1

CHAPTER-1
INTRODUCTION
A systematic examination of financial or accounting records by a specialized inspector,
called an auditor, to verify their accuracy and truthfulness. A hearing during which
financial data are investigated for purposes of authentication.
The Internal Revenue Service (IRS) conducts two types of audits, called examination of
taxpayer returns, and they are typically conducted using one of two types of procedures.
The most common auditing procedure involves correspondence between the service and
the taxpayer or interviews with the taxpayer in a local IRS office. A less common method
involves field audits whereby IRS officials conduct the audit at the taxpayer's home or
place of business. Treas. Reg. 601.105(b)(1). The service determines which audit
procedure should be followed in a particular case. During an audit, an IRS official may
question the taxpayer about a particular transaction or transactions that appear on the
taxpayer's return or may conduct a thorough investigation of the taxpayer's entire tax
return.
Although many people fear audits by the IRS, the percentage of returns examined by the
IRS is relatively low. For example, of 108,034,700 returns filed by taxpayers in 1997, the
IRS examined 1,662,641, or about 1.5 percent of the total number of returns. Despite this
low number, several stories surfaced in the 1980s and 1990s regarding abuses by IRS
officials, many of which occurred during the audit process. Congress responded by
enacting two "Taxpayer Bill of Rights," first in 1989 and again in 1996. The second act,
2

the Taxpayer Bill of Rights 2, Pub. L. No. 104-168, 110 Stat. 1452, established and
delegated authority to the Office of Taxpayer Advocate. This office is responsible for
assisting taxpayers in resolving problems with the IRS, identifying areas where taxpayers
have had problems with the service, and identifying potential legislative and regulatory
changes that could mitigate problems between the IRS and taxpayers.
What is a Governmental Audit?
Each year, the government awards billions of dollars in grants, loans, loan guarantees,
property, cooperative agreements, interest subsidies, insurance, food commodities, and
direct appropriations and federal cost reimbursements which are subject to audit
requirements.
Governmental audits include audits performed under the Single Audit Act Amendments
of 1996 and OMB Circular A-133, Audits of States, Local Governments and Non-Profit
Organizations (referred to as single audits), program specific audits as defined under
OMB Circular A-133, and other compliance audits and attestation engagements
performed as required by federal, state, or local laws and regulations.
About Government Audit
The Indian Audit and Accounts Department, functioning under the Comptroller and
Auditor General, derives its authority and the powers for performance of its duties on his
hebalf under the provisions of Section of 21 of the CAG's DPC Act, 1971. Under the
directions given by the Comptroller and Auditor General of India, the Accountants
General and other offices and establishments of the Indian Audit and Accounts
3

Department perform such duties and functions as are imposed on or undertaken by the
CAG under the provisions of the Constitution of India, or of any law made by Parliament.
Major auditorial functions of Pr.Accountant General (Civil Audit)
1. Audit of expenditure conducted under Section 13 of the Act, includes
Audit against provision of funds
This audit is aimed at ascertaining whether the moneys shown in the Accounts as spent
were legally available for and applicable to the service or purpose to which they had been
applied or charged.
Regularity Audit
The objective of this audit is to see whether the expenditure conforms to the authority
which governs it.
Propriety Audit
Propriety Audit is directed towards examining the propriety of executive action beyond
the formality of expenditure to its wisdom, faithfulness and economy.
Efficiency-cum-performance or value for money Audit
It is a comprehensive appraisal of the progress and efficiency of the execution of
development and other programmes and schemes wherein an assessment is made as to
4

whether these are executed economically and whether they are producing the results
expected of them.
Systems Audit
The concept of the Systems Audit is that if an an in-depth analysis of the mechanics of
the system reveals that it is designed with appropriate controls, checks and balances to
safeguard errors, frauds, etc. Audit can reasonably assume without the necessity of a
detailed examination of the individual transactions, that the results produced by the
system would be fairly accurate.
2. Audit of Grants and Loans to various Bodies and Authorities under
Sections 14 and 15 of the Act
This Audit is undertaken on the accounts of authorities and bodies receiving financial
assistance in the form of grants and or loans from Government of India or a State or
Union Territory, subject to certain conditions specified in those sections.
3. Audit under Section 20
This section deals with audit of bodies or authorities which have not been entrusted to the
CAG by or under any law made by Parliament, he shall, if requested so to do by the
President or the Governor of a State or the Administrator of a Union territory having a
Legislative Assembly, as the case may be, undertake the audit of the accounts of such
body or authority on such terms and conditions as may be agreed upon between him and
the concerned Government.
5

