To The Members of
Mangalore Refinery and Petrochemicals Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of MANGALOREREFINERY AND PETROCHEMICALS LIMITED ("the Company")which comprises theStandalone Balance Sheet as at 31st March 2021 and the Standalone Statement ofProfit and Loss (including other comprehensive income) the Standalone Statement ofChanges in Equity and the Standalone Statement of Cash flow for the year then ended andnotes to the Standalone Financial statement including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (Act') in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India includingthe (Indian Accounting Standards) Rules 2015 as amended ("Ind AS") and therelevant rules issued thereunder of the state of affairs of the Company as at 31stMarch 2021 and its loss (including other comprehensive income) changes in equity andcash flows for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Companies Act 2013. Our responsibilities under thosestandards are further described in the Auditor's Responsibilities for the audit of thestandalone financial statements section of our report. We are independent of thecompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Companies Act 2013 and the rulesmade there under and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on thestandalone financial statements.
Emphasis of Matter
We invite attention to the following Notes to statement of Standalone FinancialStatements;
(a) Note No.40.2.2 (c) of the statement regarding provision of Rs.28.72 Million andRs.243.11Million respectively to make good the loss in value of investment consideringthe employer's obligation under the Provident Fund Regulations arising out of shortfallprimarily due to default over interest obligations and the probable principal defaultanticipated on Non-convertible Debentures of certain Companies wherein the Provident FundTrust has made its investments. The Provident Fund Trust has marked down the aboveinvestment by 70% in its books which will depend upon the future outcome of variousmatters and the recognition of company's claim in these matters.
(b) Note No.49 of the statement with regard to the disclosure and accounting treatmentincluding the restatement of the standalone financial statement for the year ending 31stMarch 2020 on the basis of the Expert Advisory
Committee (EAC) opinion of the Institute of Chartered Accountants of India (ICAI) inrespect of backstopping arrangement for Compulsorily Convertible Debentures (CCD) issuedby its subsidiary ONGC Mangalore Petrochemicals Limited.
(c) Note No 53 of the statement which describes the impact of COVID-19 on the company'sbusiness and the appropriateness of preparing these standalone financial statements on agoing concern basis which is more fully described therein.
Our opinion is not modified in respect of the above referred (a) to (c) matters.
Key Audit Matters
Key audit matters are those matters that in our Professional judgement were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. For each matter below our description of how our auditaddressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditors' responsibilities for the audit of the Standalone Financial Statements section ofour report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Standalone Financial Statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Standalone Financial Statements.
|The Key Audit Matters ||How the matter was addressed in our audit |
|Modified Audit Procedures necessitated in the second spell of our final audit pursuant to the second wave of COVID- 19 pandemic: ||The company provided us the VPN access over secured network to their SAP system for verification of books of accounts and documents backed by email communication video conference and other communication system to complete the audit. To the extent of our physical presence was absent we carried the audit processes on the basis of verification of such books of accounts records documents etc. made available to us as above which were relied upon as audit evidence for conducting the audit and reporting for the current period. |
|Due to the Nation-wide second wave of COVID-19 pandemic and the consequent travel and other restrictions the final part of the second phase of our audit could not be carried through our physical presence at the operating locations/other business areas/ Corporate Office of the company. To a limited extent this extraordinary situation has necessitated modification of our audit procedures so as to carry out the audit remotely through online access receipt of digital documents online meetings etc. ||We have carried out the verification of scanned copies of the documents evidences etc. produced before us from time to time through the aforesaid medium and kept as audit evidences. |
|Due to this extraordinary situation on account of the second wave of COVID-19 pandemic to the extent of our physical presence was absent as stated above we have identified such modified audit procedures as a Key Audit Matter ||We have made enquiries discussed our audit observations and gathered necessary audit evidences and information through email video conferencing dialogues and similar communication channels. |
| ||Wherever the confirmation from banks and other parties in respect of outstanding balances were not directly received by us we have relied on the confirmation and statements obtained by the company in this regard and carried other audit procedures including the verification of subsequent events and transactions |
| ||Wherever the title deeds of immovable properties are held in physical form the access of which is not available in SAP system we have relied on the other details and management representation in this regard |
| ||We have also relied upon and performed our audit procedures in accordance with the advisories and guidance issued by the institute of chartered accountants of India for Audit and Accounting procedure under COVID 19 situation. |
