1. We have audited the attached Balance Sheet of OIL AND NATURAL GAS
CORPORATION LIMITED (the Company) as at 31st March, 2012, the
Statement of Profit and Loss and the Cash Flow Statement for the year
ended on that date, annexed thereto in which incorporated the Company''s
share in the total value of assets, liabilities, expenditure and income
of 139 blocks under New Exploration Licensing Policy (NELPs) / Joint
Venture (JVs) accounts for exploration and production out of which 9
NELPs / JVs accounts have been certified by other firms of Chartered
Accounts and 11 NELP / JVs have been certified by the management in
respect of NELps / JVs operated by other operators (Refer note
no.41.3.1 and 41.3.2 of the financial statements). These financial
statements are the responsibility of the Company''s management. Our
responsibility is to express an opinion on these financial statements
bases 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 well as exploratory,
development and producing, allocation of cost incurred on them,
depletion of producing properties / impairment on the basis of the
proved developed hydrocarbon reserves, liabily for abondonment costs,
liability under NELP and nominated blocks for under-performances
against agreed Minimum Work Programme and allocation of depreciation on
process platforms to transportation and facilities.
4. As required by the Companies (Auditor''s 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 paragrph 1 above) a statement on the matters specified in
paragraphs 4 and 5 of the said order.
5. Further to our comments referred to in paragraph 4 above we report
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
5.2 In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
5.3 The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this report are in agreement with the
books of account.
5.4 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.
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 October 21,2003 issued by the Department of Company
Affairs, Government of India.
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
account, give the information required by the Companies Act, 1956 in
the manner so required and give a true and fairview 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, 2012;
b) In the case of the Statement of Profit and Loss, 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 4 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
b) As per information and explanations given to us, the fixed assets
having substantaial value, other than those which are underground /
submerged / under joint venture have been physically verified by the
management in a phased manner, which in our opinion is reasonable,
having regard to the size of the Company and nature of its business.
The reconcilliation of physically verified assets with the book records
is in progress. Discrepancies noticed on physical verification and
consequential adjustments are carried out on completion of
reconcillation. According to the information and explanations given by
the management and in our opinion, the same is not material.
c) The Company has not disposed off a substantial part of fixed assets
during the year.
2.a) According to the information and explanations given by the
management, the inventory has been physically verified in a phased
manner (excluding inventory lying with third parties, at some of the
site-locations, inventory with joint ventures and intra site material
in transit) during the year by the management. In our opinion, the
frequency of verification is reasonable.
b) In our opinion, the procedures of physical verification of inventory
followed by the management 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.
According to the information and explanations given by the management
and in our opinion, the discrepancies noticed on physical verification
between the physical stock and book records were not material having
regard to the size of the Company and nature of its business. 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 cases where the reconcilliation
is not complete, the management has stated that the effect of the same
on the accounts would be adjusted on completion of reconcilliation.
3.a) The company has granted secured loans to three parties covered in
the register maintained under section 301 of the Companies Act, 1956.
The amount outstanding at the year end is Rs.0.35 million and the
maximum amount outstanding at any time during the year was Rs.0.92
b) The rate of interest and other terms and conditions of the loans
granted are not prima facie prejudicial to the interest of the Company.
c) The payment of principal amount and interest are regular.
d) There is no overdue amount in respect of loans granted to the
parties listed in the register maintained under Section 301 of the
Companies Act, 1956.
e) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956. And consequently, the
reporting requirements of clause (iii) (f) and (iii) (g) of paragraph 4
of the Companies (Auditor''s Report) Order, 2003 are not applicable.
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 and services. During the course of our audit we have not
observed any continuing failure to correct major weaknesses in internal
5.a) In our opinion and according to the information and explanations
given to us, there is no contract or arrangement that needs to be
entered in the register required to be maintained in pursuance of
section 301 of the Companies Act, 1956.
b) Accordingly, the reporting requirement of clause (v) (b) of
paragraph 4 of the Companies (Auditor''s Report) Order, 2003 is not
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 cost records 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. However, we have not made a
detailed examination of the cost records with the view to determine
whether they are accurate or complete.