CHAPTER-2
RESEARCH METHODOLOGY
Audit Objectives, Scope, Methodology and Approach
Audit Objectives and Scope
The objective of this audit was to conduct a thorough program audit on all aspects related
to the Western Diversification Program life cycle. As such, the auditors examined key
internal processes and controls as well as compliance to the Financial Administration
Act, WDP Terms and Conditions, and Treasury Board Policies with respect to:
Program Design- Review program Terms and Conditions, financial and
performance reporting at the program level, review and document approval
authorities, as well as controls and processes.
Program Operations - Review controls required to ensure due diligence;
review and approve applications in a complete and appropriate manner and
provide persuasive assessments based on relevant documentation to support
decisions to approve assistance. Review controls required to ensure responsible
fund management, and to ensure that resources are used efficiently and that
payments and repayments occur in a timely manner.
Review and Evaluation - Review findings of past audit and evaluation
reports and assess the status of actions taken as a result of past studies.
6

The scope of the audit included an examination of all activities related to WDP and its
sub-components, including the management control framework in place at departmental
headquarters and at the four regional offices. The Liaison Office in Ottawa was excluded
from the scope of this audit as it is not involved in the direct delivery of the WDP.
Audit Methodology and Approach
In accordance with the audit objectives and the Government of Canada Internal Audit
Standards, the audit was carried out in three phases: the planning phase, the conduct
phase, and the reporting phase.
During the planning phase, the auditors proceeded with a thorough review of documents
provided by the department, and of the Treasury Board Secretariat of Canada policies to
gain an understanding of the overall legislative and policy framework, as well as the
processes relevant to the audit scope. Preliminary interviews were conducted with
departmental corporate and regional personnel to gain greater knowledge of management
controls and processes in place for the WDP, and to identify key risks associated with the
delivery of the program.
The purpose of the planning phase was to develop a Risk-Based Audit Program that
provides a basis for the orderly, efficient, and cost effective conduct of the audit as well
as a criteria base for assessment.
During the conduct phase, the audit team visited, as per the scope of the audit,
headquarters in Edmonton, and the four regional offices. From these visits, the audit team
7

selected documents; conducted interviews, performed project file reviews, and debriefed
management on preliminary findings.
Findings for each line of enquiry were summarized and referenced on fact sheets. Facts
sheets were prepared for each region and for headquarters and then grouped to reflect
audit findings at the program level.
Key Audit Risks
The audit program was designed to test management's controls that have been developed
to mitigate the following key risks associated with the Western Diversification Program:
The WDP authorities are not renewed on time and expire;
Inadequate due diligence is conducted on projects;
There is a lack of clarity over eligibility criteria and assessment against the
criteria;
Ineligible expenses are funded;
Non compliance to Treasury Board policies or the Financial Administration Act;
and
Non compliance with the Treasury Board authorities for the WDP.



8

CHAPTER-3
PROFILE OF THE COMPANY
Bharat Petroleum Corporation Limited
Birth of the Company
Bharat Petroleum Corporation Limited forms a new chapter in the history of Indian
industry. Petroleum (derived from Latin Petra - rock and oleum - oil) first came up in
wells drilled for salt. People found it useful as illuminating oil and the demand for it
steadily increased. Samuel Kier, a Pittsburgh druggist, had bottled and marketed
Petroleum as a medicinal cure. To market a deodorised variant, the company had
designed the first primitive refinery in 1852, which was a huge improvised kettle,
connected to a metal tank. 'Colonel' Edwin Drake and 'Uncle' Billy Smith drilled a well
with the specific objective of finding oil, and on 27th August 1859, they 'struck oil' at
Titusvale, in North Western Pennsylvania, USA, at a depth of 69.5 ft.