|Contingent Liabilities related to claims against the company/Disputed demands (Refer Note No 45 of accompanying Standalone Financial statements) ||Our audit procedure included but was not limited to the following : |
|There are several claims and litigations pending before various forums against the company which have not been acknowledged as debt by the company and are disclosed as contingent Liabilities. ||Obtained an understanding of the management process for: |
|Whether a liability is recognised or disclosed as a contingent liability in the financial statements is inherently judgmental and dependent on a number of significant assumptions and assessments. The eventual outcome of these legal proceedings is dependent on the outcome of future events and unexpected adverse outcomes could significantly impact the Company's reported profits and balance sheet position. ||Controls and identification of legal actions initiated in respect of claims and disputed amount against the Company |
|Considering the degree of management judgement in interpreting the various cases including accounting estimates that involves high estimation uncertainty in relation to the exposure arising out the claims against the company/disputed demand this matter has been identified as a key audit matter for the current year audit. ||Assessment of accounting treatment for each such litigation identified under Ind AS 37 and Measurement of amounts involved. |
| ||Obtained an understanding of the nature of litigations pending against the Company and discussed the developments during the year for key litigations with the management and respective legal department of the company. |
| ||Assessed management's conclusions through understanding precedents set in similar cases |
| ||Evaluated the adequacy and completeness of disclosures made for their appropriateness in accordance with the applicable accounting standards |
|Recognition and Measurement Deferred Tax Assets ||Our audit procedure included but was not limited to the following : |
|As per IND AS 12 Deferred Tax Assets are the amount of income tax recoverable in future periods in respect of (a) deductible temporary differences (b) the carry forward of unused tax losses and (c) the carry forward of unused tax credits ||Considered the company's past years taxable profits and taxes paid obtained details of carry forward losses under income tax and details of estimates of future taxable profits. |
|A deferred tax asset shall be recognised for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised ||Tested the period over which the deferred tax assets on such unused tax losses and unused tax credits would be recovered against future taxable income. |
|Determination of probable future taxable profit is a matter of judgment based on convincing evidence. Considering the management's involvement in estimation and judgment of determining the future taxable profits which have a degree of uncertainty this matter has been determined as a key audit matter. ||Tested the management's under lying assumptions and judgments in estimating the probable future taxable profits and the existence of sufficient taxable temporary difference against which the unused tax losses or unused tax credits can be utilised by the company |
| ||Assessed the adequacy and appropriateness of the disclosures in the Standalone financial statements. |
|Impairment of Investment in Subsidiary ||Our audit procedure included but was not limited to the following : |
|As per the IND AS 36 Impairment of Assets An entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired including investment in subsidiaries associates and joint ventures. If any such indication exists the entity shall estimate the recoverable amount of the asset. ||We discussed and evaluated management assessment of impairment of investment in subsidiary. |
|As disclosed in note No. 11 of standalone financial statements the Company has investments in subsidiary ONGC Mangalore Petrochemicals Limited as well as joint venture Shell MRPL Aviation Fuels and Services Limited indicators of impairment of the said investments by reference to the requirements under relevant Ind AS which involve use of significant estimates and assumptions. ||We evaluated the objectivity and independence of specialists/ experts involved in the valuation process. |
|ONGC Mangalore Petrochemicals Limited has incurred continuous losses which have led to erosion of its net worth. The management of ONGC Mangalore Petrochemicals Limited has estimated that it will make profits in the upcoming years based on the assumptions and projections which have been approved by the Board of directors of ONGC Mangalore Petrochemicals Limited ||We have assessed and reviewed the valuation method including the assumptions considered by the Management of ONGC Mangalore Petrochemicals Limited for projecting the future cash flows and the key assumptions used in this regard. |
|The accounting for Investment in this subsidiary is a Key Audit matter as the determination of recoverable value for impairment assessment involves significant management assumptions and judgement in respect of estimated Future cash flows Discount rates economic and entity specific factors etc. ||Obtained the representations from the management and reviewed the Independent audit report of the statutory auditor of the subsidiary company. |
| ||We considered the disclosures in the standalone IND AS financial statements for compliance with disclosure requirements. |
The audit of the Standalone financial statement for the year ended 31stMarch 2020 included in the statement was carried out and reported by the predecessorauditors who have expressed unmodified opinion vide their audit report dated 9thJune 2020 whose report has been furnished to us and which have been relied upon by us forthe purpose of our audit of the statement. Our opinion is not modified in respect of thismatter.
