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Hindustan Petroleum Corporation | Auditor's Report > Refineries > Auditor's Report from Hindustan Petroleum Corporation - BSE: 500104, NSE: HINDPETRO
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Hindustan Petroleum Corporation
BSE: 500104|NSE: HINDPETRO|ISIN: INE094A01015|SECTOR: Refineries
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« Mar 11
Auditor's Report (Hindustan Petroleum Corporation) Year End : Mar '12
1.  We have audited the attached Balance Sheet of HINDUSTAN PETROLEUM
 CORPORATION LIMITED as at 31st March 2012 and the Statement of Profit
 and Loss 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 as
 amended by Companies (Auditor''s Report) (Amendment) Order, 2004
 (together ''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) and (4) 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 and proper returns, adequate for the purposes of our audit,
 have been received from the branch not visited by us
 
 c) The Branch Auditors'' report, made available to us, has been
 appropriately dealt with while preparing our report.
 
 d) The Balance Sheet and the Statement of Profit and Loss and the Cash
 Flow Statement dealt with by this report are in agreement with the
 books of account and with audited returns from the branch.
 
 e) In our opinion, the Balance Sheet, the Statement of Profit and Loss
 and the Cash Flow Statement dealt with by this report comply with the
 Accounting Standards referred to in sub-section (3C) of Section 211 of
 the Companies Act, 1956.
 
 f) Disclosure in terms of clause (g) of Sub-section (1) of Section 274
 of the Companies Act, 1956 is not required for Government Companies as
 per Notification No. GSR 829(E) dated October 21, 2003 issued by the
 Department of Company Affairs.
 
 g) Without qualifying our opinion, we invite attention to
 
 i) Note No. 42 of 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) Note No. 35(b) of Notes to Accounts regarding recognition of
 Minimum Alternative Tax (MAT) credit wherein, we have relied on the
 management representation that the MAT credit of Rs. 268.77 Crores will
 be set off during the period specified in Section 115JAAof the Income
 Tax Act, 1961.
 
 iii) Note No.  33 of Notes to Accounts regarding recoverability of
 outstanding amount of Rs. 505.53 Crores from Kingfisher Airlines Limited,
 wherein we have relied on the management representation that the entire
 outstanding will be realised.
 
 iv) Note No. 34 of Notes to Accounts regarding amortization of
 ancillary cost over the tenure of External Commercial Borrowings.
 
 h) 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, 2012;
 
 ii) in the case of the Statement of Profit and Loss, 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.
 
 Annexure to the Auditors'' Report
 
 (Referred to in Paragraph (3) of our report of even date)
 
 (i) 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
 industry.
 
 b) As explained to us, the Company, having regards to nature and size
 of its business, has adopted the practice of carrying out physical
 verification of fixed assets, except LPG cylinders and fixed assets of
 the erstwhile Kosan Gas Company Undertaking, not handed over, on a
 staggered basis, over a period of five years in the case of furniture,
 fixtures and office equipment and over a period of three years in the
 case of Plant and Machinery and other assets.  We were informed that
 discrepancies noticed on such verification were not material as
 compared to the book records and have been properly dealt with in the
 books of account. The existence of fixed assets situated at the
 residence of employee has, however, been ascertained on a
 self-declaration basis.
 
 c) Fixed Assets disposed off during the year were not substantial and,
 therefore, do not affect the going concern assumption.
 
 (ii) a) As explained to us, the inventories were physically verified
 during the year by Management at reasonable intervals.  In case of
 material lying with third parties, certificates confirming sticks held
 have been received from them.
 
 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 are 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. We were informed that discrepancies noticed on physical
 verification, as compared to the book records, were not material and
 have been properly dealt with in the books of account.
 
 (iii) Based on the audit procedures applied by us and according to the
 information and explanations given to us, the Company has neither
 granted nor taken loans, secured or unsecured to / from companies,
 firms or other parties covered in the register maintained under Section
 301 of the Companies Act, 1956. Consequently, sub-clause (b), (c), (d),
 (e), (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, and having regard to the explanation that some of the
 items are of a specialized nature, in respect of which suitable
 alternative sources do not exist for obtaining comparative quotations,
 there are 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.
 
 (v) In our opinion and according to the information and explanation
 given to us, there are no contracts and arrangements referred in
 Section 301 of the Companies Act,1956 entered during the year that need
 to be entered in the Register maintained under that Section.
 Accordingly, sub-clause (b) of sub-para (v) of Para 4 of the Order is
 not applicable to the Company for the current year.
 
 (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 and the provisions of section 58A and 58AA or any
 other relevant provisions of the Companies Act, 1956 and the rules
 framed there under with regard to deposits accepted from public.  We
 have been informed that no order has been passed by the Company Law
 Board or National Company Law Tribunal or Reserve Bank of India.
 