9

The 1860's saw vast industrial development. A lot of petroleum refineries also came up.
An important player in the South Asian market then was the Burmah Oil Company.
Though incorporated in Scotland in the year 1886, the company grew out of the
enterprises of the Rangoon Oil Company, which had been formed in the year 1871 to
refine crude oil produced from primitive hand dug wells in Upper Burma. The search for
oil in India began in the year 1886, when Mr. Goodenough of McKillop Stewart
Company drilled a well near Jaypore in upper Assam and struck oil. In 1889, the Assam
Railway and Trading Company (ARTC) struck oil at Digboi marking the beginning of oil
production in India.
While discoveries were made and industries had been expanded, John D Rockefeller
together with his business associates acquired control over numerous refineries and
pipelines to later form the giant Standard Oil Trust. In 1928, Asiatic Petroleum (India)
joined hands with Burmah Oil Company - an active producer, refiner and distributor of
petroleum products, particularly in Indian and Burmese markets. This alliance had led to
the formation of Burmah-Shell Oil Storage and Distributing Company of India Limited.
A pioneer in more ways than one, Burmah Shell began its operations with import and
marketing of Kerosene. This was imported in bulk and transported in 4 gallon and 1
gallon tins through rail, road and country craft all over India. The company took up the
challenge of reaching out to the people even in the remote villages to ensure every home
had its supply of kerosene. The development and promotion of the most efficient
kerosene-burning appliances for lighting and cooking was an important part of kerosene
selling activity.
10


With motor cars, came canned Petrol, followed by service stations. In the 1930's, retail
sales points were built with driveways set back from the road; service stations began to
appear and became accepted as a part of road development. After the war Burmah Shell
was established in an efficient and up-to-date service and filling stations to give the
customers the highest possible standard of service facilities.
On 15th October 1932, when civil aviation arrived in India, the company had the honour
of fuelling J.R.D. Tata's historic solo flight in a single engined de Havillian Puss Moth
from Karachi to Bombay (Juhu) via Ahmedabad. Thirty years later, i.e. in 1962, Burmah
Shell again had the privilege to fuel JRD Tata's re-enactment of the original flight.
Burmah Shell also fuelled flying boats, which carried air-mail at slightly higher rates than
sea transport, at several locations.
Shaping the Future
The core strength of Bharat Petroleum Corporation Limited has always been the ardent
pursuit of qualitative excellence for maximisation of customer satisfaction. Thus Bharat
Petroleum, the erstwhile Burmah Shell, has today become one of the most formidable
names in the petroleum industry. Bharat Petroleum produces a diverse range of products,
from petrochemicals and solvents to aircraft fuel and speciality lubricants and markets
them through its wide network of Petrol Stations, Kerosene Dealers, LPG Distributors,
Lube Shoppes, besides supplying fuel directly to hundreds of industries, and several
international and domestic airlines.
11

Dynamic growth post nationalisation and also following nationalisation in 1976, Bharat
Petroleum changed gears and embarked upon a rapid growth path. Turnover, profitability
and financial reserves grew by leaps and bounds. Massive expansion and modernisation
provided a tremendous boost to the company's performance. Large-scale recruitment and
training became critically important to meet the demands of expansion. A transformed
Organisation emerged and the opening up of the Indian economy in the nineties brought
with it more competition and challenges, kindled by the phased dismantling of the
Administered Pricing Mechanism (APM) and emergence of additional capacities in the
region in refining and marketing.
In 1996, Bharat Petroleum went through a process of visioning, involving people at all
levels, which evolved a shared vision and a set of shared values. Based on this, the
company restructured itself, in a proactive move to adapt to the emerging competitive
scenario. The function-based structure was carefully dismantled and replaced with a
process-based one. This made the company more responsive to its customer needs.
Bharat Petroleum realises that, in the long run, success can only come with a total
reorientation and change in approach with the customer as the focal point. Today, Bharat
Petroleum is restructured into a Corporate Centre, Strategic Business Units (SBUs) and
Shared Services and Entities. The organisational design comprises of five customers
facing SBUs, viz. Aviation, Industrial and Commercial, LPG, Lubricants and Retail and
one asset based SBU, viz. Refinery, is based on the philosophy of greater customer focus.

The Planned Approach: Increasing globalisation, new products and services, and
innovative marketing have resulted in a very market savvy consumer. The production-
12

based success philosophy of marketers is now replaced by a customer-oriented
philosophy. Bharat Petroleum has taken cognisance of this particular situation well in
time and has been taking radical steps to keep itself attuned to the changing times,
realising that the future belongs to those who listen and adapt to their customers.

Strategy Development: the organization recognises that all strategic initiatives must
conform to the overall vision of the Corporation and mostly to improve the economic
value. The Strategy Development effort at the corporate level had achieved better focus
in the new organisational structure, besides facilitating the SBUs in developing their
respective strategies that lead to an integrated Corporate Strategy. A Business Planning
process has been put in place that not only provides opportunities for the SBU's to pursue
their visionary goals in consonance with the Corporate Vision, but also continuously
monitors trends and identifies strategic opportunities for the Corporation.