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board Report including Annexure toBoard's Report Management Discussion and Analysis Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditor's report thereon. The above referred information isexpected to be made available to us after the date of this auditor's report.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. When we read the information if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance and take appropriate actions necessitated by the circumstances and theapplicable laws and regulation.
Responsibilities of Management and those charged with governance for the StandaloneFinancial Statements
The Company's Board of Directors are responsible for the matters stated in section134(5) of the the Companies Act 2013("the Act") with respect to the preparationof these standalone financial statements that give a true and fair view of the financialposition financial performance total comprehensive income changes in equity and Cashflow of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provision of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financial controlthat were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statement that give true and fair view and are free from material misstatementwhether due to fraud or error.
In preparing the standalone financial statements the Board of Directors areresponsible for assessing the company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to ceases operations or has no realistic alternative but to do so.
Those Board of Directors are responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
z Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
z Obtain an understanding of internal controls relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing an opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
z Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
z Conclude on the appropriateness of the management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the company to cease tocontinue as a going concern.
z Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the stand alone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on thematters specified in the paragraph 3 and 4 of the order to the extent applicable.
2. Based on the verification of Records of the Company and based on information andexplanations given to us we give here below a report on the Directions issued by theComptroller and Auditor General of India in terms of Section 143 (5) of the Act: a. Thecompany process all the accounting transactions through IT system named SAP. Based on theaudit procedures carried out and as per the information and explanations given to usthere were no accounting transactions processed outside the IT system for the year ended31st March 2021 closure no financial implications arise to impact theintegrity of accounts. b. Based on the audit procedures carried out and as per theinformation and explanations given to us there is
no restructuring of an existing loan or cases of waiver/write off ofdebt/loans/interest etc. made by lender to the company due to the company's inability torepay the loan. c. Based on the audit procedures carried out and as per the informationand explanations given to us. Government grants in the form of interest free loansreceived from the State Government have been properly accounted and utilised as per theterms and conditions.
3. As required by section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit; b) In ouropinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books;
c) The standalone Balance Sheet standalone Statement of Profit and Loss (includingother comprehensive income) the standalone statement of Cash Flows and the standalonestatement of changes in Equity dealt with by this Report are in agreement with the booksof account;
d) In our opinion the aforesaid standalone financial statements comply with IndianAccounting Standards specified under Section 133 of the Act read with rule 7 of theCompanies (Accounts) Rules 2014.
e) As per Notification No. GSR 463(E) of the Ministry of Corporate Affairs dated05-06-2015. Disqualification of directors stated under Section 164(2) of the Act is notapplicable to the Company since it is a Government Company.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statement of the Company and the operating effectiveness of such controls referto our separate report in
"Annexure B". g) As per Notification No GSR 463 (E) of Ministry ofCorporate Affairs dated 05-06-2015 provisions of Section 197 as regards managerialremuneration are not applicable to the company since it is a Government Company and h)With respect to the other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:
(I) The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note No 45 to the StandaloneFinancial Statements;
(II) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses. and
(III) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by.
