To the Members of Oil and Natural Gas Corporation LimitedReport 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, 2023, 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, 201 3 (“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, 2023, 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. 8.2 & 10.3, which explains that certain Discovered Small Fields (DSF) of the Company have been identified by DGH, MoPNG, GOI for bidding under DSF III, after considering the value of such fields as Nil. These identified contract areas have been awarded to the winning bidders (awardees) and the PML/PELs of these contract areas have been transferred to the said awardees. Accordingly, during the year, the company has charged off exploratory wells, development wells in progress and capital work in progress amounting to '21,837.76 Million and reversed the accumulated impairment of '21,718.77 Million on the said assets.
ii. Note No. 24.4 & 48.1.1.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 is contesting the same at various forums. However, as an abundant caution, the Company has deposited the disputed Service Tax and GST on royalty along-with interest under-protest amounting to '115,581.52 Million up to 31 March 2023.
As mentioned in the said note, the Company shall continue to contest such disputed matters before various forums, however, considering the pending final decision in a similar matter by the Nine Judges’ Bench of Hon’ble Supreme Court, which is yet to be constituted and keeping in view the considerable time elapsed, during the year, company has reviewed the entire issue and has decided to make a provision towards these disputed taxes as a prudent and conservative practice in respect of the nominated fields, as per agreed terms in JV blocks where there are no disputes amongst the JV partners and to the extent of company’s participating interest in the JV blocks where there are disputes amongst the JV partners. Accordingly, during the year, the Company has provided '92,351.14 Million towards disputed taxes for the period from April 1, 2016 to March 31,
2022 together with interest thereon upto March 31,
2023 and being material has been disclosed as an exceptional item. Further, a similar provision of '28,723.32 Million has also been made during the year for disputed taxes for the financial year 2022-23.
As further mentioned in the note, based on the legal
opinions, with respect to JV blocks where there are disputes with JV partners, the Service Tax/GST, if applicable on royalty, will required to be discharged by the JV partners in their respective share of participating interest, and pending resolution of the disputes, other partners’ share of disputed ST/GST on Royalty in such JV blocks together with interest upto March 31,2023 amounting to '43,318.13 Million has not been considered by the company for provision and is disclosed as contingent liability.
The remaining disputed demand received by the company towards penalty and other differences of '18,624.60 Million has also been disclosed as contingent liability.
As mentioned in the note, considering the experts’ opinion, the amount deposited under protest has been claimed by the company in the Income Tax return / in the ongoing assessment & appellate proceedings as an allowable expenditure under Income Tax Act, 1961 for the relevant earlier assessment years and has also been considered as an allowable expenditure while calculating the current tax. Deferred tax asset has also been created for '879.86 Million in respect of the amounts yet to be deposited against the provision made for disputed taxes for the above periods.
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 Government of India (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 1,624.05 Million equivalent to '133,415.71 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 recasting 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 English Commercial Court (London High Court) are not available with the company. The Company has
informed that the English 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. The English Court had delivered its verdict on June 9, 2022 dismissing the challenge made by GOI. The GOI filed an appeal against the English Court verdict of June 9, 2022 that was rejected by the English courts in August 2022.
Based on the information shared by BGEPIL, the GOI has also filed an execution petition before the Hon’ble Delhi High Court seeking enforcement and execution of the October 12, 2016 FPA. BGEPIL / RIL contend that GOI’s execution petition is not maintainable and have opposed the reliefs sought by the GOI under the said petition. The hearings in the matter before the Hon’ble Delhi High Court concluded on August 4, 2022 and orders are awaited.
Pending finalization of the decision of the Arbitration 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 demand raised by DGH, amounting to USD 1,624.05 Million equivalent to '133,415.71 Million has been considered necessary and has been treated as contingent liability.
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:
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Key Audit Matter
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How our audit addressed the matter
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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-in-Progress, 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, impact of 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 of the financial performance and position.
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.
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Our audit procedures included the following:
Evaluated the appropriateness of management’s identification of the CGUs, exploration and evaluation assets and tested the operating effectiveness of controls over the impairment assessment process, including indicators of impairment, as required by relevant financial reporting standards.
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.
Reviewed the appropriateness of discount rates used in the estimation.
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
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.
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.
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Key Audit Matter
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How our audit addressed the matter
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In case of exploration and evaluation assets including other Oil and Gas 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.