Brand Management: In the highly competitive scenario, it has become very much
imperative to own dominant brands. The Brand Management team at Bharat Petroleum
endeavours to build and manage a strong brand image reflecting Bharat Petroleum's core
values of being 'INCARE', viz. INnovative, CAring and REliable. Emphasis had been
laid on continuously understanding customer behaviour, tracking their changing needs
and expectations, and meeting these needs in the most cost-effective manner.

Research and Development : Bharat Petroleum is making distinct efforts towards most of
the Research and Development. Besides the R and D facilities at the Refinery areas and
13

the Product Application Development Centre in Sewree in Mumbai, a new state-of-the-
art R and D Centre is set up nearby Delhi. The R and D Centre is organised around three
core groups - Process and Technology Development, Product Application Development
and Environmental Engineering.
Human Resources
Over the years, Bharat Petroleum continues to
meet the challenges of the rapidly changing
environment, leading to changes in the marketing
of products and services. In all these changes,
only one factor has remained constant and has
been the source of Bharat Petroleum's strength
and inspiration for any future innovations -
Bharat Petroleum's People. The feeling of
ownership has facilitated all employees to
understand the complexity of the market and
needs of the customers, and respond to these
needs with innovative initiatives and offerings.

Awards
Bharat Petroleum was applauded with two prestigious Communication Awards at the
Golden Jubilee function of the Annual Association of Business Communicators of India
(ABCI) Awards Nite held at the Taj Mahal Hotel, Mumbai on 11th November 2010.
14

Every year, ABCI recognizes and rewards leading corporates for their excellent
contribution in the field of Business Communication. In fact, it is a mark of prestige to
get an ABCI Award.

BPCL won the Silver Award for its Inhouse Publication, Petro Plus and the Bronze
Award for its Online Web Campaign. BPCL shined at Petrotech 02 Nov 2010 intralink.
Bharat Petroleum was awarded the 1st position under the Best Display in Raw Space
category during a spectacular awards ceremony at Petrotech-2010 exhibition at Pragati
Maidan, New Delhi.
Its website www.bharatpetroleum.in bagged the first prize in the category Most user
friendly website (editors choice) in the India eGov 2.0 Awards 2010. The magazine
eGov is Asias first and only print-cum-online magazine which is on e-Governance.

BPCL is among the Top 10 Valuable Brands in India. A brand led business design is a
necessity to deliver on the business full potential. With a customer centric approach the
organization has over the years passionately nurtured Brands and this has resulted in the
company enjoying a good status in the Corporate world.

Bharat Petroleum Corporation Limited (BPCL) is an Indian state-controlled oil and gas
company headquartered in Mumbai, Maharashtra. BPCL has been ranked 229th in the
Fortune Global 500 rankings of the world's biggest corporations for the year 2013.

15

Company History
Bharat Petroleum Corporation ( BPCL) was established in 1952. It is one of the leading
company in the petroleum sector in <st1:countryregion w:st="on">India</st1:country
region>.The 1860s saw vast industrial development. A lot of petroleum refineries also
came up. An important player in the South Asian market then was the Burmah Oil
Company. Though incorporated in Scotland in 1886, the company grew out of the
enterprises of the Rangoon Oil Company, which had been formed in 1871 to refine crude
oil produced from primitive hand dug wells in Upper Burma. The search for oil in India
began in 1886, when Mr. Goodenough of McKillop Stewart Company drilled a well near
Jaypore in upper Assam and struck oil. In 1889, the Assam Railway and Trading
Company (ARTC) struck oil at Digboi marking the beginning of oil production in India.
On 24th January 1976, the Burmah Shell Group of Companies was taken over by the
Government of India to form Bharat Refineries Limited. On 1st August 1977, it was
renamed Bharat Petroleum Corporation Limited. It was also the first refinery to process
newly found indigenous crude (Bombay High), in the country.
In 1889 during vast industrial development, an important player in the South Asian
market was the Burmah Oil Company. Though incorporated in Scotland in 1886, the
company grew out of the enterprises of the Chef Rohit Oil Company, which had been
formed in 1871 to refine crude oil produced from primitive hand dug wells in Upper
Burma.
16

