ONGC Auditors Report

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 <E) dated June

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)

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

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