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Auditor Report of Oil And Natural Gas Corporation Ltd.

Mar 31, 2022

To the Members of Oil and Natural Gas Corporation Limited Report on the Audit of the Standalone Financial Statements1. Opinion

We have audited the accompanying Standalone Financial Statements of Oil and Natural Gas Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2022, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the Standalone Financial Statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the Standalone Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone 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 in conformity with the Indian Accounting Standards specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2022, and its profit (including other comprehensive income), the changes in equity and its cash flows for the year ended on that date.

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 are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.

3. Emphasis of Matter

We draw attention to following Notes to the Standalone Financial Statements:-

i. Note No. 10.3, which explains that certain exploratory fields have been identified by DGH, MoPNG, GOI for bidding under DSF III, after considering the value of such fields as Nil. As these fields need to be handed over to the successful bidders, pending finalization of mechanism of recovery of carrying cost of these fields, an impairment provision of '' 12,549.06 million has been made during the year towards carrying value of the land and exploratory wells in these fields.

ii. Note No. 38.1, which states that pursuant to Section 115BAA of the Income Tax Act, 1961, during the current year, the Company has decided to avail the option of lower tax rate with effect from the financial year 2020-21. Accordingly, the Company has recognised provision for tax expenses in the financial statements for the year ended March 31, 2022 and re-measured its net Deferred Tax liabilities on the basis of the provision prescribed in the said section. The net impact due to availing the said option has resulted in decrease in deferred tax by '' 90,905.15 million (of which '' (-) 1,382.25 million has been accounted in Other Comprehensive

Income) and decrease in current tax by '' 28,019.77 million (including '' 1,639.72 million relating to earlier years).

iii. Note No. 48.1.1(d), wherein it is stated that Directorate General of Hydrocarbons (DGH) had raised a demand on all the JV partners under the Production Sharing Contract with respect to Panna-Mukta and Mid and South Tapti contract areas (PMT JV), being BG Exploration and Production India Limited (BGEPIL) and Reliance Industries Limited (RIL) (together "the Claimants") and the Company (all three together referred to as "Contractors"), towards differential GOI share of Profit Petroleum and Royalty alleged to be payable by contractors pursuant to Government’s interpretation of the Final Partial Award of Arbitral Tribunal (40% share of the Company amounting to USD 1624.05 million equivalent to '' 123,022 million, including interest upto 30th November, 2016). Subsequent to Tribunal Orders dated October 12, 2016, DGH vide letter dated May 25, 2017, June 4, 2018 and January 14, 2019 had asked contractor for re-casting of accounts of the PMT JV and for remitting the respective PI share of balance dues including interest till the date of remittance. As the Company is not a party to the arbitration, the details of the proceedings of arbitration and copy of the order of London High Court are not available with the company. The Company has responded that The English High Court has delivered its final verdict on May 2, 2018 following which the Arbitral Tribunal re-considered some of its earlier findings from the 2016 FPA (Revised Award); The Government of India and JV Partners have challenged parts of the Revised Award before English court. On February 12, 2020, the English Court passed a verdict favouring the challenges made by BGEPIL and RIL and also remitted the matter in the Revised Award back to Arbitral Tribunal for reconsideration. In January 2021, the Tribunal issued a verdict favouring BGEPIL/ RIL on the remitted matter, which has been challenged by the GOI before the English Court. Pending finalization of the decision of the Arbitral Tribunal, the Company has indicated in their letters to DGH that the final recasting of the accounts is premature and the issues raised by DGH may be kept in abeyance and therefore no provision for the same has been considered necessary and has been considered as contingent liability.

iv. Note No. 48.1(b), with respect to ongoing disputes/demands raised on various work centres of the company under Service Tax (ST) and Goods & Service Tax (GST) in respect of ST and GST on Royalty levied on Crude Oil and Natural Gas. Based on the legal opinion, the company has disputed such levies and contesting the same at various forums. The estimated amounts under disputes as worked out towards ST and GST (including interest and penalty upto March 31, 2022) of '' 40,172.56 million and '' 1,02,731.94 million respectively (Total '' 1,42,904.50 million), has been considered as contingent liability. As a measure of abundant caution, the company has deposited ST and GST along with interest under protest amounting to '' 13,524.39 million and '' 74,043.48 million respectively (Total '' 87,567.87 million).

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

4. Key Audit Matters

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

Key Audit Matter

How our audit addressed the matter

Evaluation of adequacy of provision for impairment for tangible and intangible assets

(Refer Note 47 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-inProgress, 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 regulatory guidelines including notified gas prices, climate change and the global energy transition.

The management’s assumptions for prices of oil and gas in future are highly 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 with reference to 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.

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.

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 (including the relevant regulatory guidelines) 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 Mining Lease (ML)/ Petroleum Mining Lease (PML) shall be re-granted, wherever expired/ is expiring in near future.

Key Audit Matter

How our audit addressed the matter

Estimation of Decommissioning liability

(Refer Note 24 to the Standalone Financial Statements)

The Company has an obligation to restore and rehabilitate the Asset/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 fulfil this obligation.

The provision is based upon current cost estimates and has been determined on a discounted basis with reference to current legal requirements and technology. 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.

Our audit procedures included the following:

Evaluated the approach adopted by the management in determining the expected costs of decommissioning.

Identified the cost assumptions used that have the most significant impact on the provisions and tested the appropriateness of these assumptions.

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.

We have relied upon the technical assessment with respect to the Production Profile as estimated by the management based on which the Terminal year of the Asset /fields for decommissioning has been estimated.

We have relied upon management’s assessment that the Mining Lease (ML) / Petroleum Mining Lease (PML) would be regranted, till the terminal year of the field as estimated by the management.

Relied on the judgments of the internal/ external experts for the purpose of technical /commercial evaluation.

Assessed the appropriateness of the disclosures made in the financial statements.

Litigations and Claims

(Refer Note 48 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 or disclosed as a contingent liability in the Standalone Financial Statements or is considered as remote, is dependent on a number of significant assumptions and judgments made by the management. 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 because the estimates on which these amounts are based involve a significant degree of management judgment, including accounting estimates that involves high estimation uncertainty.

Our audit procedures included the following:

Understood Management’s internal instructions, process and control for determining and estimating the tax litigations, other litigations and claims and its appropriate accounting and/or disclosure.

Tested key controls surrounding such litigations.

Discussed pending matters with the Company’s personnel with respect to status of cases of litigation and claims.

Assessed management’s conclusions through understanding precedents set in similar cases, reviewed the recommendations of the internal committee specially formed by the management, placed reliance upon the expert opinions, wherever obtained by the management.

We have assessed the adequacy and appropriateness of presentation and disclosure of the Contingent liabilities in the Standalone Financial Statements.

Key Audit Matter

How our audit addressed the matter

Information Technology and General Controls

In assessing the integrity of the IT systems relevant for financial

The Company is dependent on its Information Technology ("IT") systems for processing and recording its transactions, including financial reporting processes.

reporting, we obtained an understanding of the IT infrastructure and IT systems relevant to the Company’s financial reporting process for evaluation and testing of relevant IT general controls and IT application controls (‘SAP’), through inquiries with the management

Appropriate IT general controls and application controls are

and review of the reports of the Information system control audits

required to ensure that such IT systems are able to process the

done by a third party.

data, as required, completely, accurately and consistently for reliable financial reporting.

Access rights were tested over applications, operating system, on a sample basis, which are relied upon for financial reporting. We

IT application controls are critical to ensure that changes to

further tested segregation of duties, including preventive controls

applications / files / information and underlying data are made in an

to ensure that access to change applications, the operating system

appropriate manner and under controlled environment. Appropriate

or databases in the production environment were granted only to

controls contribute to mitigating the risk of potential fraud or errors

authorized personnel.

as a result of changes to applications and data.

Our audit included making necessary inquiries with the management,

MIS reports, relevant for financial reporting, have been developed

scrutiny of the report on ‘IT audit and security’ by a third-party

and tested through internal and outsourced support arrangements

expert, access security (including controls over privileged access),

and ultimately authenticated by the users.

segregation of duties and delegation of authority.

On account of the pervasive use of its IT systems and related

In response to the above IT requirements, enhancement of

control environment on the Company’s financial reporting process,

functionalities in IT System made during the year, we performed

the testing of the general computer controls of the IT systems used

the following:

in financial reporting has been considered to be a Key Audit Matter.

- tested controls and performed additional substantive procedures of key general ledger account reconciliations.

- observed that training sessions are also provided to users, to enable full utilization of SAP functionalities.

We also tested key automated and manual business cycle controls and logic for the reports generated through the IT infrastructure including those relating to MIS, that were relevant for financial reporting or were used in the exercise of internal financial controls with reference to financial statement, including testing of the compensating controls or alternate procedures to assess whether there were any unaddressed IT risks that would materiality impact the Standalone Financial Statements.

5. Other Matters

i. We have placed reliance on technical/commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry well, allocation of cost incurred on them, production profile, proved (developed and undeveloped)/ probable hydrocarbon reserves, and depletion thereof on Oil and Gas Assets, impairment, liability for decommissioning costs, evaluation and timelines for completion of projects under progress, liability for NELP and nominated blocks for under performance against agreed Minimum Work Programme.

ii. As mentioned in Note No. 46.1.1, the Standalone Financial Statements include the Company’s share in the total value of assets, liabilities, expenditure and income of 166 blocks under New Exploration Licensing Policy (NELP)/ Hydrocarbon Exploration and Licensing Policy (HELP) / Discovered Small Fields (DSFs)/ Open Acreage Licensing Policy (OALPs) and Joint Operations (JO) accounts for exploration and production out of which:

a. 9 NELPs/ HELPs/ JOs accounts have been certified by other Chartered Accountants. In respect of these 9 NELPs/ HELPs/ JOs, Standalone Financial Statements include proportionate share in assets and liabilities as on March 31, 2022 amounting to Rs 88,362.73 million and Rs 52,020.32 million respectively and revenue and profit including other comprehensive Income for the year ended March 31,2022 amounting to Rs 98,583.94 million and Rs 15,236.73 million respectively. Our opinion is based solely on the certificate of the other Chartered Accountants.

b. 12 NELPs / HELPs/ JOs have been certified by the management in respect of NELPs / HELPs/ JOs operated by other operators. In respect of these 12 NELPs / HELPs/ JOs, Standalone Financial Statements include proportionate share in assets and liabilities as on March 31, 2022 amounting to '' 9,566.20 million and '' 8,602.73 million respectively and revenue and profit/(loss) including other comprehensive Income for the year ended March 31, 2022 amounting to '' 38.31 million and '' (708.40) million respectively. Our opinion is based solely on management certified accounts.

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

6. Information Other than the Standalone Financial Statements and Auditor’s Report Thereon

The Company’s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Board’s Report including Annexures to Board’s Report, Management Discussion and Analysis, Business Responsibility Report and Report on Corporate Governance but does not include the Standalone Financial Statements and our auditors’ report thereon. The above-referred information is expected to be made available to us after the date of this audit report.

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

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions necessitated by the circumstances and the applicable laws and regulations.

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

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate Internal Financial Controls, that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company’s financial reporting process.

8. Auditor’s Responsibilities for the Audit of Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due 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 audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.

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

• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error,

design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate Internal Financial Controls with reference to financial statements in place and the operating effectiveness of such controls.

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

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

• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (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 Financial Statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Directions u/s 143(5) of the Act for year 2021-22

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. Whether such cases are properly accounted for? (In case, lender is a Government Company, then this direction is also applicable for statutory auditor of lender Company)

Loan/Debt where Company is borrower: Based on the audit procedures carried out and as per the information and explanations given to us, there were no cases of restructuring or waivers / write-off of debts/ loans/ interest etc. by any lender, due to the company’s inability to repay the loan during the FY 2021-22.