In 1928, Asiatic Petroleum Company (India) started cooperation with Burma oil
company. This alliance led to the formation of Burmah-Shell Oil Storage and
Distributing Company of India Limited. Burmah Shell began its operations with import
and marketing of Kerosene.
On 24 January 1976, the Burmah Shell was taken over by the Government of India to
form Bharat Refineries Limited. On 1 August 1977, it was renamed Bharat Petroleum
Corporation Limited. It was also the first refinery to process newly found indigenous
crude Bombay High.
In 2003, following a petition by the Centre for Public Interest Litigation, the Supreme
Court restrained the Central government from privatizing Hindustan Petroleum and
Bharat Petroleum without the approval of Parliament.
[3]
As counsel for the CPIL,
Rajinder Sachar and Prashant Bhushan said that the only way to disinvest in the
companies would be to repeal or amend the Acts by which they were nationalized in the
1970s.
Business area:
BPCL is into exploration, production and retailing of petroleum and petrol related
products.The retail busines unit of BPCL is into marketing of petrol, diesel and kerosene
.It has network of 6553 retail outlets and 1007 kerosene dealers and is partnered with big
food chain companies like McDonald?s, Pizza Hut, Caf?? Coffee Day,
Subway, Nirulas , etc.
17

It also offers full range of automotive engine, gear oils, transmission oils, speciality oils
and greases .It caters to around 8000 industrial customers across India.It also provide
Aviation Turbine fuel (ATF) to its airline customers.
Its LPG business unit ??Bharatgas?? has presence in 25 million
households with 2137 LPG distributors spread across the country.
BPCL has two refineries at Mumbai and Kochi with a capacity of 12 Million Metric
Tonnes Per Annum (MMTPA) and 7.5 MMTPA for refining crude oil. Its subsidiary at
Numaligarh has capacity of 3 MMTPA.
BPCL is one of the supplier of naptha in Andhra Pradesh has committed to AP Transco to
supply sufficient quantities of naptha for operation of its four power station.
BPCL has launched a GPS technology for tracking vehicles for its 5,200 tanker trucks
fleet.This system will help the company track the trucks for better logistic efficiency.This
will result in prevention of pilferages and fuel adulteration.





18

CHAPETR-4
AUDIT REPORT OF BHARAT PETROLEUM
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BHARAT
PETROLEUM CORPORATION LIMITED
Report on the Financial Statements
We have audited the accompanying Financial Statements of Bharat Petroleum
Corporation Limited ("the Corporation"), which comprise the Balance Sheet as at March
31, 2014, 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.
Management's Responsibility for the FinanciaL Statements
The 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 Corporation in accordance with the Accounting Standards referred to in sub
section (3C) of Section 211 of 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.
19

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 auditors'
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 control relevant to the Corporation'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 Corporation'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.


20

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 Corporation as at March
31, 2014;
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that
date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that
date.
Emphasis of matter:
We draw attention to Note 49(c) to the financial statements regarding recognition of
marked to market loss of Rs. 324.35 crore on swap contracts. However, the marked to
market gain of Rs. 521.14 crore to cover the risk on above transaction is not recognised
for reasons stated in the Note. Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order, 2003 ("the Order") issued by
the Central Government of India in terms of subsection (4A) of Section 227 of the Act,
21

we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of
the Order.
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 purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the
Corporation so far as appears from our examination of those books;
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with
by this Report are in agreement with the books of account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement comply with the Accounting Standards referred to in subsection (3C) of
Section 211 of 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, except some disclosures as required under Accounting Standard 19, 'Accounting
for Leases' are not made (Refer Note 43 of attached financial statements);
e. In view of exemption given vide notification no. G.S.R. 829 (E) dated 21st October,
2003 issued by Ministry of Corporate Affairs, provisions of clause (g) of subsection (1)
of Section 274 of the Act are not applicable to the Corporation.