 (vii) In our opinion, the company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the cost records maintained by the
 Company in respect of the product, pursuant to the rules made by the
 Central Government, the maintenance of cost records has been prescribed
 under Section 209(1 )(d) of the Companies Act, 1956.We are of the
 opinion that prima facie the prescribed accounts and records have been
 maintained and being made. We have not, however, made a detailed
 examination of these records with a view to determine whether they are
 accurate or complete.
 
 (ix) a) According to the information and explanations given to us and
 on the basis of our examination of the books of account, the Company,
 during the year, has been generally regular in depositing with
 appropriate authorities, undisputed statutory dues, including Provident
 fund, Investor Education and Protection Fund, Income tax, Sales tax,
 Wealth tax, Service tax, Custom duty, Excise duty, Cess and any other
 material statutory dues.
 
 b) According to the information and explanations given to us and the
 basis of our examination of the books of account, no undisputed amounts
 payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax,
 Customs Duty, Excise Duty, Cess were in arrears, as at March 31st,
 2012, for a period of more than six months from the date they became
 payable.
 
 c) According to information and explanation given to us, the dues
 relation to Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service
 Tax, Excise Duty, Cess, which have not been deposited on account of
 disputes with the relevant authorities, have been reflected in the
 table below.
 
 Statute       Forum Pending             Amount        Period to which
                                                       amount relates
                                         Rs./crores
 
              CCCIT (Appeals)             6.50         Various years
                                                       pertaining to
                                                       2005 to 2011
 
 Income Tax   IW                          0.20         2006-07
 
              Total                       6.70
 
              CESTAT                    313.24         Various years
                                                       pertaining to
                                                       1992 to 2010
 Central      Commissioner (Appeals)      1.57         Various years 
                                                       pertaining to
                                                       1998 to 2010
 
 Excise       High Court                  0.12         2005-2006
 
              RA                          1.18         Various years
                                                       pertaining to
                                                       1999 to 2006
 
              Total                     316.12
 
              CESTAT                     64.57         Various years
                                                       pertaining to
                                                       1992 to 2006
 
              Total                      64.57
 
              CCEA                        0.08         Various years 
                                                       pertaining to
                                                       2004 to 2011
 Service 
 Tax          CESTAT                    136.20         Various years
                                                       pertaining to
                                                       2002 to 2010
 
              Total                     136.28
 
              Board of Revenue            1.89         Various years
                                                       pertaining to
                                                       1985 to 1987
 
              STAT                      526.60         Various years
                                                       pertaining to
                                                       1985 to 2008
 
 Sales Tax    High Court                606.66         Various years
                                                       pertaining to
                                                       1979 to 2009
 
              Supreme Court             168.98         Various years
                                                       pertaining to
                                                       2002 to 2007
 
              Commissioner/DCCT/ADC/  6,880.38         Various years
                                                       pertaining to
                                                       1976 to 2011
 
              JCCT/ACCT
 
              Total                   8,183.42
 
              Grand Total             8,707.09      
 
 (x) The company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses during the financial
 year and in the immediately preceding financial year.
 
 (xi) According to the information and explanations given to us the
 Company has not defaulted in repayment of dues to Financial
 Institutions, Banks or debenture holders.
 
 (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, debentures and other securities.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund and or a nidhi/ mutual
 benefit fund/ society. Therefore the provisions of sub-para (xiii) of
 para 4 of the Order are not applicable to the Company.
 
 (xiv) According to the information and explanation given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments. Therefore the provisions of sub-para (xiv) of para 4
 of the Order are not applicable to the Company.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the Company has not given guarantees for loans taken by
 others from banks and financial institutions.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, the term loans taken during the year, prima facie, have
 been applied for the purpose for which they were raised.
 
 (xvii) According to the information and explanations given to us, based
 on an overall examination of the Balance Sheet, funds raised on
 short-term basis have, prima facie, not been used for making long-term
 investments.
 
 (xviii) According to the information and explanations given to us,
 during the year the Company has not made any preferential allotment of
 shares to parties and companies covered in the Register maintained
 under Section 301 of the Companies Act 1956.
 
 (xix) The Company has created securities / charge as per the debenture
 trust deed in respect of debentures issued and outstanding at the year
 end.
 
 (xx) The Company has not raised any money through a public issue during
 the financial year.
 
 (xxi) According to the information and explanations given to us and
 representations obtained from the management and based on our
 examination in the normal course of audit, we report no material fraud
 on or by the Company, has been noticed or reported during the year
 under audit.
 
 For and on behalf of                   For and on behalf of
 
 Om Agarwal& Co.                        B.K. Khare & Co.
 
 Chartered Accountants                  Chartered Accountants
 
 FR No:000971C                          FR No:105102W
 
 K. C. Gupta                            Devdatta Mainkar
 
 Partner                                Partner
 
 Membership No: 072936                  Membership No: 109795
 
 Place   :    New Delhi
 
 Date    :    29th May 2012
Source : Dion Global Solutions Limited
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