Loan/Debt where Company is lender: Based on the audit procedures carried out and as per the information and explanations given to us, there were no cases of restructuring or waivers / write-off of debts/ loans/ interest etc. during the FY 2021-22 with regard to amounts lent by the company to the other parties.

3) Whether funds (Grant/ subsidy etc.) 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 funds (Grant/ subsidy) received/ receivable for specific schemes from Central/ State agencies were properly accounted for/ utilized as per its term and conditions.


9. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in “Annexure-1” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

3. As required by Section 143(3) of the Act, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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 those books;

c. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and Cash Flows dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended;

e. As per Notification number G.S.R. 463(E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 164(2) of the Act regarding the disqualifications of Directors is not applicable to the Company, since it is a Government Company;

f. With respect to the adequacy of the Internal Financial Controls with reference to Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure 2”;

g. As per Notification number G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act regarding remuneration to director is not applicable to the Company, since it is a Government Company; and

h. With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

2. Based on verification of books of accounts of the Company and according to information and explanations given to us, we give below a report on the Directions issued by the Comptroller and Auditor General of India in terms of Section 143(5) of the Act:

i. The Company has disclosed the impact of pending litigations as at 31.03.2022 on its financial position in its Standalone Financial Statements - Refer Note 48.1.1 to the Standalone Financial Statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses- Refer Note 55 to the Standalone Financial Statements;

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

iv. (a) The Management has represented that, to the best of its knowledge and belief, as disclosed in Note 45.2 to the Standalone Financial Statements, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The Management has represented, that, to the best of its knowledge and belief, as disclosed in Note 45.2 to the Standalone Financial Statements, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate

Beneficiaries; and

(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. (a) The final dividend proposed for the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act.

(b) The interim dividend declared and paid by the Company during the year is in accordance with Section 123 of the Act.

(c) As stated in Note 21.4 to the Standalone Financial Statements, the Board of Directors of the Company has proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

For G M Kapadia & Co. For R Gopal & Associates For SARC & ASSOCIATES

Chartered Accountants Chartered Accountants Chartered Accountants

Firm Reg. No: 104767W Firm Reg. No: 000846C Firm Reg. No.: 006085N

Sd/- Sd/- Sd/-

(Abhishek Singh) (Sandeep Kumar Sawaria) (Pankaj Sharma)

Partner (M. No. 407459) Partner (M. No. 061771) Partner (M.No. 086433)

UDIN: 22407549AJUWOU9423 UDIN: 22061771AJUWHF5415 UDIN: 22086433AJVAHY9049

For Kalani & Co.Chartered Accountants For M/s R.G.N. Price & Co. For S. Bhandari & Co.

Firm Reg. No.: 000722C Chartered Accountants Chartered Accountants

Firm Reg. No.: 002785S Firm Reg. No.: 000560C

Sd/-

(Vikas Gupta) Sd/- Sd/-

Partner (M.No. 077076) (G Surendranath Rao) (Sudha Shetty)

UDIN: 22077076AJUXJK4069 Partner (M.No. 022693) Partner (M.No. 047684)

UDIN: 22022693AJUYOP2074 UDIN: 22047684AJUWQP3257

New Delhi 28 May 2022


Mar 31, 2019

Independent 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 Oil and Natural Gas Corporation Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 in conformity with the Indian Accounting Standards specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (''Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2019, and its profit (including other comprehensive income), the changes in equity and its cash flows for the year ended on that date.

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 are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.

3. Emphasis of Matter

We draw attention to Note 48.1.1(c) of the standalone financial statements, wherein it is stated that Directorate General of Hydrocarbons (DGH) had raised a demand on all the JV partners under the Production Sharing Contract with respect to Panna-Mukta and Mid and South Tapti contract areas (PMT JV), being BG Exploration and Production India Limited (BGEPIL) and Reliance Industries Limited (RIL) (together "the Claimants") and the Company towards differential GOI share of Profit Petroleum and Royalty alleged to be payable by contractor pursuant to Government''s interpretation of the Final Partial Award (40% share of the Company amounting to USD 1624.05 million equivalent to Rs.112,400.50 million, including interest upto 30th November, 2016). Subsequent to London High Court Orders dated 16th April, 2018 and 2nd May, 2018, DGH vide letter dated 4th May, 2018, 15th May, 2018 and 4th June, 2018 had asked for re-casting of accounts of the PMT JV and for remitting the respective PI share of balance dues including interest till the date of remittance. As the Company is not a party to the arbitration, the details of the proceedings of arbitration and copy of the order of London High Court are not available with the Company. The Company has responded that as of now, neither the Arbitral Tribunal nor the London High Court has passed any order or quantified any amount due and payable by the Company and in the circumstances; the demand of DGH from the Company for any sum or interest thereon is premature and not justified. In the Company''s view, pending final quantification of liabilities by the Arbitration Tribunal, it is not liable to implement the Final Partial Award (FPA) being pre-mature and therefore no provision for the same has been considered necessary and the same has been considered as contingent liability.

Our opinion on the standalone financial statements is not modified in respect of the above matter.

4. Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of these standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report:

Key Audit Matter

How our audit addressed the matter

Evaluation of adequacy of provision for impairment for tangible and intangible assets (Refer

Our audit procedures included the following:

Note 47 to the standalone financial statements)

Management has assessed whether any provision needs to be recognised on account of impairment of tangible and intangible assets.

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.

The Company reviews the carrying amount of its tangible

We performed testing of the mathematical accuracy of

and intangible assets (Oil and Gas Assets, Development Wells in Progress (DWIP), Property, Plant & Equipment (including Capital Works-in- Progress) 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.

the cash flow models and validated the appropriateness of the related disclosures.

We evaluated management''s assessment whether any indicators of impairment existed by comparing the recoverable amount to the carrying amounts of respective CGUs in the books of accounts.

The determination of recoverable amount, being the higher of fair value less costs to sell and value- in-use, requires judgement on the part of management.

In case of exploration and evaluation assets, based on management judgment, 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.

We have considered the measurement of impairment as Key Audit Matter as it requires significant management judgment.

Estimation of Decommissioning liability (Refer Note 24.1 to the standalone financial statements)

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.

The provision is based upon current cost estimates and has been determined on a discounted basis with reference to current legal requirements and technology. 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.

Our audit procedures included the following:

Evaluated the approach adopted by the management in determining the expected costs of decommissioning.

Identified the cost assumptions used that have the most significant impact on the provisions and tested the appropriateness of these assumptions.

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.

Relied on the judgments of the internal 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.

Litigations and Claims (Refer Note 48 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 or considered as remote in the standalone financial statements 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.

We have assessed the appropriateness of presentation of the most significant contingent liabilities in the standalone financial statements

5. Other Matters

i. We have placed reliance on technical/ commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry well, allocation of cost incurred on them, proved (developed and undeveloped)/ probable hydrocarbon reserves and depletion thereof on Oil and Gas Assets, impairment, liability for decommissioning costs, liability for NELP and nominated blocks for under performance against agreed Minimum Work Programme.

ii. The standalone financial statements include the Company''s share in the total value of assets, liabilities, expenditure and income of 137 blocks under New Exploration Licensing Policy (NELP)/ Hydrocarbon Exploration and Licensing Policy (HELP) / Joint Operations (JO) accounts for exploration and production out of which:

a. 4 NELPs/ JOs accounts have been certified by other Chartered Accountants. In respect of these 4 NELPs/ JOs, standalone financial statements include proportionate share in assets and liabilities as on 31st March, 2019 amounting to Rs.26,142.08 million and Rs.23,736.94 million respectively and revenue and profit including other comprehensive Income for the year ended 31st March, 2019 amounting to Rs.16,963.56 million and Rs.6,697.93 million respectively, Our opinion is based solely on the certificate of the other Chartered Accountants

b. 13 NELPs / JOs have been certified by the management in respect of NELPs / JOs operated by other operators. In respect of these 13 NELPs / JOs, standalone financial statements include proportionate share in assets and liabilities as on 31st March, 2019 amounting to Rs.87,590.75 million and Rs.44,793.78 million respectively and revenue and profit including other comprehensive Income for the year ended 31st March, 2019 amounting to Rs.104,402.84 million and Rs.27,399.63 million respectively,

Our opinion is based solely on management certified accounts.

iii. The standalone financial statements of the Company for the year ended 31st March, 2018 were audited by joint auditors of the Company two of which are the predecessor audit firms, and have expressed an unmodified opinion dated May 30, 2018 on such financial statements.

Our opinion on the standalone financial statements is not modified in respect of above matters.

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

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Board''s Report including Annexures to Board''s Report, Management Discussion and Analysis, Business Responsibility Report and Report on Corporate Governance but does not include the standalone financial statements and our auditors'' report thereon. The above-referred information is expected to be made available to us after the date of this audit report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions necessitated by the circumstances and the applicable laws and regulations.

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

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

8. Auditor''s Responsibilities for the Audit of Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due 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 audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

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

Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matters or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication

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" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. Based on verification of books of accounts of the Company and according to information and explanations given to us, we give below a report on the Directions issued by the Comptroller and Auditor General of India in terms of Section 143(5) of the Act:

Directions

Replies

Whether the Company has system in place to process all the accounting transactions through IT system? If yes, the implication 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 verification carried out by us during the course of our audit and based on the information and explanations given to us, we have not come across any instance having significant implications on the integrity of accounts.

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;

There are no such cases made by a lender to the company due to its inability to repay the loan during the year

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.

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.

3. As required by Section 143(3) of the Act, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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 those books;

c. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Changes in Equity and Cash flows dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act;

e. As per notification number G.S.R. 463(E) dated 5th June, 2015 issued by Ministry of Corporate

Affairs, section 164(2) of the Act regarding the disqualifications of Directors is not applicable to the Company, since it is a Government Company;

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

g. As per notification number G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act regarding remuneration to director is not applicable to the Company, since it is a Government Company; and

h. with respect to the other matters to be included in the Auditors'' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 48.1.1 to the standalone financial statements;

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses- Refer Note 54 to the standalone financial statements;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

For K C. Mehta & Co.

For PKF Sridhar & Santhanam LLP

For Dass Gupta & Associates

Chartered Accountants

Chartered Accountants

Chartered Accountants

Firm Reg.No. l06237W

Firm Reg. No. 003990S/S200018

Firm Reg. No. 000112N

Sd/-

Sd/-

Sd/-

Vishal P. Doshi

V. Kothandaraman

Nitesh Goel

Partner (M.No. 101533)

Partner (M.No. 025973)

Partner (M.No. 542071)

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/-

Nikhil K. Agra walla

Rajen Ashar

Sunil Kumar Agarwal

Partner (M.No. 157955)

Partner (M.No. 048243)

Partner (M.No. 093209)

New Delhi

30th May, 2019

Annexure -1 to the Auditors'' Report

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

i. a. The Company has generally maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. As per the information and explanations given to us and on the basis of our examination of the records of the Company, the fixed assets having substantial value, other than those which are underground/ submerged/ under joint operations have been physically verified by the management in a phased manner, which in our opinion is reasonable, having regard to the size of Company and nature of its business. The reconciliation of physically verified assets with the book records is in progress. Discrepancies noticed on the physical verification and consequential adjustments are carried out on completion of reconciliation. According to information and explanations given by the management and in our opinion, the same are not material.

c. On the basis of the information to the extent compiled by the Company pending the reconciliation of the available records with the books of account and considering the voluminous nature and various locations, we report that the title/lease deeds of immovable properties are held in the name of Company except for the following 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

13

501.70

304.56

Free hold land

3

58.17

58.17

Building

6

154.92

54.34

Total

22

714.79

417.07

ii. According to the information and explanations given iv. to us, the inventory has been physically verified in phased manner at reasonable intervals (excluding inventory lying with third parties, inventory under joint operations and material in transit) during the year by the management which did not reveal any material discrepancies.

iii. The Company has not granted loans, secured or v. unsecured to any companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act.

