Oil and Natural Gas Corporation
BSE: 500312 | NSE: ONGC | ISIN: INE213A01011 | Oil Drilling And Exploration
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| Auditor's Report | Year End : Mar '08 |
1. We have audited the attached Balance Sheet of OIL AND NATURAL GAS
CORPORATION LIMITED (the Company) as at 31 March, 2008, the Profit and
Loss Account and also the Cash Flow Statement for the year ended on
that date, annexed thereto in which are incorporated the Companys
share in the total value of assets, liabilities, expenditure, income
and net profit of 103 blocks under New Exploration Licensing Policy
(NELPs) / Joint Venture (JVs) accounts for exploration and production
out of which 91 NELPs /JVs accounts have been certified by other firms
of Chartered Accountants and remaining 12 NELPs/JVs as certified by the
management (Refer Note 21.1.1 to 21.1.4 of Schedule 28 of the financial
statements). These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with 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 amount and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. We have placed reliance on technical/commercial evaluation by the
management in respect of categorization of wells as exploratory,
development and producing, allocation of cost incurred on them,
depletion of producing properties on the basis of the proved developed
hydrocarbons reserves, liability for abandonment costs, liabilities
under NELP for under performance against agreed Minimum Work Programme
and allocation of depreciation on process platforms to transportation
and facilities.
4. As required by the Statement on the Companies (Auditors Report)
Order, 2003 (as amended) issued by the Central Government of India in
terms of Section 227(4A) of the Companies Act, 1956, we enclose in the
Annexure (read with paragraph 1 above) a statement on the matters
specified in paragraph 4 and 5 of the said Order.
5. Further to our comments referred to in paragraph 4 above we report
as follows:
5.1. We have obtained all the information and explanations which to
the best of our knowledge and belief were necessary for the purposes of
our audit;
5.2. 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
those books;
5.3. The Balance Sheet, Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
5.4. In our opinion, the Profit and Loss Account, the Balance Sheet
and the Cash Flow Statement comply with the accounting standards
referred to in sub-section (3C) of Section 211 of the Companies Act,
1956.
5.5. Disclosure in terms of clause (g) of sub-section (1) of section
274 of the Companies Act, 1956 is not required as per notification
number GSR 829(E) dated 21st October, 2003 issued by the Department of
Company Affairs.
5.6. In our opinion and to the best of our information and according
to the explanations given to us, the said accounts read with notes to
accounts and in particular Note 2 of Schedule 28 in respect of
recognition of Sales Revenue in respect of crude oil and natural gas,
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:
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2008;
b) in the case of the Profit & Loss Account, of the profit of the
Company for the year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure to the auditors report
(Referred to in paragraph A of our report of even date)
1. a) The Company has generally maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
b) We are informed that the fixed assets other than those which are
underground/ submerged/ under joint venture, having substantial value
have been physically verified by the management in phased manner. The
reconciliation of physically verified assets with the book records is
in progress. Discrepancies noticed on physical verification and
consequential adjustments with regard to discrepancies are carried out
on completion of reconciliation. According to the information and
explanations given by the management, in our opinion, the same is not
material.
c) The Company has not disposed off substantial parts of fixed assets
during the year.
2. a) The inventory has been physically verified (excluding inventory
lying with third parties, at some of the site- locations, inventory
with joint ventures and material in transit) during the year by the
management. In our opinion, the frequency of verification is
reasonable.
b) The procedures of physical verification of inventory followed by the
management to the extent verified were generally reasonable and
adequate in relation to the size of the Company and nature of its
business.
c) The Company has generally maintained proper records of inventory
except for recording of consumption at a few of its site- locations.
The discrepancies noticed on verification between the physical stock
and book records were not material having regard to the size of the
operations of the Company. In case where discrepancies noticed on
physical verification have been identified with inventory records,
necessary adjustments have been carried out in the books. In respect of
those cases where the reconciliation is not complete, the management
has stated that the same would be adjusted in due course.
3. The Company has not taken nor granted any loans, secured or
unsecured from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly clauses 4 (iii)(a), (b) (c) and (d) of the Companies
(Auditors Report) Order, 2003 are not applicable to the Company.
4. In our opinion, and according to the information and explanations
given to us, the internal control procedures are generally adequate and
commensurate with the size of the Company and the nature of its
business with regard to purchases of inventory, fixed assets and sale
of goods. During the course of our audit we have not observed any
continuing failure to correct major weakness in internal controls.
5. a) According to the information and explanations given to us, there
is no contract or arrangement referred to in section 301 of the
Companies Act, which are required to be entered in the register
maintained under the section.
b) Accordingly, the provisions of clause 4 v (b) of the Companies
(Auditors Report) Order, 2003 is not applicable to the Company.
