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TO THE MEMBERS OF HINDUSTAN PETROLEUM CORPORATION LIMITED
1. We have audited the attached Balance Sheet of HINDUSTAN PETROLEUM CORPORATION LIMITED as at 31st March 2012 and the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies (Auditor's Report) (Amendment) Order, 2004 (together 'the Order'), issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.
4. Further to our comments in the Annexure referred to in paragraph (3) and (4) above, we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.
b) In our opinion, proper books of account as required by law, have been kept by the Company so far as it appears from our examination of the books and proper returns, adequate for the purposes of our audit, have been received from the branch not visited by us
c) The Branch Auditors' report, made available to us, has been appropriately dealt with while preparing our report.
d) The Balance Sheet and the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account and with audited returns from the branch.
e) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.
f) Disclosure in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956 is not required for Government Companies as per Notification No. GSR 829(E) dated October 21, 2003 issued by the Department of Company Affairs.
g) Without qualifying our opinion, we invite attention to
i) Note No. 42 of Notes to Accounts, regarding impairment of assets wherein, being technical matters subject to uncertainty we have relied on the estimates and assumptions made by the Company in arriving at recoverable value of assets, based on desired margins.
ii) Note No. 35(b) of Notes to Accounts regarding recognition of Minimum Alternative Tax (MAT) credit wherein, we have relied on the management representation that the MAT credit of Rs. 268.77 Crores will be set off during the period specified in Section 115JAA of the Income Tax Act, 1961.
iii) Note No. 33 of Notes to Accounts regarding recoverability of outstanding amount of Rs. 505.53 Crores from Kingfisher Airlines Limited, wherein we have relied on the management representation that the entire outstanding will be realised.
iv) Note No. 34 of Notes to Accounts regarding amortization of ancillary cost over the tenure of External Commercial Borrowings.
h) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;
ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
iii) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
(i) a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets except in respect of items like pipes, valves, meters, instruments and other similar items peculiar to a continuous process industry.
b) As explained to us, the Company, having regards to nature and size of its business, has adopted the practice of carrying out physical verification of fixed assets, except LPG cylinders and fixed assets of the erstwhile Kosan Gas Company Undertaking, not handed over, on a staggered basis, over a period of five years in the case of furniture, fixtures and office equipment and over a period of three years in the case of Plant and Machinery and other assets. We were informed that discrepancies noticed on such verification were not material as compared to the book records and have been properly dealt with in the books of account. The existence of fixed assets situated at the residence of employee has, however, been ascertained on a self-declaration basis.
c) Fixed Assets disposed off during the year were not substantial and, therefore, do not affect the going concern assumption.
(ii) a) As explained to us, the inventories were physically verified during the year by Management at reasonable intervals.
In case of material lying with third parties, certificates confirming sticks held have been received from them.
b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. We were informed that discrepancies noticed on physical verification, as compared to the book records, were not material and have been properly dealt with in the books of account.
(iii) Based on the audit procedures applied by us and according to the information and explanations given to us, the Company has neither granted nor taken loans, secured or unsecured to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, sub-clause (b), (c), (d), (e), (f) and (g) of sub-para (iii) of para 4 of the Order are not applicable.
(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that some of the items are of a specialized nature, in respect of which suitable alternative sources do not exist for obtaining comparative quotations, there are