In our opinion and according to the information and explanations given to us, the Company has not advanced loans to directors / to a Company in which the Director is interested to which provisions of section 185 of the Act apply. The provisions of section 186 of the Act, in our opinion, are not applicable to the Company.

In our opinion and according to information and explanations given to us, the Company has not accepted any deposits as per the provisions of the Act.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub section(l) of section 148 of the Act 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.

vii. a. According to records of the Company, undisputed statutory dues including Provident Fund, Income

Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Goods and Service Tax, Cess and other statutory dues have generally been 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 31st March, 2019 for a period more than six months from the date of becoming payable.

b. According to the information and explanations given to us, there were no dues in respect of Income Tax, Duty of Excise, Duty of Customs, Sales Tax, Service Tax, Value Added Tax and Goods and Service Tax which have 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

Central Excise Act, 1944

Commissioner

2015-17; 2018-19

16.37

13.02

3.35

Custom, Excise and Service Tax Appellate Tribunal

2001-09; 2011-15

1,207.91

2.75

1,205.16

Hon. High Court

1996-97; 2007-14; 2015-16

383.77

4.32

379.45

Hon. Supreme Court

2000-01

1,176.60

-

1,176.60

Total (A)

2,784.65

20.09

2,764.56

The Customs Act, 1962

Commissioner

1987-88

331.32

-

331.32

Custom, Excise and Service Tax Appellate Tribunal

2007-08; 2010-11

5.00

1.00

4.00

Hon. High Court

2013

463.93

-

463.93

Total (B)

800.25

1.00

799.25

Income Tax Act 1961

Commissioner/ (Appeals) and Additional Commissioner

2006-15

81,243.04

75,896.49

5,346.55

Income Tax Appellate Tribunal

2007-12; 2018-19

37,661.51

37,608.91

52.60

Hon High Court

1994-95; 2000-01

1,127.76

1,118.85

8.91

Total (C)

1,20,032.31

1,14,624.25

5,408.06

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

Hon High Court

2017-18; 2018-19

37,956.78

28,065.77

9,891.01

Total (D)

37,956.78

28,065.77

9,891.01

Central Sales Tax Act,1956 and Respective States'' Sales Tax Acts

Commissioner/ Joint Commissioner/ Commissioner-Appeals/ Joint Commissioner-Appeals

2000-02; 2005-06; 2007-08; 2009-13; 2014-15

4,924.30

21.25

4,903.05

Appellate Tribunal/ First Appellate Authority

1993-94; 1998-2000; 2001-07; 2011-13

8,349.43

66.61

8,282.82

Hon. High Court

1978-79; 1992-95; 2006-07; 2011-13

51.77

26.48

25.29

Hon. Supreme Court

2002-13; 2016-17

11,782.60

623.96

11,158.64

Total (E)

25,108.10

738.30

24,369.80

Service Tax

Commissioner/ (Appeals), Joint Comm., Additional Comm. of Custom, Excise and Service Tax

2004-05; 2006-13; 2015-17

7,926.93

5.34

7,921.59

Custom, Excise and Service Tax Appellate Tribunal/ First Appellate Authority

2003-15; 2016-19

40,345.36

13,751.02

26,594.34

Hon. High Court

2004-07; 2012-13; 2015-17

222.05

2.56

219.49

Hon. Supreme Court

2015-16

2.53

0.37

2.16

Total (F)

48,496.87

13,759.29

34,737.58

Grand Total (A B C D E F)

2,35,178.96

1,57,208.70

77,970.26

viii. The Company has not defaulted in repayment of dues to banks. The Company has not issued any debentures and has not borrowed any amount from financial institutions or government.

ix. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised. The Company has not raised any money by way of initial public offer or further public offer.

x. According to the information and explanations given to us, no material fraud on the Company by its officers or employees or by the Company has been noticed or reported during the year.

xi. As per notification number G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act as regards the managerial remuneration is not applicable to the Company, since it is a Government Company.

xii. In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.

xiii. According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013, where applicable and the details have been disclosed in the notes to the standalone financial statements, as required by the applicable Indian accounting standards.

xiv. According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

xv. According to the information and explanations given by the management, the Company has not entered into any non-cash transactions specified under section 192 of the Act with directors or persons connected with him.

xvi. In our opinion, the Company is not required to register under section 45-IA of the Reserve Bank of India Act 1934.

Signed and dated by the Auditors of the Company at New Delhi as at Page No. 177.

Annexure - 2 to Independent Auditors'' Report

(Referred to in paragraph 9 (3) (f) under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

Report on the Internal Financial Controls with reference to 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 to financial statements of Oil and Natural Gas Corporation Limited ("the Company") as of 31st March, 2019 in conjunction with our audit of the standalone financial 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 and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Act, to the extent

applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls with reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A Company''s internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A Company''s internal financial control with reference to financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company''s assets that could have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls with reference to financial statements

Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management, override of controls, material misstatements due to error

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls with reference to financial statements and such internal financial controls with reference to standalone financial statements were operating effectively as at 31st March, 2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. Signed and dated by the Auditors of the Company at New Delhi as at Page No. 177.


Mar 31, 2018

Independent Auditors' Report

To the Members of Oil and Natural Gas Corporation Limited 1.    Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Oil and Natural Gas Corporation Limited (‘the Company'), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information.

2.    Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditors’ Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Board of Directors as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

4.    Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the financial position of the Company as at 31st March, 2018, and its profit, other comprehensive income, cash flows and the changes in equity for the year ended on that date.

5.    Emphasis of Matter

We draw attention to Note 48.1.1(c) of the standalone Ind AS financial statements, wherein it is stated that during the year, Directorate General of Hydrocarbons (DGH) has raised a demand on all the JV partners of Panna-Mukta and Mid and South Tapti Fields JV (PMT), being BG Exploration and Production India Limited (BGEPIL) and Reliance Industries Limited (RIL) (together "the Claimants”) and the Company and the differential GOI share of Profit Petroleum and Royalty alleged to be payable by contractor pursuant to Government's interpretation of the Final Partial Award (40% share of the Company amounting to US$ 1,574.76 million equivalent to '102,233.41 millions including interest up to November 30, 2016). Subsequent to London High Court Orders dated April 16, 2018 and May 2, 2018, DGH vide letter dated May 4, 2018 and May 15, 2018 has asked for re- casting of accounts of the PMT JV and for remitting the respective PI share of balance dues including interest till the date of remittance. As the Company is not a party to the arbitration, the details of the proceedings of arbitration and copy of order of London High Court are not available with the Company. The Company has responded that as of now, neither the Arbitral Tribunal nor the London High Court has passed any order or quantified any amount due and payable by the Company and in the circumstances, the demand of DGH from the Company for any sum or interest thereon is premature and not justified. In the Company's view, pending final quantification of liabilities by the Arbitration Tribunal, it is not liable to implement the Final Partial Award (FPA) being pre-mature and therefore no provision for the same has been considered necessary and the same has been considered as contingent liability.

Our opinion is not modified in respect of this matter.

6. Other Matters

i.    The standalone Ind AS financial statements include the Company's share in the total value of assets, liabilities, expenditure and income of 136 blocks under New Exploration Licensing Policy (NELP) / Joint Operations (JOs) accounts for exploration and production out of which 3 NELP / JOs accounts have been certified by other Chartered Accountants and 11 NELP / JOs have been certified by the management in respect of NELP / JOs operated by other operators. In respect of these 11 NELP/ JOs, Ind AS financial statements include proportionate share in assets and liabilities as on 31st March, 2018 amounting to Rs,74,914.29 millions and Rs,54,785.18 millions respectively and revenue and profit including other comprehensive Income for the year ended 31st March, 2018 amounting to Rs,82,340.43 millions and Rs,16,375.29 millions respectively, Our opinion is based solely on the certificate of the other Chartered Accountants and management certified accounts.

ii.    We have placed reliance on technical/ commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry well, allocation of cost incurred on them, proved (developed and undeveloped) hydrocarbon reserves and depletion thereof on Oil and Gas Assets, impairment, liability for decommissioning costs, liability for NELP and nominated blocks for under performance against agreed Minimum Work Programme.

Our opinion is not modified in respect of these matters.

7. Report on Other Legal and Regulatory Requirements

i.    As required by the Companies (Auditor's Report) Order, 2016 ("the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure 1” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

ii.    Based on the verification of books of account of the Company and according to information and explanations given to us, we give below a report on the Directions issued by the Comptroller and Auditor General of India in terms of Section 143 (5) of the Act:

a. On the basis of the information to the extent compiled by the Company pending the reconciliation of the available records with the books of account and considering the voluminous nature and various locations, we report that the title/lease deeds for free hold/lease hold land are held in the name of Company except for the following where the title deeds are not available with the Company:

                                                                             (Rs, in million)

Nature

Number of assets

Gross Block

Net Block

Lease hold land

14

632.03

392.40

Free hold land

4

58.21

58.21

Total

18

690.24

450.61

Pending compilation by the management of all the relevant details covering all the units, area under respective line item for the above could not be given.

b.    According to information and explanations given to us, the cases of waiver/write off of debts / loans / interest wherever applicable during the year along with the reasons and amount involved are stated in "Annexure 2”

c.    According to information and explanations given to us, the Company has maintained adequate records in respect of inventories lying with third parties and assets received by the Company as gift/grants from Government or other authorities.

iii. As required by Section 143(3) of the Act, we report that:

a.    we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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 those books;

c.    the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Cash flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d.    in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act;

e.    as per notification number G.S.R. 463(E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 164(2) of the Act regarding the disqualifications of Directors is not applicable to the Company, since it is a Government Company;

f.    with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure 3”; and

g.    with respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i.    the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 48.1.1 to the standalone Ind AS financial statements;

ii.    the Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses-Refer Note 53.2 to the standalone Ind AS financial statements;

iii.    there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

(Referred to in paragraph 7(i) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

a.    The Company has generally maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b.    As per the information and explanations given to us and on the basis of our examination of the records of the Company, the fixed assets having substantial value, other than those which are underground/ submerged/ under joint operations have been physically verified by the management in a phased manner, which in our opinion is reasonable, having regard to the size of Company and nature of its business. The reconciliation of physically verified assets with the book records is in progress. Discrepancies noticed on the physical verification and consequential adjustments are carried out on completion of reconciliation. According to information and explanations given by the management and in our opinion, the same are not material.