6. The Company has not accepted any deposits from the public.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the books of account relating to
materials, labour and other items of cost maintained by the Company
pursuant to the Rule made by the Central Government for the maintenance
of cost records under section 209 (1 )(d) of the Companies Act, 1956
and we are of the opinion that prima facie the prescribed accounts and
records have been made and maintained.
9. a) The Company is generally regular in depositing with appropriate
authorities undisputed statutory dues including Provident Fund,
Investor Education and Protection Fund, Employees State Insurance,
Income Tax, Sales Tax, Service Tax, Wealth Tax, Customs Duty, Excise
Duty, Cess and other material statutory dues applicable to it. There
are no such material outstanding statutory dues accrued in accounts as
of the last date of the financial year concerned for a period of more
than six months from the date they became payable.
b) According to the information and explanations given to us, the
disputed statutory dues are as under:
Name of the statute Nature of the dues Amount
(Rs.in
million)
Income tax Act, 1961 Income tax 38,971.81
Central Excise Act, 1944 Central Excise duty/ 3,195.75
Interest/Penalty
The Customs Act, 1962 Customs duty/ 6,622.59
Penalty/Interest
Oilfields (Regulation & Royalty/Surface 381.43
Development Act, 1948)/ rent/lnterest/Penalty
AP Mines and Geology Act
AP Mineral Bearing Lands Cess 726.96
(Infrastructure) Cess
Oil Industries (Development) Cess/Interest 8.93
Act, 1974
Central Sales Tax Act, 1956 Sales tax/ 2,827.88
and respective States Turnover Tax/
Sales Tax Act Penalty/ Interest
Municipal Corporation of Octroi Duty 66.89
Greater Mumbai Act
(Octroi Rules, 1965)
Assam Specified Land Tax on Crude oil 1,354.36
Taxation Act and Natural Gas
Period to which Forum where dispute
the amount relates is pending
(financial year)
1996-2008 ITAT/ CCIT/ CIT(A), High Court
1981-2008 CEGAT/Director of Central Excise/
Commisioner/Asst. Comm. of Central Excise
1995-2008 Supreme Court/ High Court/
CBEC/Comm. Customs
1992-2008 Director, Mines & Geology/
Dept. of Geology and Mining,
A. P. High Court
2005-2008 Dept.of Geology & Mining,
A. P. High Court
2000-2008 CEGAT/Supdt./Comm.(A)
1977-2008 Supreme Court/High Court/
Tribunal/Asst.Comm/Dy.Comm./
Suptd. of Taxes/Commercial Tax Officer
1977-2008 Supreme Court
2004-2008 Guwahati High Court
10. The Company has no accumulated losses at the end of the current
financial year and has not incurred cash losses either during the year
or during the immediately preceding financial year.
11. The Company has not issued any debentures and not defaulted in
repayment of dues to financial institutions or banks.
12. In our opinion and as per the information and explanation given by
the management, the Company has not granted loans and advances on the
basis of security by way of pledge of shares, debentures and other
securities.
13. In our opinion, the Company is not a chit fund or a nidhi mutual
benefit fund/ society. Accordingly, the provision of clause (xiii) of
the Companies (Auditors Report) Order, 2003 are not applicable to the
Company.
14. In our opinion and as per the information and explanation given by
the management, the Company is not dealing in or trading in shares,
securities, debentures and other investments.
15. In our opinion and as per the information and explanation given by
the management, the terms and conditions on which the Company has given
guarantees for loans taken by others from banks or financial
institutions are not prejudicial to the interest of the Company, since
these guarantees are given for the subsidiary/ company promoted by the
Company.
16. In our opinion, the term loans have been applied for the purpose
for which they were raised.
17. On an overall examination of the balance sheet of the Company, we
report that no funds raised on short terms basis have been used for
long term investment.
18. The Company has not issued any preferential allotment of shares
during the year.
19. The Company has not issued any debentures during the year.
20. The Company has not raised any money by way of public issue during
the year.
21. According to the information and explanations given to us, no
fraud on or by the company which is material in amount and nature has
been noticed or reported during the course of our audit.
For K.K.Soni & Co. For S.C.Ajmera & Co. For Singhi & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
K.K. Soni Arun Sarupria Pradeep Kr. Singhi
Partner (Mem. No. 07737) Partner (Mem. No. 78398) Partner
(Mem.No. 50773)
For P. S. D. & Associates For Padmanabhan Ramani & Ramanujam
Chartered Accountants Chartered Accountants
D.D. Dadhich Padmanabhan R.
Partner (Mem. No. 71909) Partner (Mem. No. 13216)
New Delhi
25th June, 2008
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| Source : Religare Technova | |
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