"ANNEXURE - A" TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements ofour Report of even date to the members of M/S MANGALORE REFINERY AND PETROCHEMICALSLIMITED on the accounts of the Company for the year ended 31st March 2021]
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:
i) In respect of the Company's Property Plant and Equipment;
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.
b. All the assets have not been physically verified by the management during the yearbut there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and nature of its assets. As per the reportssubmitted by the Company no material discrepancies have been noticed on suchverification.
c. According to the information and explanation given to us and the records of thecompany examined by us the title deeds of immovable properties are held in the name ofthe company. In respect of immovable properties taken on lease and disclosed asright-of-use-assets in the standalone financial statements the formal lease agreementsfor lands amounting to Rs.1247.51 million are yet to be executed. Refer Note no. 6.2 tothe standalone financial statements.
ii) We are informed that the inventory of stores and spares are physically verifiedduring the year by the management on a continuous basis as per programme of perpetualinventory. Inventories of other items have been physically verified at the year end. Thefrequency of the verification in our opinion is reasonable having regard to the size ofthe company and nature of its business. As per the reports submitted by the Company nomaterial discrepancies have been noticed on such verification.
iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Companies Firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013. Hence the provisions of clause (iii) (a) to (c) of paragraph 3 ofthe Order are not applicable to the company.
iv) According to the information and explanations given to us in respect of loansinvestments guarantees and security the Company has complied with provisions of Section185 and Section 186 of the Companies Act 2013.
v) According to the information and explanations given to us the Company has notaccepted any deposits within the meaning of sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed thereunder. Hence theprovisions of clause (v) of paragraph 3 of the Order are not applicable to the company.
vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by the Central Government for maintenance of cost records under Subsection (1) of Section 148 of the Companies
Act 2013 and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. However we have not made a detailed examination of therecords.
vii) a. According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including Provident Fund Income Tax Goods and Services TaxSales Tax Duty of Excise and other statutory dues applicable to it during the year withappropriate authorities.
According to the information and explanations given to us there were no undisputedamounts payable in respect of Provident Fund Income Tax Sales Tax Duty of Excise andother statutory dues outstanding as at 31st March 2021 for a period of morethan six months from the date they became payable.
b. According to information and explanations given to us and as per our verification ofrecords of the Company the disputed tax which are not deposited with the appropriateauthorities as at 31st March 2021 are given below.
|NAMEOF THESTATUTE ||NATUREOFTHE DUES ||TOTAL DEMAND ||TOTALTAX PAID UNDER PROTEST/ ADJUSTED ||AMOUNT NOT DEPOSITED ||PERIOD (FINANCIAL YEAR) ||FORUMWHERE THE DISPUTE IS PENDING |
|Income Tax Act 1961 ||Income Tax / Interest / Penalty ||112.24 || || ||2013-14 ||Commissioner of Income Tax Appeals |
|Central Excise Act 1944 ||Central Excise Duty / Service Tax / Interest / Penalty ||6298.54 ||327.09 ||5971.45 ||2002-03 to 2016-17 ||CESTAT |
|The Customs Act 1962 ||Custom Duty / Interest / Penalty ||7049.19 ||2503.96 ||4545.23 ||1997-2000 & 2015-17 ||CESTAT - Bangalore |
| || ||71.86 || ||71.86 ||1997-2000 ||Supreme Court |
| || ||3.34 ||0.76 ||2.58 ||2017-18 ||Commissioner (Appeals) (Customs) Bangalore |
|The Karnataka Sales tax Act 1957/ Central ||Tax/ Interest/ Penalty ||4341.60 ||4341.60 ||- ||1999-00 to 2009-10 ||Karnataka Appellate Tribunal |
|Sales Act 1956 || ||16.42 ||12.42 ||4.00 ||2009-10 to 2011-12 ||Karnataka High Court |
| || ||34.97 ||22.66 ||12.31 ||2003-04 ||Gujarat Value Added Tax Tribunal |
viii) According to the information and explanation given to us and the records of theCompany examined by us the Company has not defaulted in repayment of loans or borrowingsto any bank or Government during the year.