9.a) According to records of the Company, undisputed statutory dues
including provident Fund, Investor Education and Protection Fund,
Employee''s State Insurance, Income Tax, Sales Tax, Service Tax, Wealth
Tax, Custom Duty, Excise Duty, Cess and other statutory dues have been
generally regularly deposited with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of the aforesaid dues were
outstanding as at March 31,2012 for a period more than six months from
the date of becoming 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
Income tax Act,1961 Income Tax/ 7,321.80
Central Excise Act,1944 Central Excise duty/ 1,195.96
Interest / Penalty 1,338.41
The Customs Act,1962 Customs Duty/ 5,067.88
Penalty / Interest
Oilfields (Regulation & Royalty/ 66,123.54
Development Act, 1948)/ Surface rent/
AP Mines and Geology Act Interest / Penaity
AP Mineral Bearing Lands Cess 1,694.82
Oil Industries Cess / Interest 6.57
Central Sales Tax Act,1956 Sales tax/ 2,960.23
and respective States'' Turnover Tax /
Sales Tax Act Penalty / Interest
Municipal Corporation Octroi Duty 66.89
Greater Mumbai Act
(Octroi Rules, 1965)
Assam Specified Land Tax on Crude oil and 2,860.57
Taxation Act Natural Gas
Service Tax Service Tax / Cess 3,513.00
Name of the Statute Period to which Forum where dispute
the amount relates is pending
Income tax Act,1961 1991-2012 Revisionary Authority
2004-2012 Appellate Authority
1995-2012 High Court
1984-2012 Supreme Court
Central Excise Act,1944 2002-2012 Commissioner of Central
Excise, Customs &
2005-2012 Central Board of Excise
2007-2012 Custom, Excise and
service Tax Appelate
2011-2012 Directorate General of
1984-2012 Supreme Court
The Customs Act,1962 1995-2012 Commissioner of Central
Excise, Customs &
2007-2012 Custom Excise and
Service Tax Appellate
Oilfields (Regulation & 1992-2012 Dept.of Geology and
Development Act, 1948)/ Mining.AP High Court
AP Mines and Geology Act
AP Mineral Bearing Lands
(infrastructure) Cell 2005-2012 Deot. of Geology and
Mining.AP High Court
(Development) Act,1974 2005-2012 Commissioner of Central
Excise, Customs &
Central Sales Tax Act, 2002-2012 Demand Notice
1956 and respective 2001-2012 Deputy Commissioner
States'' Sales Tax Act 1999-2012 Joint Commissioner/
1994-2012 Appellate Tribunal
1977-2012 High Cout
Municipal Corporation 1978-2012 Supreme Court
Greater Mumbai Act
(Octroi Rules, 1965)
Assam Specified Land 2004-2012 High Court
Service Tax 2004-2012 Commissioner of Central
Excise, Customs &
2004-2012 Commissioner of Central
Excise & Customs
10. The Company does not have accumulated losses at the end of the
Curent 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 has not defaulted in
repayment of dues to financial institutions or banks.
12. In our opinion and 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
13. The Company is not a chit fund or a nidhi, mutual benefit fund /
society. Accordingly, the reporting requirements of clause (xiii) of
paragraph 4 of the Companies (Auditor''s Report) Order, 2003 are not
applicable to the Company.
14. In our opinion and according to the information and explanations
given to us, the Company is not dealing or trading in Shares,
securities, debentures and other investments.
15. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the company has given
guarantees for loans taken by others from banks or financial
institutions are not prima facie prejudicial to the interest of the
16. In our opinion, the term loans have been applied for the purpose
for which they were raised.
17. According to the information and explanations given to us and 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
18. The Company has not made any preferential allotment of shares
during the year.
19. The Company has not issued any debentures.
20. The Company has not raised any money by way of public issue during
21. According to the information and explanations given to us, no fraud
on or by the Company has been noticed or reported during the year.
For Kalyanlwalla & Mistry For Varma & Varma For S Bhandari & Co.
Charterd Accountants Chartered Accountants Charterd Accountants
Firm Reg No.104607W Firm Reg No.004532S Firm Reg No.000560C
(Emin K Irani) (K M Submarni) (P P pareet)
Parter (Mem No.035646) Partner (Mem No.015707) Partner
For Ray & Ray For Mehra Goel & Co.,
Chartered Accountants Chartered Accounts
Firm Reg No.301072E Firm Reg No.000517N
(B K Ghosh) (R K Mehra)
Partner (Mem No.051028) Partner (Mem No. 006102)