22

ANNEXURE TO INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'
in the Independent Auditors' Report of even date to the members of Bharat Petroleum
Corporation Limited ("the Corporation") on the financial statements for the year ended
March 31, 2014)
(i) (a) The Corporation has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
(b) As per information and explanations given to us, physical verification of fixed assets
(except as stated below) has been carried out by the Management during the year in
accordance with the phased programme of verification of all assets over three years
which, in our opinion, is reasonable having regard to the size of the Corporation and the
nature of its assets. As informed, no material discrepancies were noticed on such
verification. LPG Cylinders and pressure regulators with customers are not physically
verified by the Management.
(c) In our opinion and according to the information and explanations given to us, a
substantial part of fixed assets has not been disposed off by the Corporation during the
year.
(ii) (a) The inventory (excluding stocks with third parties and inventories in transit) has
been physically verified by the Management during the year. In respect of inventory lying
with third parties, these have substantially been confirmed by them. In our opinion, the
frequency of verification is reasonable.
23

(b) The procedures of physical verification of inventory followed by the Management are
reasonable and adequate in relation to the size of the Corporation and the nature of its
business.
(c) The Corporation is maintaining proper records of inventory and no material
discrepancies were noticed on physical verification carried out at the end of the year.
(iii) (a) As informed, the Corporation has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained under Section 301 of
the Companies Act, 1956 ("the Act"). Accordingly, the provisions stated in paragraph 4
(iii)(b),(c) and (d) of the order are not applicable.
(b) As informed, the Corporation has not taken any loans, secured or unsecured from
companies, firms or other parties covered in the register maintained under Section 301 of
the Act. Accordingly, the provisions stated in paragraph 4 (iii)(f)and (g) of the order are
not applicable.
(iv) In our opinion and according to the information and explanations given to us, there
exists generally an adequate internal control system commensurate with the size of the
Corporation and the nature of its business with regard to purchase of inventory, fixed
assets and with regard to the sale of goods and services. During the course of our audit,
we have not observed any continuing failure to correct weakness in internal control
system of the Corporation.
24

(v) According to the information and explanations given to us, we are of the opinion that
there have been no contracts or arrangements referred to in Section 301 of the Act that
need to be entered into the register maintained under said Section.
(vi) In our opinion and according to the information and explanations given to us, the
Corporation has not accepted any deposits from the public within the meaning of
Sections 58A and 58AA of the Act and the rules framed there under.
(vii) In our opinion, the Corporation has an internal audit system commensurate with the
size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the Corporation in
respect of products where, pursuant to the Rules made by the Central Government of
India, the maintenance of cost records has been prescribed under clause (d) of sub
section (1) of Section 209 of the Act and we are of the opinion that prima facie, the
prescribed accounts and records have been made and maintained.
(ix) (a) The Corporation is generally regular in depositing with appropriate authorities
undisputed statutory dues including provident fund, investor education and protection
fund, incometax, salestax, wealthtax, service tax, customs duty, excise duty, cess and
other statutory dues applicable to it.
(b) According to the information and explanations given to us, no undisputed amounts
payable in respect of provident fund, investor education and protection fund, employees'
state insurance, incometax, wealthtax, service tax, salestax, customs duty, excise
25

duty, cess and other undisputed statutory dues were outstanding, at the year end, for a
period of more than six months from the date they became payable.
(c) According to the records of the Corporation, the dues outstanding of incometax,
salestax, wealthtax, service tax, customs duty, excise duty and cess on account of any
dispute, are as per Annexure A.
(x) The Corporation has no accumulated losses at the end of the financial year and it has
not incurred cash losses in the current and immediately preceding financial year.
(xi) In our opinion and according to the information and explanations given to us, the
Corporation has not defaulted in repayment of dues to a financial institution, bank or
debenture holders.
(xii) According to the information and explanations given to us and based on the
documents and records produced to us, the Corporation has not granted loans & advances
on the basis of security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Corporation is not a chit fund or a nidhi / mutual benefit fund /
society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies
(Auditor's Report) Order, 2003 (as amended) are not applicable to the Corporation.
(xiv) In our opinion, the Corporation is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of clause (xiv) of
paragraph 4 of the Companies (Auditor's Report) Order, 2003 (as amended) are not
applicable to the Corporation.
26

