1. We have audited the attached Balance Sheet of BHARAT PETROLEUM
CORPORATION LIMITED as at 31st March 2011 and the Profit and Loss
Account and the Cash Flow Statement of the Company for the year ended
on that date, annexed thereto. These financial statements are the
responsibility of the Company''s management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the Auditing Standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor''s Report) Order, 2003 (''the
Order''), issued by the Central Government in terms of Section 227(4A)
of the Companies Act, 1956, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the Order.
4. Further to our comments in the Annexure referred to in paragraph
(3) above, we report that:
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
b) In our opinion, proper books of account as required by law have been
kept by the Company so far as it appears from our examination of the
books.
c) The Balance Sheet and the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account.
d) In our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement comply with the Accounting Standards referred
to in sub-section (3C) of section 211 of the Companies Act, 1956.
e) Disclosure in terms of clause (g) of sub-section (1) of section 274
of the Companies Act, 1956 is not required as per Notification No. GSR
829(E) dated October 21, 2003 issued by the Department of Company
Affairs.
f) Without qualifying our opinion, we invite attention to :
i) Note 4 of Schedule X – Part B, Notes to Accounts, regarding
impairment of assets wherein, being technical matters subject to
uncertainty we have relied on the estimates and assumptions made by the
Company in arriving at recoverable value of assets, based on desired
margins.
ii) Notes 6 and 7 of Schedule X – Part B, Notes to Accounts, regarding
the provision for post retirement benefit schemes and related impact on
provision for current tax, where the Company''s position is supported by
legal advice and based on reasonable certainty of obtaining necessary
approvals from tax authorities.
g) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read with the notes
thereon give the information required by the Companies Act, 1956, in
the manner so required and give a true and fair view in conformity with
the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011;
ii) in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
iii) in the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
(Referred to in Paragraph (3) of our report of even date on the
accounts of BHARAT PETROLEUM CORPORATION LIMITED for the year ended
31st March 2011.)
(i) In respect of fixed assets
a) The company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets except in
respect of items like pipes, valves, meters, instruments and other
similar items peculiar to a continuous process plants.
b) The Company has carried out physical verification of fixed assets,
other than LPG cylinders with customers, in accordance with the
verification programme and the frequency of verification is reasonable.
According to information and explanations given to us, no material
discrepancies have been reported on such verification.
c) In our opinion, the disposals of fixed assets during the year are
not of a significant value and do not affect the going concern
assumption.
(ii) In respect of inventories:
a) The inventories of finished goods, stores, spares parts and raw
materials, except those lying with third parties and in transit, have
been verified by the management at reasonable intervals. In respect of
inventories lying with third parties, these have been confirmed by them
and the inventory in transit has been verified with subsequent
receipts.
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management were generally reasonable and adequate in
relation to the size of the company and the nature of its business.
c) In our opinion and according to the information and explanations
given to us, the company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification as compared to the records of inventories.
(iii) Based on the audit procedures applied by us and according to the
information and explanations given to us, the company has not granted
or taken any loans, secured or unsecured to / from companies, firms or
other parties covered in the register maintained under section 301 of
the Companies Act, 1956. Therefore, the provisions of sub-clause (b) to
(d), (f) and (g) of sub-para (iii) of para 4 of the Order are not
applicable.
(iv) In our opinion and according to the information and explanations
given to us, having regard to the explanation that some of the items
purchased are of a special nature and suitable alternative sources do
not exist for obtaining comparable quotations, there is an adequate
internal control procedure commensurate with the size of the Company
and the nature of its business, for the purchase of inventories and
fixed assets and for the sale of goods and services. During the course
of our audit, we have not observed any continuing failure to correct
major weaknesses in the internal control system.
(v) In respect of transactions entered in the register maintained under
section 301 of the Companies Act, 1956:
a) In our opinion and according to the information and explanation
given to us, there were no transactions exceeding the value of Rs. five
lakhs in case of any party that need to be entered in the Register
maintained in pursuance of section 301 of the Companies Act, 1956.
b) As there are no transactions exceeding the value of Rs. five lakhs
in case of any party that need to be entered in the Register maintained
pursuant to section 301 of the Companies Act, 1956, sub-clause (b) of
sub-para (v) of Para 4 of the Order regarding reasonability of price at
which such transactions have been entered is not applicable.
(vi) In our opinion and according to the information and explanation
given to us, the company has complied with the directives issued by the
Reserve Bank of India, the provisions of section 58A and 58AA of the
Companies Act, 1956 and the rules framed there under.
(vii) In our opinion, the company has an adequate internal audit system
commensurate with the size and the nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie the prescribed
records have been kept and maintained. We have not made a detailed
examination of these records.
(ix) According to the information and explanations given to us, in
respect of statutory and other dues:
a) According to the records of the Company, the company has been
generally regular in depositing undisputed statutory dues including
Provident fund, Investor Education and Protection Fund, Employees''
State Insurance Fund, Income tax, Sales tax, Wealth tax, Service tax,
Custom duty, Excise duty, cess and any other statutory dues, with
appropriate authorities during the year. According to the information
and explanations given to us, no undisputed amounts payable in respect
of Income tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and
Excise Duty were outstanding, at the year end for a period of more than
six months from the date they became payable.
b) The details of disputed dues of sales tax, income tax, customs duty,
wealth tax, service tax, excise duty, cess, which have not been
deposited, are given in Annexure I.