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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 changes. At each reporting date the decommissioning liability is reviewed and remeasured 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.
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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 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.
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.
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Key Audit Matter
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How our audit addressed the matter
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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 interests or 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.
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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.
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 recognition, measurement, presentation and disclosure of the Contingent liabilities in the Standalone Financial Statements.
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Key Audit Matter
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How our audit addressed the matter
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Information Technology and General Controls
The Company is dependent on its Information Technology (“IT”) systems for processing and recording its transactions, including financial reporting processes.
Appropriate IT general controls and application controls are required to ensure that such IT systems are able to process the data, as required, completely, accurately and consistently for reliable financial reporting.
IT application controls are critical to ensure that changes to applications / files / information and underlying data are made in an appropriate manner and under controlled environment. Appropriate controls contribute to mitigating the risk of potential fraud or errors as a result of changes to applications and data.
MIS reports, relevant for financial reporting, have been developed and tested through internal and outsourced support arrangements and ultimately authenticated by the users.
During the year, the Company transitioned to SAP HANA and on account of the pervasive use of its IT systems and related control environment on the Company’s financial reporting process, the testing of the general computer controls of the IT systems used in financial reporting has been considered to be a Key Audit Matter.
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In assessing the integrity of the IT systems relevant for financial 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 and review of the reports of the Information system control audits done by a third party.
Access rights were tested over applications, operating system, on a sample basis, which are relied upon for financial reporting. We further tested segregation of duties, including preventive controls to ensure that access to change applications, the operating system or databases in the production environment were granted only to authorized personnel.
Our audit included making necessary inquiries with the management, scrutiny of the report on ‘IT audit and security’ by a third-party expert, access security (including controls over privileged access), segregation of duties and delegation of authority.
In response to the above IT requirements, enhancement of functionalities in IT System made during the year, we performed the following:
- reviewed 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.
Reviewed 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.
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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. 46.1.3, the Standalone Financial Statements include the Company’s share in the total value of assets, liabilities, expenditure and income of 194 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. 10 NELPs/ HELPs/ JOs accounts have been certified by other Chartered Accountants. In respect of these NELPs/ HELPs/ JOs, Standalone Financial Statements include proportionate share in assets and liabilities as on March 31, 2023 amounting to '89,931.05 Million and '70,111.16 Million respectively and revenue and profit/(loss) including other comprehensive Income for the year ended March 31, 2023 amounting to '110,395.89 Million and ' (2,248.21) Million respectively. Our opinion is based solely on the certificate of the other Chartered Accountants.
b. 15 NELPs / HELPs/ JOs have been certified by the management in respect of NELPs / HELPs/ JOs operated by other operators. In respect of these NELPs / HELPs/ JOs, Standalone Financial Statements include proportionate share in assets and liabilities as on March 31,2023 amounting to '8,977.15 Million and '11,035.80 Million respectively and revenue and profit/(loss) including other comprehensive Income for the year ended March 31, 2023 amounting to '49.52 Million and ' (3,956.19) Million respectively. Our opinion is based solely on management certified accounts.
iii. The Company has availed certain Working Capital Loans from the banks against the lien/security of Term Deposits, total sanctioned limits of such loans was '106,585 Million as mentioned in Note No. 27.1 to
the Standalone Financial Statements. The charge on such loans, as required by section 77 of the Act, has not been registered/created by the company with the Registrar of Companies (MCA).
iv. The Standalone Financial Statements of the Company for the year ended March 31, 2022 were audited by joint auditors of the Company, two of which were the predecessor audit firms, and have expressed an unmodified opinion dated May 28, 2022 on such standalone financial statements.
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.
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.
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:
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Directions u/s 143(5) of the Act for year 2022-23
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Auditor’s reply on the action taken on the directions
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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.
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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.
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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)
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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 2022-23.
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 2022-23 with regard to amounts lent by the company to the other parties.
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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.
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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.
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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:
i. The Company has disclosed the impact of pending litigations as at 31.03.2023 on its financial position in its Standalone Financial Statements - Refer Note No. 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 No. 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 No. 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 No. 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.
vi. As proviso to rule 3(1) of the Companies (Accounts)
Rules, 2014 is applicable for the company only w.e.f. April 1, 2023, reporting under clause 11(g) of the Companies (Audit and Auditors) Rules, 2014 is not applicable.
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