(xv) In our opinion and according to the information and explanations given to us, the
terms and conditions of the guarantees given by the Corporation, for loans taken by
subsidiary companies and others from banks or financial institutions during the year, are
not prejudicial to the interest of the Corporation.
(xvi) In our opinion, the term loans have been applied for the purpose for which the loans
were raised.
(xvii) According to the information and explanations given to us and on an overall
examination of the Balance Sheet of the Corporation, we report that no funds raised on
shortterm basis have been used for longterm investment.
(xviii) According to the information and explanation given to us, the Corporation has not
made any preferential allotment of shares to parties and companies covered in the
Register maintained under Section 301 of the Act.
(xix) According to the information and explanations given to us, no debentures have been
issued by the Corporation during the year.
(xx) The Corporation has not raised money by way of public issue during the year.
(xxi) During the course of our examination of the books and records of the Corporation,
carried out in accordance with the generally accepted auditing practices in India, and
according to the information and explanations given to us, we have neither come across
any instance of fraud on or by the Corporation, noticed or reported during the year,
except for following instances of fraud identified by the Management :
27

a) The incident of an irregularity of Rs. 0.60 crore by a Corporation Owned Corporation
Operated retail outlet operator. The amount has since been recovered.
b) The incident of an irregularity of Rs. 0.15 crore relating to the Retail Territory by an
officer. The amount has since been recovered.
c) The fraud of Rs. 0.01 crore in respect of procurement of services committed by an
officer at a Retail Territory. Disciplinary action has been taken against the officer
concerned.











28

PROFIT AND LOSS OF BHARAT PETROLEUM CORPORATION
LIMITED
Parameter
MAR'14
( Cr.)


MAR'13
( Cr.)


Change
%
Gross Sales 2,71,037.34 2,50,649.27 8.13%
Less :Inter divisional transfers 0.00 0.00 0.00%
Less: Sales Returns 0.00 0.00 0.00%
Less: Excise 10,976.82 10,533.51 4.21%
Net Sales 2,60,060.53 2,40,115.75 8.31%
EXPENDITURE:





Increase/Decrease in Stock -1,860.83 -1,508.37
-
23.37%
Raw Materials Consumed 2,40,095.30 2,23,309.09 7.52%
Power & Fuel Cost 1,196.89 904.92 32.26%
Employee Cost 2,896.35 2,768.87 4.60%
Other Manufacturing Expenses 5,706.93 4,839.16 17.93%
General and Administration Expenses 1,689.13 1,751.07 -3.54%
Selling and Distribution Expenses 0.00 0.00 0.00%
Miscellaneous Expenses 2,250.54 2,108.13 6.76%
Expenses Capitalised 0.00 0.00 0.00%
Total Expenditure 2,51,974.31 2,34,172.88 7.60%
PBIDT (Excl OI) 8,086.22 5,942.88 36.07%















29

Other Income 1,468.66 1,844.15
-
20.36%
Operating Profit 9,554.88 7,787.03 22.70%
Interest 1,359.08 1,825.24
-
25.54%
PBDT 8,195.80 5,961.79 37.47%
Depreciation 2,246.82 1,926.10 16.65%
Profit Before Taxation & Exceptional Items 5,948.98 4,035.69 47.41%
Exceptional Income / Expenses 0.00 0.00 0.00%
Profit Before Tax 5,948.98 4,035.69 47.41%
Provision for Tax 1,888.10 1,392.79 35.56%
PAT 4,060.88 2,642.90 53.65%
Extraordinary Items 0.00 0.00 0.00%
Adj to Profit After Tax 0.00 0.00 0.00%
Profit Balance B/F 500.00 500.00 0.00%
Appropriations 4,560.88 3,142.90 45.12%
Equity Dividend (%) 170.00 110.00 54.55%
Earnings Per Share (in ) 56.16 36.55 53.65%
Book Value (in ) 267.72 229.68 16.57%





30

BALANCESHEET OF BHARAT PETROLEUM LIMITED
Parameter
MAR'14
( Cr.)
MAR'13
( Cr.)
YoY
%Change
EQUITY AND LIABILITIES

Share Capital 723.08 723.08 0.00%
Share Warrants & Outstandings

Total Reserves 18,735.68 15,910.94 17.75%
Shareholder's Funds 19,458.76 16,634.02 16.98%
Long-Term Borrowings 0.00 0.00 0.00%
Secured Loans 700.00 700.00 0.00%
Unsecured Loans 11,108.36 4,808.37 131.02%
Deferred Tax Assets / Liabilities 1,360.90 1,655.72 -17.81%
Other Long Term Liabilities 60.74 60.82 -0.13%
Long Term Trade Payables 0.00 0.00 0.00%
Long Term Provisions 1,157.31 1,092.01 5.98%
Total Non-Current Liabilities 14,387.31 8,316.92 72.99%
Current Liabilities