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

                                                                             (Rs, in millions)

Nature

Number of assets

Gross Block

Net Block

Lease hold land

14

632.03

392.40

Free hold land

4

58.21

58.21

Building

6

154.92

57.65

Total

24

845.16

508.26

ii.    According to the information and explanations given to us, the inventory has been physically verified in phased manner at reasonable intervals (excluding inventory lying with third parties, at some of the site-locations, inventory under joint operations and material in transit) during the year by the management which did not reveal any material discrepancies. However, in our opinion, procedures for physical verification of Stores and Spare parts, ascertainment of discrepancies and carrying out of consequent accounting adjustments need to be made compliant with internal guidelines of the Company and further strengthened so as to make the same commensurate with the size of the Company and the nature of its business.

iii.    The Company has not granted loans, secured or unsecured to any companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act.

iv.    In our opinion and according to the information and explanations given to us, the Company has not advanced loans to directors / to a Company in which the Director is interested to which provisions of section 185 of the Act apply. The provisions of section 186 of the Act, in our opinion, are not applicable to the Company.

v.    In our opinion and according to information and explanations given to us, the Company has not accepted any deposits as per the provisions of the Act.

vi.    We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub section(1) of section 148 of the Act 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.

vii.    a. According to records of the Company, undisputed statutory dues including Provident Fund, Employees' State

Insurance, Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Goods and Service Tax, Cess and other statutory dues have generally been 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 31st March, 2018 for a period more than six months from the date of becoming payable.

b. According to the information and explanations given to us, there were no dues in respect of Income Tax, Duty of Excise, Duty of Customs, Sales Tax, Service Tax, Value Added Tax and Goods and Service Tax which have 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

CENTRAL EXCISE ACT, 1944

Commissioner / (Appeals) of Custom, Excise and Service Tax

2015-17

0.92

0.05

0.87

Custom , Excise and Service Tax Appellate Tribunal

2001-09;

2011-16

8,735.84

275.31

8,460.53

Hon. High Court

1996-97;

2007-14;

2015-2016

353.68

4.32

349.36

Hon. Supreme Court

2000-01

1,176.60

-

1,176.60

Total (A)

 

10,267.04

279.68

9,987.36

THE CUSTOMS ACT, 1962

Commissioner / (Appeals) of Custom, Excise and Service Tax

1987-88

304.95

Rs,

304.95

Custom , Excise and Service Tax Appellate Tribunal

2007-08 2010 -11

6.50

1.11

5.39

Total(B)

 

311.45

1.11

310.34

INCOME TAX ACT, 1961

Commissioner/ (Appeals)

2006-09;

2011-14

76,071.83

76,063.07

8.76

Income Tax Appellate Tribunal

1999-2001;

2007-11

18,530.92

18,514.92

16.00

High Court

2000-01

8.91

-

8.91

Total(C)

 

94,611.66

94,577.99

33.67

GOODSAND SERVICES TAX

Commissioner (Appeals) of GST and Central Excise

2017-18

14,315.98#

11,704.68*

2,611.30

Total (D)

 

14,315.98

11,704.68

2,611.30

 

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/ Joint Commissioner/ Commissioner - Appeals/ Joint Commissioner- Appeals

2000 -02 2004 -07 2009 -12 2013-14

2,459.21

7.68

2,451.53

CENTRAL SALES TAX ACT,1956 AND RESPECTIVE

Appellate Tribunal

1993-94;

1998-2000;

2001-03;

2005-06;

2011-14

7,399.40

54.28

7,345.12

STATES SALES TAX ACT

Hon. High Court

1978-79;

1992-95;

2006-07;

2011-2013

51.77

26.48

25.29

 

Hon. Supreme Court

2002-13;

2016-17

11,493.48

623.96

10,869.52

 

Total(E)

 

21,403.86

712.40

20,691.46

 

Commissioner/ (Appeals),Joint Comm., Additional Comm. of Custom, Excise and Service Tax

2004-05;

2006-07;

2009-13

8,657.79

0.27

8,657.52

 

Commissioner (Appeals) of GST and Central Excise

2017-18

19,834.29#

13,448.61*

6,385.68

SERVICE TAX

Custom , Excise and Service Tax Appellate Tribunal

2003-04;

2005-13;

2014-15;

2017-18

721.49

19.64

701.85

 

Hon. High Court

2004-16

34.80

2.56

32.24

 

Hon. Supreme Court

2015-16

1.35

0.37

0.98

 

Total(F)

 

29,249.72

13,471.45

15,778.27

Grand Total (A+B+C+D+E+F)

 

170,159.71

120,747.31

49,412.40

#    Excluding penalty

*    The amount has been since deposited in May 2018, refer note no.48.1.1.b

viii.    The Company has not defaulted in repayment of dues to banks. The Company has not issued any debentures and has not borrowed any amount from financial institutions or government.

ix.    Based on our audit procedures performed and according to the information and explanations given by the management, the Company has not raised any money by way of initial public offer or further public offer and term loan.

x.    According to the information and explanations given to us, no fraud on the Company by its officers or employees or by the Company has been noticed or reported during the year.

xi.    As per notification number G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act as regards the managerial remuneration is not applicable to the Company, since it is a Government Company.

xii.    In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.

xiii.    According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 ofCompanies Act, 2013, where applicable and the details have been disclosed in the notes to the standalone Ind AS financial statements, as required by the applicable accounting standards.

xiv.    According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

xv.    According to the information and explanations given by the management, the Company has not entered into any non-cash transactions specified under section 192 of the Act with directors or persons connected with him.

xvi.    In our opinion, the Company is not required to register under section 45-IA of the Reserve Bank of India Act, 1934.

 

For MKPS & Associates                                       For Khandelwal Jain & Co.

For Lodha & Co                                                    Chartered Accountants

 Firm Reg. No: 301051E                                       Sd/-

                                                                              (Prashant Khandelwal)          

Partner

(M.No.056652)

For K. C. Mehta & Co.

Chartered Accountants

Firm Reg. No.106237W

Sd/-

(Vishal P. Doshi)

Partner (M. No.101533)

 

Chartered Accountants                             Chartered Accountants

Firm Reg. No: 302014E                           Firm Reg. No: 105049W

Sd/-                                                            Sd/-

(Nikhil K. Agrawalla)                               (Narendra Jain)

Partner (M.No. 157955)                            Partner (M.No. 048725)

For PKF Sridhar & Santhanam LLP         For Dass Gupta & Associates

Chartered Accountants                              Chartered Accountants

Firm Reg. No.003990S/S200018               Firm Reg. No. 000112N

Sd/-                                                             Sd/-

(V. Kothandaraman)                                  (Raaja Jindal)

Partner (M. No 025973)                             Partner (M. No.504111)

New Delhi 30.05.2018

 


Mar 31, 2017

1. Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Oil and Natural Gas Corporation Limited (‘the Company’), which comprise the Balance Sheet as at 31st March, 2017, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information.

2. Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditors’ Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the financial position of the Company as at 31st March, 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

5. Other Matters

i. The comparative financial information of the Company for the year ended 31st March, 2016 and the transition date opening balance sheet as at 1st April, 2015 prepared in accordance with Ind AS included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor joint auditors whose report for the year ended 31st March, 2016 and 31st March, 2015 dated 26th May, 2016 and 28th May, 2015 respectively expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.

ii. The standalone Ind AS financial statements include the Company’s share in the total value of assets, liabilities, expenditure and income of 135 blocks under New Exploration Licensing Policy (NELPs) / Joint Operations (JOs) accounts for exploration and production out of which 5 NELPs / JOs accounts have been certified by other Chartered Accountants and 10 NELPs / JOs have been certified by the management in respect of NELPs / JOs operated by other operators. Our opinion is based solely on the certificate of the other Chartered Accountants and management certified accounts.

iii. We have placed reliance on technical/ commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry well, allocation of cost incurred on them, proved developed hydrocarbon reserves and depletion thereof on Oil and Gas Assets, impairment, liability for decommissioning costs, liability for NELP and nominated blocks for under performance against agreed Minimum Work Programme.

Our opinion is not modified in respect of these matters.

6. Report on Other Legal and Regulatory Requirements

i. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure 1” a statement on the matters specified in the paragraphs 3 and 4 of the Order, to the extent applicable.

ii. Based on the verification of books of account of the Company and according to information and explanations given to us, we give below a report on the Directions issued by the Comptroller and Auditors General of India in terms of Section 143 (5) of the Act:

a. On the basis of the information to the extent compiled by the Company pending the reconciliation of the available records with the books of account and considering the voluminous nature and various locations, we report that the title/lease deeds for free hold/lease hold land are held in the name of Company except for the following where the title deeds are not available with the Company:

(Rs. in million)

Nature

Number of assets

Gross Block

Net Block

Lease hold land

14

632.03

399.87

Free hold land

36

88.89

88.89

Total

50

720.92

488.76

Pending compilation by the management of the complete details covering all the units, area under respective line items for the above could not be given.

b. According to information and explanations given to us, the cases of waiver/write off of debts/loans/interest wherever applicable during the year along with the reasons and amount involved are stated in “Annexure 2”

c. According to information and explanations given to us, the Company has maintained adequate records in respect of inventories lying with third parties and assets received by the Company as gift/grants from Government or other authorities.

iii. As required by Section 143(3) of the Act, we report that:

a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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 those books;

c. the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash flows Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books ofaccount;

d. in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act;

e. as per notification number G.S.R. 463(E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 164(2) of the Act regarding the disqualifications of Directors is not applicable to the Company, since it is a Government Company;

f. with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure 3”; and

g. with respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 49.1 to the standalone Ind AS financial statements;

ii. according to information and explanations given to us, the Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses-Refer Note 55.1 to the standalone Ind AS financial statements;

iii. there has been delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company in case of Dividend declared on 18th December, 2009 where the unpaid amount aggregating to Rs.13.79 million was transferred on 9th March, 2017 as against the due date of 17th January, 2017; and

iv. the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the management. Refer Note 18.1 to the standalone Ind AS financial statements.

Annexure - 1 to the Auditors’ Report (Referred to in paragraph 6(i) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

i. a. The Company has generally maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b. As per the information and explanations given to us and on the basis ofour examination of the records of the Company, the fixed assets having substantial value, other than those which are underground/ submerged/ under joint operations have been physically verified by the management in a phased manner, which in our opinion is reasonable, having regard to the size of Company and nature of its business. The reconciliation of physically verified assets with the book records is in progress. Discrepancies noticed on the physical verification and consequential adjustments are carried out on completion of reconciliation. According to information and explanations given by the management and in our opinion, the same are not material.

c. On the basis of the information to the extent compiled by the Company pending the reconciliation of the available records with the books of account and considering the voluminous nature and various locations, we report that the title/lease deeds of immovable properties are held in the name of Company except for the following 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

632.03

399.87

Free hold land

36

88.89

88.89

Building

12

280.08

61.10

Total

62

1001.00

549.86

ii. According to the information and explanations given to us, the inventory has been physically verified in phased manner at reasonable intervals (excluding inventory lying with third parties, at some of the site-locations, inventory under joint operations and material in transit) during the year by the management which did not reveal any material discrepancies. However, in our opinion, procedures for physical verification of Stores and Spare parts, ascertainment of discrepancies and carrying out of consequent accounting adjustments need to be made compliant with internal guidelines of the Company and further strengthened so as to make the same commensurate with the size of the Company and the nature of its business.

iii. The Company has not granted secured loans to any companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act.

iv. In our opinion and according to the information and explanations given to us, the Company has not advanced loans to directors / to a Company in which the Director is interested to which provisions of section 185 of the Act apply. The provisions of section 186 of the Act, in our opinion, are not applicable to the Company.

v. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits as per the provisions of the Act.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub section(1) of section 148 of the Act 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.

vii. a. According to records of the Company, undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Service Tax, Duty ofCustoms, Duty ofExcise, Value Added Tax, Cess and other statutory dues have generally been 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 31st March, 2017 for a period more than six months from the date of becoming payable.

b. According to the information and explanations given to us, there were no dues in respect ofIncome Tax, Duty of Excise, Duty of Customs, Sales Tax, Service Tax and Value Added Tax which have not been deposited on account of any dispute except the following:

(Rs.in million)

Name of Statute

Nature of Dues

Forum where Dispute is pending

Period to which the amount relates (Financial Year)

Gross Amount Involved

Amount paid under protest

Amount Unpaid

Central Excise Act, 1944

Central Excise Duty / Interest/ Penalty

Commissioner/ (Appeals) of Custom, Excise and Service Tax

2002 - 2003 2009 - 2012 2014 - 2015

119.36

108.82

10.54

Custom , Excise and Service Tax Appellate Tribunal

2001 - 2016

8,611.46

367.74

8,243.72

Hon. High Court

1996 - 2016

648.57

258.40

390.17

Hon. Supreme Court

2000 - 2005 2011 - 2012

1,185.20

2.87

1,182.33

Total (A)