(x) The company does not have any accumulated losses at the end of the
financial year. The Company has not incurred any cash losses during the
financial year covered by our audit and in the immediately preceding
financial year.
(xi) According to the information and explanations given to us and
based on the documents and records produced before us, the Company has
not defaulted in repayment of dues to Financial Institutions / Banks.
(xii) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares and other securities.
(xiii) In our opinion and according to the information and explanations
given to us, the nature of activities of the Company does not attract
any special statute applicable to chit fund and nidhi/ mutual benefit
fund/ societies.
(xiv) (a) The Company does not deal or trade in shares, securities,
debentures and other investments.
(b) The shares, securities, debentures and other investments are held
by the Company in its own name except to the extent of the exemption
granted under section 49 of the Companies Act, 1956.
(xv) The Company has given guarantees for loans taken by others from
banks or financial institutions, aggregating to Rs.1608.76 crores where
the terms and conditions, according to the information and explanations
given to us, and in our opinion, are not prima facie prejudicial to the
interests of the Company.
(xvi) In our opinion, the term loans obtained during the year, prima
facie, have been applied for the purpose for which the loans were
raised.
(xvii) According to the information and explanations given to us, based
on an overall examination of the Balance Sheet and Cash Flows of the
Company, we report that the Company has not utilized funds raised on
short-term basis for long-term investment.
(xviii) The Company has not made any preferential allotment of shares
to parties covered in the register maintained under section 301 of the
Companies Act 1956.
(xix) The Company has created security / charge on the debentures
issued during the year.
(xx) The Company has not raised any money through a public issue during
the year.
(xxi) As represented to us by the management and based on our
examination in the course of our audit, except for the instance at (a)
below, no material fraud on or by the Company has been noticed or
reported during the year.
a) The Company''s bank had debited Rs. 29.03 Lacs related to forged
cheques and subsequently reversed the amount based on the Company''s
clarifications. There was no financial loss due to this instance.
(Amount in Rs Crores)
Nature of Statute /
Nature Period Block Forum where Dispute is pending
of Dues
Supreme High Appellate Appellate
Court Court Tribunal* Authority**
Customs Act, 1962
(Customs 1995-2000 57.32
Duty Including
Penalty &
Interest, wherever
applicable) 2000-2005 17.35 0.50
2005-2010 0.01
Customs Duty Total - - 74.66 0.51
Central Excise Act,
1944 1985 to
1990 0.14
(Excise Duty
Including
Penalty & Interest,
wherever 1990 to 1995 0.43
applicable)
1995 to 2000 27.93 0.56
2000 to 2005 507.99 282.17 87.25
2005 to 2011 53.08 328.63 43.96
Excise Duty Total 561.06 - 638.73 132.34
Sales Tax/ VAT
Legislations 1980 to 1985 0.04
(Sales Tax
Including Penalty &
Interest, wherever
applicable) 1985 to 1990 0.75 4.10 0.01 21.97
1990 to 1995 33.37 2.45 12.95
1995 to 2000 27.96 200.73 889.65
2000 to 2005 0.23 354.85 7.94 1,847.37
2005 to 2011 26.21 55.69 58.44
Sales Tax Total 0.98 446.52 266.83 2,830.37
Income Tax Act,
1961 1990 to 1995 6.73 0.22
(Income Tax
including
Penalty &
Interest,
wherever 1995 to 2000 0.26 0.48 1.35
applicable)
2000 to 2005 5.51 -
2005 to 2011 0.03
Income Tax Total - 6.99 6.21 1.38
Finance Act, 1994 2000 to 2005 0.36
(Service Tax) 2005 to 2011 1.62 0.94
Service Tax Total - - 1.62 1.31
Grand Total 562.04 453.51 988.06 2,965.90
Nature of the
Statue / Nature
of Dues Adjudicating Joint Board of Grand Total
Authority*** Secretary, Revenue
MDF
Customs Excise Act,
1944 3.25 60.57
0.32 18.16
0.01
Custom Duty Toatl 3.57 - - 78.74
0.14
0.43
28.50
84.20 0.21 961.81
10.68 436.34
Excise Total 94.88 0.21 - 1,427.22
0.04
6.17 0.02 33.02
48.77
10.26 13.88 1,142.47
344.13 2,554.53
28.46 168.80
389.02 - 13.89 3,947.62
- - 6.95
- - - 2.09
- - - 5.51
- - - 0.03
- - - 14.58
0.17 0.54
2.57
0.17 - - 3.11
487.64 0.21 13.89 5,471.26
* Appellate Tribunal includes Sales Tax Tribunal, CESTAT and ITAT.
** Apellate Authority includes Commissioner Appeals, Assistant
Commissioner Appeals, Deputy Commissioner Appeals, Joint Commissioner
Appeals and Deputy Commissioner Commercial Taxes Appeals.
*** Adjudicating Authority includes Collector of Sales Tax, Sales Tax
Officer and Deputy Commissioner Sales Tax, Joint / Deputy/ Additional
Commissioner of Commercial Taxes
For and on behalf of For and on behalf of
B.K.KHARE AND CO. K.VARGHESE AND CO.
Chartered Accountants Chartered Accountants
FR No: 105102W FR No:004525S
Sd/- Sd/-
Padmini Khare Kaicker K.Varghese
Partner Partner
Membership No: 44784 Membership No: 20674
Delhi Delhi
Dated: 30th May 2011 Dated: : 30th May 2011
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