xi) The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments) during the year. The term loans borrowed were appliedfor the purpose for which they were raised.
x) According to the information and explanations given to us and the books of accountexamined by us no instance of fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.
xi) As per notification No. GSR 463(E) of the Ministry of Corporate Affairs dated05/06/2015 provisions of section 197 as regards managerial remuneration are notapplicable to the Company since it is a Government Company. Hence the provisions ofclause (xi) of paragraph 3 of the Order are not applicable to the company.
xii) As the Company is not a Nidhi Company; the Nidhi Rules2014 are not applicable toit. Hence the provisions of clause (xii) of paragraph 3 of the Order are not applicableto the company.
xiii) The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under theapplicable accounting standards.
xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review. Hence the provisions of clause (xiv)of paragraph 3 of the Order are not applicable to the company.
xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with thedirectors during the year. Hence the provisions of clause (xv) of paragraph 3 of theOrder are not applicable to the company.
xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.Accordingly the provisions of clause (xvi) of paragraph 3 of the Order are not applicableto the company.
"ANNEXURE B"TO THE INDEPENDENT AUDITORS' REPORT
REFERRED TO IN PARAGRAPH 3(f) UNDER THE HEADING "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" OF OUR INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THESTANDALONEFINANCIAL STATEMENTS OF MANGALORE REFINERY AND PETROCHEMICALS LIMITED FOR THEYEAR ENDED 31ST MARCH 2021
Report on the Internal Financial Controls with reference to these Standalone FinancialStatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act")
We have audited the internal financial controls system with reference to stand alonefinancial statements reporting of MANGALORE REFINERY AND PETROCHEMICALS LIMITED ("theCompany") as of 31st March 2021 in conjunction with our audit of theStandalone 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 internalfinancial controls based on the internal controls with reference to financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols system with reference to the standalone financial statements reporting based onour audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting (the "Guidance Note") andthe Standards on Auditing issued by ICAI and deemed to be prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls with reference to Standalone financial Statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols system with reference to these standalone financial statements was establishedand maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to these standalone financialstatements reporting and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements included obtaining anunderstanding of internal financial controls with reference to the standalone financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to these standalone financial statements.
Meaning of Internal Financial Controls with reference to these Standalone FinancialStatements
A company's internal financial control system with reference to these standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of Standalone financial statementsfor external purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to standalone financial statementsreporting includes those policies and procedures that (1) Pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) Provide reasonable assurance thattransactions are recorded as necessary to permit preparation of standalone financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) Provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with reference to StandaloneFinancial Statements
Because of the inherent limitations of internal financial controls system withreference to the standalone financial statements including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls with reference to standalone financial statements to future periods aresubject to the risk that the internal financial controls system with reference tostandalone financial statements may become inadequate because of changes in conditions orthat the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystems with reference to these standalone financial statements and such internalfinancial controls system with reference to these standalone financial statements wereoperating effectively as at 31 March 2021 based on the internal control with reference tothese standalone financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
|For SANKAR & MOORTHY ||For RAM RAJ & CO |
|Chartered Accountants ||CharteredAccountants |
|Firm Registration Number: 003575S ||Firm Registration Number: 002839S |
|Sd/- ||Sd/- |
|CA JAYAPRAKESH M C ||CA G VENKATESWARA RAO |
|Partner ||Partner |
|Membership no: 215562 ||Membership no: 024182 |
|Place : Kannur ||Place : Bangalore |
|Date : 17th May 2021 ||Date : 17th May 2021 |
|UDIN : 21215562AAAADA4355 ||UDIN :21024182AAAACR7020 |