10,564.59

737.83

9,826.76

Central Sales Tax Act,1956 and

respective states Sales Tax Act

Sales Tax / Turnover Tax / Penalty / Interest

Commissioner of Sales Tax

2010 - 2012 2013 - 2014

1,657.99

0.14

1,657.85

Joint Commissioner/ Commissioner CT-Appeals

2000 - 2005 2006 - 2007 2009 - 2012

3,748.01

44.54

3,703.47

Appellate Tribunal

1993 - 1995 1998 - 2000 2007 - 2008 2011 - 2012

441.06

73.79

367.27

Hon. High Court

1978 - 2013

3,427.42

22.60

3,404.82

Hon. Supreme Court

2002 - 2009 2012 - 2013

7,685.84

623.96

7,061.88

Total(B)

16,960.32

765.03

16,195.29

Income Tax Act, 1961

Income Tax / Interest / Penalty

Asst Commissioner of Income Tax/ ACIT (TDS)

2007 - 2008 2010 - 2011

2,591.86

2,586.90

4.96

Commissioner (Appeals)

2006 - 2013

72,788.32

53,452.00

19,336.32

Income Tax Appellate Tribunal

1994 - 2010

12,019.75

4,136.47

7,883.28

Total(C)

87,399.93

60,175.37

27,224.56

The

Customs Act, 1962

Custom Duty / Interest / Penalty

Commissioner/ (Appeals) of Custom, Excise and Service Tax

1987 - 1988

258.44

-

258.44

Custom , Excise and Service Tax Appellate Tribunal

2007 - 2008 2010 - 2011

6.50

1.11

5.39

Total (D)

264.94

1.11

263.83

Finance Act 1994 (Service Tax)

Service Tax / Interest / Penalty

Commissioner/ (Appeals)/ Joint/ Deputy/ Additional Commissioner of Central Excise, Custom and Service Tax

2004 - 2016

8,405.09

-

8,405.09

Custom , Excise and Service Tax Appellate Tribunal

2006 - 2008 2009 - 2015

827.62

12.55

815.07

Hon. High Court

2012 - 2017

3.39

2.56

0.83

Hon. Supreme Court

2015 - 2016

4.80

0.37

4.43

Total(E)

9,240.90

15.48

9,225.42

Wealth Tax Act, 1957

Interest

Asstt. Commissioner of Wealth Tax

2014-15

0.47

-

0.47

Total(F)

0.47

-

0.47

Grand Total (A B C D E F)

1,24,431.15

61,694.82

62,736.33

viii. The Company has not issued any debentures and has not borrowed any fund from financial institutions, banks and government during the year. The company has not defaulted in repayment of dues to the bank.

ix. Based on our audit procedures performed and according to the information and explanations given by the management, the Company has not raised any money by way of initial public offer or further public offer and term loan.

x. According to the information and explanations given to us, no fraud on the Company by its officers or employees or by the Company has been noticed or reported during the year.

xi. As per notification number G.S.R. 463 (E) dated 5th June, 2015 issued by Ministry of Corporate Affairs, section 197 as regards the managerial remuneration is not applicable to the Company, since it is a Government Company.

xii. In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.

xiii. According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the standalone Ind AS financial statements, as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

xv. According to the information and explanations given by the management, the Company has not entered into any non-cash transactions specified under section 192 of the Act with directors or persons connected with him.

xvi. In our opinion, the Company is not required to register under section 45-IA of the Reserve Bank of India, 1934.

For Lodha & Co For MKPS & Associates For Khandelwal Jain & Co.

Chartered Accountants Chartered Accountants Chartered Accountants

Firm Reg. No: 301051E Firm Reg. No: 302014E Firm Reg. No: 105049W

(H K Verma) (Mahendra K. Agrawala) (Narendra Jain)

Partner (M.No.055104) Partner (M.No. 051764) Partner (M. No. 048725)

For K. C. Mehta & Co. For PKF Sridhar & For Dass Gupta & Associates

Chartered Accountants Santhanam LLP Chartered Accountants

Firm Reg. No.106237W Chartered Accountants Firm Reg. No. 000112N

Firm Reg. No.003990S/S200018

(Vishal P. Doshi) (V. Kothandaraman) (Naresh Kumar)

Partner (M. No.101533) Partner (M. No 025973) Partner (M. No.082069)

New Delhi

26th May, 2017


Mar 31, 2016

To

The Members of Oil and Natural Gas Corporation Limited

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Oil and Natural Gas Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016 the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

2. Management’s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 (''the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditors ‘Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31. 2016, and its profit and its cash flows for the year ended on that date.

5. Emphasis of Matter

We draw attention to Note No. 45.1.1.b to the standalone financial statements with regard to the dispute between the company and the Government of Gujarat in respect of payment of Royalty on the crude oil reduced in the State. The accrual of the additional ability of Rs. 117,864.64 million, against which an amount of Rs. 21,690.24 million has been paid with effect from February 2014 and considered as deposit, would depend on the decision of the Hon''ble Supreme Court of India. The amount of Rs. 117,864.64 million has been disclosed as contingent liability.

We draw attention to Note no. 45.1.1.C to the standalone financial statements with regard to similar dispute before High Court of Guwahati where Government of Assam has claimed royalty on the crude oil produced in the state. This amount of demand including interest there on Rs. 30,857.82 million is disclosed as contingent liability.

Our opinion is not modified in respect of this matter.

6. Other Matters

i. The financial statements include the Company''s share in the total value of assets, liabilities, expenditure and income of 135 blocks under New Exploration Licensing Policy (NELPs) / Joint Venture (JVs) accounts for exploration and production out of which 6 NELPs / JVs accounts have been certified by other Chartered Accountants and 11 NELP / JVs have been certified by the management in respect of NELPs / JVs operated by other operators. Our opinion is based solely on the certificate of the other Chartered Accountants and management certified accounts.

ii. We have placed reliance on technical/commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry wells, allocation of costs incurred on them, proved developed hydrocarbon reserves and depletion thereof on Oil and Gas Assets, impairment, liability for abandonment costs, liability for NELP and nominated blocks for under performance against agreed Minimum Work Programme.

Our opinion is not modified in respect of these mat ters.

7. Report on Other Legal and Regulatory Requirements

i. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order"), issued by the Central Government ol India in terms of the section 143(11) of the Act, we give in ‘Annexure 1” a statement on the matters specified in the paragraphs 3 and 4 of the said Order, to the ex tent applicable.

ii. Based on the verification of books of account of the Company and according to information and explanations given to us, we give below a report on the Directions/ Additional Sub-Directions issued by the

(Rs, in millions)

Nature

Number of assets

Gross Block

Net Block

Lease hold land

15

1,903.98

1.679.02

Free hold land

158

184.61

184.61

Total

173

2.088.59

1,863.63

Comptroller and Auditor General of India in terms of section 143 (5) of the Act:

a. On the basis of the information to the extent compiled by the Company pending the reconciliation of the available records with the books of account and considering the voluminous nature and various locations, we report that the title/lease deeds for free hold/lease hold land are held in the name of Company except for the following where the title deeds and area details for the same are not available with the Company:

Pending compilation by the management of the complete details covering all the units, area under respective line items for the above could not be given.

b. According to information and explanations given to us the cases of waiver/write off of debts ‘loans/interest wherever applicable during the year along with the reasons and amount involved are stated in ‘Annexure 2”.

c. According to information and explanations given to us, the Company has maintained adequate records in respect of inventories lying with third parties and assets received by the Company as a gift/grants from Government or other authorities.

d. We have verified ceiling test calculation for all oil and gas fields/Cash Generating Units for determination of impairment provision of Fixed Assets of the Company.

iii. As required by section 143(3) of the Act, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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 those books.

c. 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.

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 ot the Act, read with Rule 7 of the Companies (Accounts) Rules 2014.

e. As per notification number G.S.R. 463 (E) dated June 5, 2015 issued by Ministry of Corporate Affairs, section 164(2) as regards the disqualifications of Directors is not applicable to the Company, since it is a Government Company.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure 3" to this Report.

g. The matter described under “Emphasis of Matters" para above in the event of being decided unfavorably, in our opinion, may have an adverse impact on the functioning of the Company.

h. With respect to the other matters to be included in Auditor s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules. 2014 in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of the pending litigations on its financial position in its financial statements- Refer Note 45.1.1 to the financial statements.

ii. According to information and explanations given to us, the Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses- Refer Note 50 to the financial statements.

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

i a. The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets,

b. As per the information and explanations given to us, the fixed assets having substantial 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 Company and nature of its business. The reconciliation of physically verified assets with the book records is in progress. Discrepancies noticed on the physical verification and consequential adjustments are carried out on completion of reconciliation. According to information and explanations given by the management and in our opinion, the same are not material,

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

(Rs, in millions)

Nature

Number of assets

Gross Block

Net Block

Lease hold land

15

1.903.98

1,679.02

Free hold land

158

184.61

184.61

Building

12

280.14

64.94

Total

185

2,368.73

1,928.57

ii. According to the information and explanations given to us, the inventory has been physically verified in phased manner at reasonable intervals (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 which did not reveal any material discrepancies. However, in our opinion, procedures for physical verification of Stores and Spare parts, ascertainment of discrepancies and carrying out of consequent accounting adjustments need to be made compliant with internal guidelines of the Company and strengthened so as to make the same commensurate with the size of the Company and the nature of its business.

iii. The Company has not granted secured loans to any companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act.

iv. In our opinion and according to the information and explanations given to us, the Company has not advanced loans to directors / to a Company in which the Director is interested to which provisions of section 185 of the Act apply. The provisions of section 186 of the Act, in our opinion, are not applicable to the Company.

v. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits as per the provisions of the Act

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub section (1) of section 148 of the Act 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.

vii. a. According to records of the Company, undisputed

statutory dues including Provident Fund, Employees'' State Insurance. Income Tax, Sales Tax. Service Tax, Duty of Customs, Duty of Excise, Value Added Tax. Cess and other statutory dues have generally been 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. 2016 for a period more than six months from the date of becoming payable,

b. According to the information and explanations given to us. there were no dues in respect of Income Tax. Duty of Excise. Duty of Customs, Sales Tax. Service Tax and Value Added Tax which have not been deposited on account of any dispute except the following:

(Rs, in millions)

Name of the statute

Nature of Dues

Forum where dispute is pending

Period to which the amount relates (financial year)

Gross Amount Involved

Amount Paid under Protest

Amount

Unpaid

CENTRAL EXCISE ACT, 1944

Central Excise Duty / Interest/ Penalty

Commissioner (Appeals) of Custom. Excise and Service Tax

2002 - 2003 2014-2015

109.81

108.54

1.27

Custom , Excise and Service Tax Appellate Tribunal

2001 -2016

6,288.10

346.73

5,941.37

Hon. High Court

1996-2000 2007 - 2015

351.33

4.32

347.01

Hon. Supreme Court

2000 2005

1,176.60

1.176.60

Total (A)

7,925.84

459.59

7.466.25

CENTRAL SALES TAX ACT.1956 AND RESPECTIVE STATES SALES TAX ACT

Sales Tax / Turnover Tax / Penalty / Interest

Commissioner of Sales Tax

2005 - 2006 2010-2012 2013-2014

1.586.49

10.68

1,575.81

Joint Commissioner/ Commissioner CT-Appeals

2000 - 2005

2006 - 2007 2009-2012

3,727.50

44.54

3.682.96

Appellate Tribunal

1993- 1995 1998 - 2000 2001 -2003 2007 - 2008

329.84

47.22

282.62

Hon. High Court

1978-1995 2006 - 2007 2009-2013

3,927.87

35.04

3,892.83

Hon. Supreme Court

1997-2009

20,511.16

623.96

19.887.20

Total (B)