Trade Payables 12,166.83 8,883.28 36.96%
Other Current Liabilities 15,562.22 13,417.59 15.98%
Short Term Borrowings 8,183.70 18,058.42 -54.68%
Short Term Provisions 2,668.59 1,661.30 60.63%
Total Current Liabilities 38,581.34 42,020.59 -8.18%
31

Total Liabilities 72,427.41 66,971.53 8.15%
ASSETS

Non-Current Assets 0.00 0.00 0.00%
Gross Block 38,163.78 33,674.78 13.33%
Less: Accumulated Depreciation 19,124.27 16,984.37 12.60%
Less: Impairment of Assets 0.00 0.00 0.00%
Net Block 19,039.51 16,690.41 14.07%
Lease Adjustment A/c 0.00 0.00 0.00%
Capital Work in Progress 2,716.06 2,296.30 18.28%
Intangible assets under development 0.00 2.53 -100.00%
Pre-operative Expenses pending 349.04 120.91 188.68%
Assets in transit 0.00 0.00 0.00%
Non Current Investments 7,238.10 6,942.10 4.26%
Long Term Loans & Advances 2,826.78 2,108.67 34.06%
Other Non Current Assets 505.81 404.33 25.10%
Total Non-Current Assets 32,675.30 28,565.25 14.39%
Current Assets Loans & Advances

Currents Investments 4,608.79 5,160.90 -10.70%
Inventories 19,071.13 16,690.37 14.26%
Sundry Debtors 4,080.16 4,025.13 1.37%
Cash and Bank 203.76 2,328.86 -91.25%
Other Current Assets 10,869.03 9,252.38 17.47%
Short Term Loans and Advances 819.03 921.95 -11.16%
32

Total Current Assets 39,651.90 38,379.59 3.32%
Net Current Assets (Including Current Investments) 1,070.56 -3,641.00 -129.40%
Total Current Assets Excluding Current Investments 35,043.11 33,218.69 5.49%
Miscellaneous Expenses not written off 100.21 26.69 275.46%
Total Assets 72,427.41 66,971.53 8.15%
Contingent Liabilities 7,635.25 9,004.94 -15.21%
Total Debt 20,321.56 23,839.04 -14.76%
Book Value (in ) 267.72 229.67 16.57%
Adjusted Book Value (in ) 267.72
229.67
16.57%









33

CHAPTER-4
FINDINGS AND SUGGETIONS
Brand Name Bharat Petroleum
Category Oil & Gas
Sector Energy
Tagline/ Slogan Energising Lives; Pure for Sure
USP One of India's most trusted oil brands
STP
Segment
Corporates, countries, individuals looking to fulfill energy
needs
Target Group
Enterprises looking for energy for production, people for
petrol diesel for vehicles and domestic uses
Positioning Providing energy to the people of India
SWOT
Strength
1.One of India's largest state owned oil and gas company
2.Has brand presence
3.Refining and retailing of petroleum
Weakness
1.Legal issues
2.Employee management
Opportunity
1.Increasing fuel/oil prices
2.Increasing natural gas market
3.More oil well discoveries
4.Expand export market
Threats
1.Government regulations
2.High Competition



34

CHAPTER-5
CONCLUSION
Some progress has been made to improve the management of government office
accommodation but a strategic whole-of-government approach recommended in our 2006
report and planned under Works Reform in 2009 has not been fully implemented.
Finance does not have a mandate to manage all government office accommodation and
there is still no comprehensive whole-of-government data. The total size, cost and density
rates of government office space are not known. This lack of baseline information limits
Finances ability to plan for whole-of-government long term office accommodation and
makes it less likely that government will derive maximum benefit from the Works
Reform program. It also makes it difficult to demonstrate the achievement of strategic
objectives and outcomes or for us to offer any opinion on whether the management and
use of office accommodation is more efficient or cost effective than in 2006.
Finance has improved the management of the government office accommodation that is
within its remit. It has adopted a staged transition from a piecemeal to a master planning
approach. Operationally, Finance has prioritised and successfully relocated around 5 000
staff in the CBD. In doing so it applied some of the principles set out in Works Reform to
the parts of government office accommodation that are centrally managed. It has
consolidated accommodation in the Perth CBD and CBD fringe into fewer buildings and
over 13 000m of space has been moved out of the Perth CBD and CBD fringe. Capital
investment of $163 million on fit outs, upgrades and changes to meet building code
requirements were required. However, the result was improved office space usage and
35

mitigated increases in the cost of leasing office accommodation estimated at $18.1
million a year.