gupta) (Pankaj Sharma) (Rangarajan Raghavan Iyengar)
Partner (M. No. 077076) Partner (M. No. 086433) Partner (M. No. 041883)
UDIN: 20077076AAAAAG5689 UDIN: 20086433AAAAAD2300 UDIN: 20041883AAAAAB6754
Place: Jaipur Place: New Delhi Place: Mumbai
June 30 2020