30,082.86

761.44

29,321.42

INCOME TAX ACT. 1961

Income Tax/ Interest / Penalty

Asst Commissioner of Income Tax

2008 - 2009 2010-2011

2,630.50

2,618.13

12.37

Commissioner (Appeals)

2006-2012

66,338.09

49.902.78

16.435.31

Income Tax Appellate Tribunal

1994 - 1995 1999-2001 2005 - 2011

3,527.41

548.05

2,979.36

Hon. High Court

2000 - 2001 2009-2010

62.68

14.86

47.82

Total (C)

72,558.68

53.083.82

19,474.86

THE CUSTOMS ACT, 1962

Custom Duty/ Interest1 Penalty

Custom . Excise and Service Tax Appellate Tribunal

2007 - 2008 2010 - 2011

6.50

1.11

5.39

Total (D)

6.50

1.11

5.39

Finance Act 1994 (Service Tax)

Service Tax/ Interest / Penalty

Commissioner /Joint / Deputy Commissioner of Central Excise Custom and Service Tax

2004 - 2005 2008-2010 2011 -2016

95.71

94.90

0.81

Commissioner (Appeals) of Custom. Excise and Service Tax

2006 - 2007

0.66

0.66

Custom. Excise and Service Tax Appellate Tribunal

2003-2015

452.54

12.85

439.69

Director General

2006 - 2008

637.40

-

637.40

Hon. High Court

2004 - 2005

26.08

-

26.08

Total(E)

1,212.39

107.75

1.104.64

Grand Total (A B C D E)

1,11,786.27

54,413.71

57,372.56

viii. The Company has not issued any debentures and has not borrowed any fund from financial institutions, banks and government during the year. The Company has not defaulted in repayment of dues to the bank,

ix. Based on our audit procedures performed and according to the information and explanations given by the management, the Company has not raised any money by way of initial public offer or further public of fer and term loan.

x. According to the information and explanations given to us, no fraud on the Company by its officers or employees or by the Company has been noticed or reported during the year.

xi. As per notification number G.S.R. 463

5, 2015 issued by Ministry of Corporate Affairs, section 197 as regards the managerial remuneration is not applicable to the Company, since it is a Government Company.

xii. In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company.

xiii. According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

x v. According to the information and explanations given by the management, the Company has not entered into any non-cash transactions specified under section 192 of the Act with directors or persons connected with him. xvi. In our opinion, the Company is not required to register under section 45-IA of the Reserve Bank of India Act, 1934.

To the Members of Oil and Natural Gas Corporation Limited

We have audited the internal financial controls over financial reporting of Oil and Natural Gas Corporation Limited ("the Company'') as of March 31, 2016 in conjunction with our audit of the standalone financial 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 and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note”) and the Standards on Auditing as specified under section 143(10) of the Act. to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company''s assets that could have a material of feet on the financial statements. Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management, override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Other Matters

In respect of 17 NELPs/ JVs which are operated by others, there are no reports from Chartered Accountants in respect of Internal Financial Control system over financial reporting and hence, these NELPs/ JVs are not covered in this report.

For G. D. Apte & Co. For Khandelwal Jain & Co. For Lodha & Co.

Chartered Accountants Chartered Accountants Chartered Accountants Firm Reg. No:100515E Firm Reg. No: 105049W Firm Reg. No: 301051E

(U,S Abhyankar) (Narendra Jain) (R.P Singh)

Partner (M.No. 113053) Partner (M.No. 048725) Partner (M.No. 052438)

For P.K.F Sridhar & Santhanam LLP For Dass Gupta & Associates For K C Mehta & Co.

Chartered Accountants Chartered Accountants Chartered Accountants

Firm Reg. No.003990S/S200018 Firm Reg. No.000112N Firm Reg. No.106237W

(V. Kothandaraman) (Raaja Jindal) (Vishal P Doshi)

Partner (M. No 025973) Partner (M. No.504111) Partner (M. No.101533)


Mar 31, 2015

We have audited the accompanying standalone financial statements of Oil and Natural Gas Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31st 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

2. Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act 2013 ("The Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

we conducted our audit in accordance with the Standards on Auditing specified under Section 143 (10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, and its profit and its cash flows for the year ended on that date.

5. Emphasis of Matter

we draw attention to Note No. 44.1.1.b to the financial statements with regard to the dispute between the company and the Government of Gujarat in respect of payment of Royalty on the crude oil produced in the State. The accrual of the additional liability of Rs. 117,242.00 million, (reduced to the extent Rs. 16,440.00 million paid to Gujarat Government- refer note no. 31.2 to the financial statements), against which an amount of Rs. 21,067.60 million has been paid with effect from February 1, 2014 and considered as deposit, would depend on the decision of the Hon'ble Supreme Court of India. The amount of Rs. 117,242.00 million has been disclosed as contingent liability.

Our opinion is not modified in respect of this matter.

6. Other Matters

I. The financial statements include the Company's share in the total value of assets, liabilities, expenditure and income of 134 blocks under New Exploration Licensing Policy (NELPs)AJoint Venture (JVs) accounts for exploration and production out of which 6 NELPs/JVs accounts have been certified by other Chartered Accountants and 17 NELP/JVs have been certified by the management in respect of NELPs/JVs operated by other operators. Our opinion is based solely on the certificate of the other Chartered Accountants and management certified accounts.

II. We have placed reliance on technical/commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry well, allocation of cost incurred on them, proved developed hydrocarbon reserves and depletion thereof on producing properties, impairment, liability for abandonment costs, liability for NELP and nominated blocks for under performance against agreed Minimum Work Programme and allocation of depreciation on process platforms to transportation and facilities.

Our opinion is not modified in respect of these matters.

7. Report on the Other Legal and Regulatory Requirements

I. As required by the Companies (Auditors Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of the section 143(11) of the Act, we give in Annexure 1 a statement on the matters specified in the paragraphs 3 and 4 of the said Order, to the extent applicable.

II. Based on the verification of books of account of the Company and according to information and explanations given to us, we give below a report on the directions issued by the Comptroller and Auditors General of India in terms of section 143 (5) of the Act:

a. According to information and explanations given to us, the company has not been selected for disinvestment.

b. According to information and explanations given to us, the cases of waiver/write off of debts/loans/ interest wherever applicable during the year along with the reasons and amounts involved are stated in Annexure 2.

c. According to information and explanations given to us, the company has maintained adequate records in respect of inventories lying with third parties and assets received by the company as a gift from Government or other authorities.

d. we have carried out a review of age wise analysis of significant pending legal/arbitration cases based on the information and explanations made available to us and report that the reasons for the pendency are mainly on account of adjournment and other matters related to legal procedures. we also report that the company has in place a monitoring mechanism for expenditure incurred on such cases.

III. As required by section 143(3) of the Act, we report that:

a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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 those books.

c. 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.

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014.

e. On the basis of the written representations received from the directors as on 31st March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31stMarch 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

f. The matter described under "Emphasis of Matters" para above in the event of being decided unfavourably, in our opinion, may have an adverse impact on the functioning of the company.

g. with respect to the other matters to be included in Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 in our opinion and to the best of our information and according to the explanations given to us:

i. The company has disclosed the impact of the pending litigations on its financial position in its financial statements- Refer Note 44.1.1 to the financial statements.

ii. According to information and explanations given to us, the company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses- Refer Note 51 to the financial statements.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and protection Fund by the Company.

Annexure 1 to Independent Auditors' Report (Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

i. a. The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b. As per the information and explanations given to us, the fixed assets having substantial 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 company and nature of its business. The reconciliation of physically verified assets with the book records is in progress. Discrepancies noticed on the physical verification and consequential adjustments are carried out on completion of reconciliation. According to information and explanations given by the management and in our opinion, the same is not material.

ii. a. According to the information and explanations

given by the management, the inventory has been physically verified in the 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, considering the size of the company and nature of its business, the procedure of physical verification of inventory followed by the management needs to be strengthened further.

c. The Company has generally maintained proper records of inventory. During the year, the management has identified certain discrepancies in the physical stock of crude oil which has been written off as stated on Note No. 50 to the financial Statements. According to the information and explanations given by the management and in our opinion, other than as stated above 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 of account. In respect of cases where the reconciliation is not complete, the management has stated that the effect of the same on the accounts would be adjusted on completion of reconciliation.

iii. The Company has granted secured loans to five parties covered in the register maintained under section 189 of the Act.

a. According to information and explanations given to us and based on our verification of books of account, the receipt of principal amount and interest are regular.

b. According to information and explanations given to us and based on our verification of books of account we report that, there was no overdue amount in respect of such loans granted.

iv. 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 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 internal controls.

v. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits as per the provision of the Act.

vi. We have broadly reviewed the costs records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub section (1) of section 148 of the Companies Act, 2013 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.

vii. a. According to records of the Company, undisputed

statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Service Tax, Wealth Tax, Duty of Customs, Duty of Excise, Value Added Tax, 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 31,2015 for a period more than six months from the date of becoming payable.

b. According to the information and explanations given to us, there were no dues in respect of Income Tax, Duty of Excise, Duty of Customs, Cess, Sales Tax, Service Tax, Value Added Tax and Wealth Tax which have not been deposited on account of any dispute except the following:

(Rs. in million)

Name of the Nature of Forum where dispute statute Dues is pending





Central Excise Central excise Commissioner (Appeals) of Act, 1944 duty/Interest/ Central Excise, Custom and

Penalty Service Tax

Custom, Excise and Service

Tax Appellate Tribunal

Hon. High Court

Hon. Supreme Court

Total (A)

Oil Industries Cess/ Interest Custom, Excise and Service (Development) Tax Appellate Tribunal Act, 1974

Total (B)

A.P Mineral Cess/ Interest Hon. High Court Bearing Ordinance (infrastructure) Cess Rules, 2005

Total (C)

The Custom Custom duty/ Custom, Excise and Service Act, 1962 Penalty/ Tax Appellate Tribunal Interest

Total (D)

Income Tax Income Tax/ Commissioner (Appeals) Act, 1961 Penalty/ Hon. High Court Interest Hon. Supreme Court Income Tax Appellate Tribunal

Total (E)

Central Sales Sales Tax/ Appellate Tribunal Tax Act, 1956 Turnover Tax/ Hon. High Court and respective Penalty/

Joint Commissioner/ Commissioner CT-Appeals

Total (F)

Finance Act, Service Tax/ Commissioner/Joint/Deputy 1994 Interest/ Commissioner of Central Penalties Excise, Custom and Service Tax

Custom, Excise and Service Tax Appellate Tribunal

Directorate General of Central Excise, Custom and Service Tax

Hon. High Court

Name of the Period to Gross Amount statute which the Involved amount relates (financial year)

Central Excise 2002-2007 109.20 Act, 1944



2001-2013 4,116.17



1996-2015 351.33

1980-2005 1,283.30

5,860.00

Oil Industries 2004-2009 6.57 (Development) Act, 1974

657

A.P Mineral 2005-2014 2,371.75 Bearing Ordinance (infrastructure) Cess Rules, 2005

2,371.75

The Custom 2007-08 5.00 Act, 1962

5.00

Income Tax 2006-2012 74,701.19 Act, 1961 2003-2010 1,002.78 1983-1986 740.22 1995-2011 3,556.25

80,000.44

Central Sales 1993-2000 146.95 Tax Act, 1956 1978-2013 24,439.03 and respective

2000-2010 3,227.65

27,813.63

Finance Act, 2004-2015 2.09 1994



2005-2012 93.46

2006-2008 637.40

2004-2007 32.48

Total (G) 765.43

Grand Total (A B C D E F G) 116,822.82

Name of the Amount Amount statute Paid under Unpaid Protest

Central Excise 108.54 0.66 Act, 1944



109.37 4,006.80



- 351.33

- 1,283.30

217.91 5,642.09

Oil Industries - 6.57 (Development) Act, 1974

- 6.57

A.P Mineral - 2,371.75 Bearing Ordinance (infrastructure) Cess Rules, 2005

- 2,371.75

The Custom 1.00 4.00 Act, 1962

1.00 4.00

Income Tax 44,819.55 29,881.64 Act, 1961 14.86 987.92 - 740.22 566.45 2,989.80

45,400.86 34,599.58

Central Sales 20.92 126.03 Tax Act, 1956 655.16 23,783.87 and respective

39.38 3,188.27

715.46 27,098.17

Finance Act, 1.98 0.11 1994



93.42 0.04

- 637.40

- 32.48

Total (G) 95.40 670.03

Grand Total (A B C D E F G) 46,430.63 70,392.19

c. The amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

viii. The Company does not have 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.

ix. The Company has not issued any debentures and has not borrowed any fund from financial institutions. The company has not defaulted in repayment of dues to the bank.

x. 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 Company.

xi. The company has not availed any term loan during the year.

xii. According to the information and explanations given to us, except for over reporting of crude oil production and inventory which is under investigation as stated in note no. 50 to the financial statements, no fraud on or by the Company has been noticed or reported during the year.

For G. D. Apte & Co. For Khandelwal Jain & Co. Chartered Accountants Chartered Accountants Firm Reg. No: 100515W Firm Reg. No: 105049W

(C.M. Dixit) (Narendra Jain) Partner (M.No. 017532) Partner (M.No. 048725)

For Lodha & Co. For Mehra Goel& Co. Chartered Accountants Chartered Accountants Firm Reg. No: 301051E Firm Reg. No:000517N

(R. P Singh) (R. K. Mehra) Partner (M.No. 052438) Partner (M.No. 006102)

For Varma & Varma Chartered Accountants Firm Reg. No:004532S

(P. R. Prasanna Varma) Partner (M.No.025854)

Date : May 28, 2015 Place : New Delhi


Mar 31, 2014

We have audited the accompanying financial statements of Oil And Natural Gas Corporation Limited (the "Company"),which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

2. Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (''the Act'') read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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 March 31, 2014;

ii. In the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

iii. In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

5. Emphasis of Matter

We draw attention to Note No. 42.3.2 with regard to the dispute between the company and the Government of Gujarat in respect of payment of Royalty on the crude oil produced in the State. The accrual of the additional liability of Rs. 1,16,326.96 millions, which also includes an amount of Rs. 2,092.23 millions paid with effect from February 1, 2014 and considered as deposit, would depend on the decision of the Hon''ble Supreme Court of India. The amount of Rs. 1,16,326.96 millions has been disclosed as contingent liability.

Our opinion is not qualified in respect of this matter.

6. Other Matters

I. The financial statements include the Company''s share

in the total value of assets, liabilities, expenditure and income of 135 blocks under New Exploration Licensing Policy (NELPs) / Joint Venture (JVs) accounts for exploration and production out of which 8 NELPs / JVs accounts have been certified by other firms of Chartered Accountants and 11 NELP / JVs have been certified by the management in respect of NELPs / JVs operated by other operators. Our opinion is based solely on the reports of the other auditors and management certified accounts.

ii. We have placed reliance on technical / commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry well, allocation of cost incurred on them, depletion of producing properties on the basis of proved developed hydrocarbon reserves, impairment, liability for abandonment costs, liability under NELP and nominated blocks for under-performance against agreed Minimum Work Programme and allocation of depreciation on process platforms to transportation and facilities.

Our opinion is not qualified in respect of these matters.

7. Report on Other Legal and Regulatory Requirements

i. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

ii. As required by section 227(3) of the Act, 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 purposes of our audit;

b. 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 those books;

c. 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;

d. 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 notified under the Act read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

e. Disclosure in terms of clause (g) of sub-section (1) of section 274 of the Act is not required as per notification number GSR 829(E) dated October 21, 2003 issued by the Department of Company Affairs, Government of India.

Annexure to the Auditors'' Report (Referred to in paragraph 7 (i) of our report of even date)

i. a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) As per information and explanations given to us, the fixed assets having substantial 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 reconciliation 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 reconciliation. According to the information and explanation 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.

ii. 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 reconciliation is not complete, the management has stated that the effect of the same on the accounts would be adjusted on completion of reconciliation.

iii. 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. 0.50 million and the maximum amount outstanding at any time during the year was Rs. 0.90 million. 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 receipt of principal amount and interest are regular.

d) There is no overdue amount in respect of loans granted to the above parties.

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 (AuditorRs.s Report) Order, 2003 are not applicable.

iv. 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 controls.

v. 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 applicable.

vi. The Company has not accepted any deposits from the public.

vii. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

viii. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government 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.

ix. a) According to records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' 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, 2014 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 in respect of Income Tax, Excise Duty, Customs Duty, Cess, Sales Tax, Service Tax, and ealth Tax are as under:

Nature of the statute Nature of the dues Amount Amount Paid Involved under Protest (Rs. in million) (Rs.in million)

Income Tax Act, 1961 Income tax/ Penalty/ 50,644.75 32,528.47 Interest

2,748.61 556.50

947.18 51.27

723.61 -

Total 55,064.15 33,136.24

Central Excise Act, 1944 Central excise duty / 494.16 108.54 Interest / Penalty

4,838.14 109.37

1.317.46 -

1,773.30 490.00

Total 8,423.06 707.91

The Customs Act, 1962 Customs duty / Penalty / 2,324.87 - Interest

1.437.47 -

5.00 1.00

Total 3,767.34 1.00

Oil Industries Cess / Interest 6.75 - (Development) Act, 1974

Total 6.75 -

Central Sales Tax Act, Sales tax / Turnover Tax / 3,108.59 34.48 1956 and respective Penalty / Interest States Sales Tax Act

7,880.43 220.92

37,639.98 596.77

Total 48,629.00 852.17

Finance Act, 1994 Service Tax /Interest/ 2,550.06 4.10 Penalties

0.11 -

637.40 -

32.48 -

Total 3,220.05 4.10



Nature of the statue Period to Forum where which the dispute is amount relates pending (financial year)

Income Tax Act, 1961 2006-2013 Commissioner (Appeals)

1995-2011 Income Tax Appellate Tribunal

1991-2012 Hon. High Court

1983-1987 Hon. Supreme Court

Central Excise Act, 1944 2001-2010 Commissioner (Appeals) of Central Excise, Customs and Service Tax

2003-2013 Custom, Excise and Service Tax Appellate Tribunal

1996-2014 Hon. High Court

1980-2005 Hon. Supreme Court

The Customs Act, 1962 1996-2003 Central Board of Excise and Customs

1995-1997 Commissioner of Central Excise, Customs & Service Tax

2007-2008 Custom, Excise and Service Tax Appellate Tribunal

Oil Industries (Development) Act, 1974 2004-2010 Custom, Excise and Service Tax Appellate Tribunal

Central Sales Tax Act, 1956 and respective States Sales Tax Act 2000-2010 Joint Commissioner/ Commissioner CT - Appeals 1993-2009 Appellate Tribunal

1978-2013 Hon. High Court

Finance Act, 1994 2003-2014 Custom, Excise and Service Tax Appellate Tribunal

2004-2005 Deputy Commissioner of Central Excise, Customs and Service Tax

2006-2008 Directorate General of Central Excise Intelligence

2006-2008 Hon. High Court

x. The Company does not have 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.

xi. The Company has not issued any debentures and has not defaulted in repayment of dues to financial institutions or banks.

xii. 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 securities.

xiii. The Company is not a chit fund or a nidhi/mutual enefit 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.

xiv. 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.

xv. 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 Company.

xvi. The company has not availed any term loan during the year.

xvii. 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 investment.

xviii. The Company has not made any preferential allotment of shares during the year.

xix. The Company has not issued any debentures.

xx. The Company has not raised any money by way of public issue during the year.

xxi. 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 M/s S Bhandari & Co. For M/s G. D. Apte & Co. For M/s Mehra Goel & Co.

Chartered Accountants Chartered Accountants Chartered Accountants

Firm Reg No. 000560C Firm Reg No. 100515W Firm Reg No. 000517N

( P. D. Baid) (C. M. Dixit) (R. K. Mehra)

Partner (Mem. No. 072625) Partner (Mem. No. 017532) Partner (Mem. No. 006102)

For M/s Varma & Varma For M/s Ray & Ray

Chartered Accountants Chartered Accountants

Firm Reg No. 004532S Firm Reg No. 301072E

(K. M. Sukumaran) (B. K. Ghosh)

Partner (Mem. No. 015707) Partner (Mem. No. 051028)

Date : May 29, 2014 Place : New Delhi


Mar 31, 2013

1. Report on the Financial Statements

We have audited the accompanying financial statements of OIL AND NATURAL GAS CORPORATION LIMITED (the "Company") which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss, ,and Cash Flow Statement for the year then ended, with the summary of significant accounting policies andother explanatory information.

2. Management''s Responsibility forthe Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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 3151 March, 2013;

b. In the case of the Statement of Prof it 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.

5. Other Matters

a. The financial statements include the Company''s share in the total value of assets, liabilities, expenditure and income of 140 blocks under New Exploration Licensing Policy (NELPs) I Joint Venture (JVs) accounts for exploration and production out of which 8 N ELPs /JVs accounts have been certified by other firms of Chartered Accountants and 11 NELP/JVs have been certified by the management in respect of N ELPs/ JVs operated by other operators.

b. We have placed reliance on technical/ commercial evaluation by the management in respect of categorization of wells as exploratory, development, producing and dry well, allocation of cost incurred on them, depletion of producing properties on the basis of proved developed hydrocarbon reserves, impairment, liability for abandonment costs, liability under NELP and nominated blocks for under-performance against agreed Minimum Work Programme and allocation of depreciation on process platforms to transportation and facilities.

Our opinion is not qualified in respect of other matters.

6. Report on Other Legal and Regulatory Requirements

6.1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure (read with paragraph 1 above) a statement on the matters specified in paragraphs 4 and 5 of the said Order.

6.2. As required by section 227(3) of the Act, 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 purposes of our audit;

b. 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 those books;

c. 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;

d. 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 theAct,;

e. Disclosure in terms of clause (g) of sub-section (1) of section 274 of theAct is not required as per notification number GSR 829(E) dated October 21,2003 issued by the Department of Company Affairs, Government of India.

1. a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) As per information and explanations given to us, the fixed assets having substantial value, other than those which are underground I submerged I 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 reconciliation 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 reconciliation. According to the information and explanation 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 ouropinion, 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 reconciliation is not complete, the management has stated that the effect of the same on the accounts would be adjusted on completion of reconciliation.

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 isRs. 0.89 million and the maximum amount outstanding at any time during the year wasRs. 1.60 million.

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 above parties.

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 controls.

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 notapplicable.

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 costs records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government 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, Employees'' 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 31,2013 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 in respect of Income Tax, Excise Duty, Customs Duty, Cess, Sales Tax, Service Tax, and Wealth Tax are as under: Amount Amount Nature of the statute Nature of the dues Involved Paid under (Rs. In million) Protest (Rs. In million)

Income tax Act, 1961 Income tax/ 25,152.24 16,567.54 Penalty/ Interest

3,090.62 809.49

1,374.35 -

707.01 -

Total 30,324.22 17,377.03

Central Central 3.72 - Excise Act, 1944 excise duty/ Interest/ Penalty

6,926.67 490.00

83,720.00 -

21.68 -

1,192.97 -

Total 91,865.04 490.00

The Customs Customs 1,437.47 - Act, 1962 duty/ Penalty / Interest

94.57 1.00

Total 1,532.04 1.00

Oil Industries Cess / Interest 6.57 - (Development) Act, 1974

Central Sales Sales tax/ 13,806.48 28.86 Tax Act, 1956 and Turnover Tax / respective States Sales Penalty / Interest Tax Act

31,776.62 393.30

3,49170 13.42

Total 49,074.80 435.58

Finance Act, 1994 Service Tax/ 174.14 - Interest/Penalties

2,381.28 4.30

637.40 -

62.54 -

35.50 -

Total 3,290.86 4.30

Nature of the Statute Period to Forum where which the dispute Is pending amount relates (financial year)

Income tax Act, 1961 1995-2012 Commissioner (Appeals)

2000-2011 Income Tax Appellate Tribunal

1991-2012 Hon. High Court

1982-2004 Hon. Supreme Court

Central Excise Act 1944 2005-2009 Commissioner of Central Excise, Customs & Service Tax

1984-2013 Custom, Excise and Service Tax Appellate Tribunal

2008-2013 Hon. High Court

2007-2013 Joint Secretary (Revenue Authority) MOF

2000-2006 Hon. Supreme Court

The Customs Act 1962 1995-1997 Commissioner of Central Excise, Customs & Service Tax

2007-2011 Custom, Excise and Service Tax Appellate Tribunal

Oil Industires Act 1974 2005-2012 Commissioner of Central Excise, Customs & Service Tax

Central Sales Tax Act 1999-2011 Deputy Commissioner/ Joint Commissioner/Commissioner CT-Appeals

1993-2009 Appellate Tribunal

1978-2013 High Court

Finance Act 1994 2007-2013 Commissioner of Central Excise, Customs & Service Tax

2007-2013 Custom, Excise and Service Tax Appellate Tribunal

2006-2008 Directorate general of central excise intelligence

2004-2007 High Court

1997-1998 Supreme Court

10. The Company does not have 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 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 securities.

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 Company.

16. The company has not availed any term loan during the year.

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 investment.

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 the year.

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 G D Apte & Co. For Varma & Varma For S. Bhandari & Co.

Chartered Accountants Chartered Accountants Chartered Accountants

Firm Reg. No. 100515W Firm Reg. No. 004532S Firm Reg. No. 000560C

(C. M. Dixit) (K.M. Sukumaran) (P.P.Pareek)

Partner (M.No. 017532) Partner (M. No.015707) Partner (M. No. 071213)

For Ray & Ray For Mehra Goel & Co.

Chartered Accountants Chartered Accountants

Firm Reg. No. 301072E Firm Reg. No. 000517N

(B.K.Ghosh) (R.K.Mehra)

Partner (M. No. 051028) Partner (M.No. 006102)

New Delhi

May 29,2013


Mar 31, 2012

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 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 appears from our examination of those books.

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 assets.

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 million.

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 controls.

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 applicable.

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 (Rs. In Million)

Income tax Act,1961 Income Tax/ 7,321.80

Penalty/ 3,689.80

Interest 2,213.24

4,481.99

Total 17,706.83

Central Excise Act,1944 Central Excise duty/ 1,195.96 Service Tax/ Interest / Penalty 1,338.41

1,892.98

696.57

1,283.30

Total 6,407.22

The Customs Act,1962 Customs Duty/ 5,067.88 Penalty / Interest

5.00

Total 5,072.88

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 (infrastructure) Cell

Oil Industries Cess / Interest 6.57 (Development) Act,1974

Central Sales Tax Act,1956 Sales tax/ 2,960.23 and respective States' Turnover Tax / 1,900.53 Sales Tax Act Penalty / Interest 16,391.55

19,594.44

291.40

Total 41,138.16

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

1,014.16

Total 4,527.16

Name of the Statute Period to which Forum where dispute the amount relates is pending (financial year)

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 & Service Tax

2005-2012 Central Board of Excise & Customs

2007-2012 Custom, Excise and service Tax Appelate Tribunal

2011-2012 Directorate General of Central Excise Intelligent

1984-2012 Supreme Court

The Customs Act,1962 1995-2012 Commissioner of Central Excise, Customs & Service Tax

2007-2012 Custom Excise and Service Tax Appellate Tribunal

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

Oil Industries (Development) Act,1974 2005-2012 Commissioner of Central Excise, Customs & Service Tax

Central Sales Tax Act, 2002-2012 Demand Notice 1956 and respective 2001-2012 Deputy Commissioner States' Sales Tax Act 1999-2012 Joint Commissioner/ Commissioner CT-Appeals

1994-2012 Appellate Tribunal Commissioner

1977-2012 High Cout

Municipal Corporation 1978-2012 Supreme Court Greater Mumbai Act (Octroi Rules, 1965)

Assam Specified Land 2004-2012 High Court Taxation Act Service Tax 2004-2012 Commissioner of Central Excise, Customs & Service Tax

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 securities.

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 company.

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 investment.

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 the year.

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 (Mem.No.071213)

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)

New Delhi

May 29,2012


Mar 31, 2010

1. We have audited the attached Balance Sheet of OIL AND NATURAL GAS CORPORATION LIMITED (the Company) as at 31st March, 2010, the Profit and Loss Account and 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 and income of 124 blocks under New Exploration Licensing Policy (NELPs)/ Joint Venture (JVs) accounts for exploration and production out of which 70 NELP/ JV accounts have been audited by one of the firms of statutory auditors, 47 NELPs /JVs accounts have been certified by other firms of Chartered Accountants and 7 NELP/JVs are as certified by the management (Refer Note 24.3.1 and 24.3.2 of Schedule 27 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 / impairment on the basis of the proved developed hydrocarbons reserves, liability for abandonment costs, liability under NELP and nominated blocks for under performance against agreed Minimum Work Programme and allocation of depreciation on process platforms to transportation and facilities.

4. As required by 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. Furtherto 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 ouraudit;

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 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 October 21,2003 issued by the Department of Company Affairs.

5.6. Without qualifying our opinion we invite attention to Note no. 2.1 to 2.3 of Schedule 27 in respect of recognition of sales revenue of crude oil and natural gas and Note no. 13 of Schedule 27 regarding certain observations made by auditors of a Jointly Controlled assets- Panna Mukta & Tapti, impact of which is not ascertainable, 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 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 31sl March, 2010;

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

1. a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) As per information and explanations given to us, the fixed assets, other than those which are underground/ submerged/ under joint venture / assets held by employees, having substantial value have been physically verified by the management in phased manner, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. The reconciliation 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 reconciliation. 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) 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 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 are 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. 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 cases 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 reconciliation is not complete, the management has stated that the same would be adjusted in due course.

3. a) The Company has granted secured loans to seven parties covered in the register maintained under section 301 of the Companies Act, 1956. The amount outstanding at the year end is Rs. 0.56 million and the maximum amount outstanding at any time during the year was Rs. 3.58 million.

b) The rate of interest and other terms and conditions of the loans granted are not 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 requirements of clause (iii)(f) and (iii)(g) of paragraph 4 of the Companies (Auditors 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 majorweaknesses in internal controls.

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 pursuance of section 301 of the Companies Act, 1956.

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. The Company has an internal audit system, which in our opinion is 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 costs 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, Custom 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.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

b) Accordinq to the information and explanations qiven to us, the disputed statutory dues are as under:

Name of the Nature of Amount Statute the dues (Rs. In Million)

Income taxAct, 1961 Income Tax 5,280.79

1,386.69 65.78

8,997.01

Total 15,730.27

Central Excise Act 1944 Central Excise duty/ 4.54

Interest/Penalty 15.18

1185.89

147.32

Total 1,352.93

The Customs Act, 1962 CustomsDuty/ 1,133.02

Penalty/ 10.00

Interest 1,437.47

Total 2580.49

Oilfields (Regulations Royalty/ 18,849.79 Development Act, 1948)/ Surfacerent/ AP Mines and Geology Act Interest/ Penalty

AP Mineral Bearing Lands Cess 1,171.84 (Infrastructure) Cess

Oil Industries Cess/Interest 7.72

(Development)Act,1974 7.07

8.61

Total 23.40

Central Sales Tax Act 1956 Sales tax/ 13,257.25

and respective States Turnover Tax/ 5.69

Sales TaxAct Penalty/ 1,092.02

Interest 6.99

8,732.35

0.35

Total 23,094.65

Municipal Corporation Octroi Duty 66.89 of MumbaiAct (Octroi Rules, 1965)

Assam Specified Land Tax on Crude oil and 2,274.50

Taxation Act Natural Gas



Name of the Period to which Forum where Statue the amount relates dispute (financial year) is pending

Income taxAct, 1961 1994-95 to 2009-10 Revisionary Authority

2005-06 to 2009-10 Appellate Authority

2000-01 to 2009-10 High Court

1991-92 to 2009-10 Supreme Court

Central Excise Act 1944 2005-06to2009-10 Commissioner

2006-07 to 2007-08 CBE&C

2002-03 to 2009-10 CESTAT

1980-81 to 2006-07 High Court

The Customs Act, 1962 1998-99 to 2009-10 Asst. Commissioner

2007-08 CESTAT

1995-96 to 1996-97 Ministry of Finance

Oilfields (Regulation & Development Act, 1948)/ AP Mines and Geology Act 1992-93 to 2009-10 Dept. of Geology and Mining, A.P. High Court

AP Mineral Bearing Lands (Infrastructure) Cess 2004-05 to 2009-10 Dept. of Geology and Mining, A.P. High Court

Oil Industries (Development) Act, 1974 2004-05 to 2009-10 Commissioner

2002-03 to 2004-05 CESTAT

2001-02 to 2003-04 High Court

Central Sales Tax Act 1956 and respective States Sales TaxAct 1978-79 to 2009-10 Demand Notice

Deputy Commissioner

2001-02 to 2006-07 Joint Commissioner

1992-93 to 2002-03 CT-Appeals

2004-05 to 2005-06 Tribunal

2006-07 High Court

Municipal Corporation of MumbaiAct (Octroi Rules, 1965) 1978-79 to 2009-10 Supreme Court

Assam Specified Land Taxation Act 2004-05 to 2009-10 Guwahati High Court

10. The Company does not have 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 has not defaulted in repayment of dues to financial institutions or banks.

12. In our opinion and according to the information and explanation given to us, the Company has not granted loans and advance so on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi mutual benefit fund/ society. Accordingly, the provision of clause (xiii) of paragraph 4 of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

14. In our opinion and according to the information and explanation 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 explanation 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 Company, since these guarantees are given for the subsidiary companies promoted by the Company.

16. In ouropinion, 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 investment.

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 byway of public issue during the year.

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 ArunK.Agarwal& Associates For Singhi & Co. For P.S.D.& Associates

Chartered Accountants Chartered Accountants Chartered Accountants

(Firm Regn. No: 003917N) (Firm Regn. No: 302049E) (Firm Regn. No: 004501C)

(Rajesh Surolia) (B. K. Sipani) (Prakash Sharma)

Partner (Mem. No.88008) Partner (Mem. No. 88926) Partner (Mem. No. 72332)

For Kalyaniwalla & Mistry For Padmanabhan Ramani & Ramanujam

Chartered Accountants Chartered Accountants

(Firm Regn. No: 104607W) (Firm Regn. No: 00251 OS)

(Ermin K.Irani) (K.R.Ganesh)

Partner (Mem.No.35646) Partner (Mem. No 22439)

New Delhi 28,th May, 2010

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