Mangalore Refinery And Petrochemicals Ltd.
|BSE: 500109||Sector: Oil & Gas|
|NSE: MRPL||ISIN Code: INE103A01014|
|BSE 00:00 | 24 Apr||Mangalore Refinery And Petrochemicals Ltd|
|NSE 05:30 | 01 Jan||Mangalore Refinery And Petrochemicals Ltd|
Mangalore Refinery And Petrochemicals Ltd. (MRPL) - Auditors Report
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Company auditors report
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 ofMANGALORE REFINERY AND PETROCHEMICALS LIMITED ("the Company") which comprisethe Balance Sheet as at 31st March 2019 the Statement of Profit and Loss(including Other Comprehensive Income) the Statement of Changes in Equity and theStatement of Cash Flows for the year then ended on that date and notes to the standalonefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Companies Act 2013 read with Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and the relevant rules issuedthereunder of the state of affairs (financial position)of the Company as at 31stMarch 2019 the profit (financial performance including other comprehensive income)changes in equity and its cash flows for the year ended on that date.
Basis for opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) specified under section 143(10) of theCompanies Act 2013. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI)together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the standalonefinancial statements.
Key Audit Matters
Key audit matters are those matters that in our professionaljudgmentwereofmostsignificanceinourauditofthestandalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Director's Report including Annexures to Director'sReport Business Responsibility Report Corporate Governance and Shareholder'sInformation but does not include the standalone financial statements and ourauditor's report thereon. The Annual report is expected to be made available to usafter the date of this auditor's report.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Management's Responsibility for the Standalone FinancialStatements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these standalone financial statements that give a true and fair view ofthe financial position financial performance total comprehensive income changes inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian accounting standards (Ind AS) specifiedunder section 133 of the Companies Act 2013. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error. Inpreparing the standalone financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also: Identifyand assess the risks of material misstatement of the standalone financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control. Obtain anunderstanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3) (i) of the Actwe are also responsible for expressing our opinion on whether the company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation. We communicate with those charged with governance regardingamong other matters the planned scope and timing of the audit and significant auditfindings including any significant defficiencies in internal control that we identifyduring our audit. We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards. From the matterscommunicated with those charged with governance we determine those matters that were ofmost significance in the audit of the standalone financial statements of the currentperiod and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
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 of the Companies Act 2013 we give in Annexure A astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
2. Based on the verification of Records of the Company and based oninformation and explanations given to us we give here below a report on the Directionsissued by the Comptroller and Auditor General of India in terms of Section 143(5) of theAct: a. The company processes all the accounting transactions through IT system. As therewere no accounting transactions processed outside the IT system for the year ended 31stMarch 2019 closure no financial implications arise to impact the integrity of accounts.b. There is no restructuring of an existing loan or cases of waiver/write off ofdebts/loans/interest etc. made by a lender to the Company due to the Company'sinability to repay the loan. c. Government grants in the form of interest free loansreceived from the State Government have been properly accounted and utilized as per termsand conditions.
3. As required by Section 143(3) of the Act we report that:
a. We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;
b. In our opinion proper books of account as required by law relatingto preparation of the aforesaid standalone financial statements have been kept by so faras it appears from our examination of those books and the reports of the other auditors;
c. The Balance Sheet the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowdealt with by this Report are in agreement with the relevant books of account maintainedfor the purpose of preparation of the financial statements;
d. In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e. Disqualification of directors stated under Section 164(2) of the Actis not applicable to a Government Company as per notification no. GSR 463(E) of theMinistry of Corporate Affairs dated 05/06/2015;
f. With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate report in Annexure - B;
g. With respect to the other matters to be included in theAuditor'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 theexplanations given to us:
b. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; and
c. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
We refer to our Audit Report dated 13th May 2019 alreadyissued on the above referred Balance Sheet as on 31st March 2019 the Statementof Profit and Loss Cash Flow Statement and the Statement of changes in equity. The saidreport is suitably amended to comply with the observations of Comptroller and AuditorGeneral of India with respect to the Auditors Report. There have been no changes in theBalance Sheet as on 31st March 2019 the Statement of Profit and Loss CashFlow Statement and the Statement of changes in equity referred in our earlier report dated13th May 2019
ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in our report of even date)
(i) In respect of the Company's fixed assets:
a. The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
b. All the assets have not been physically verified by the managementduring the year but there is a regular programme of verification which in our opinionis reasonable having regard to the size of the Company and nature of its assets. As perthe reports submitted by the Company no material discrepancies have been noticed on suchverification.
c. According to the information and explanation given to us and therecords of the Company examined by us the title deeds of immovable properties are held inthe name of the Company except some leasehold land costing र 982.37 Million which isin the possession of the company towards which formal lease deeds are yet to be executed.Refer Note No. 5&6 to the standalone financial statements.
(ii) We are informed that the inventory of stores and spares arephysically verified during the year by the management on a continuous basis as perprogramme of perpetual inventory. Inventories of other items have been physically verifiedat the year end. The frequency of the verification in our opinion is reasonable havingregard to the size of the company and nature of its business. As per the reports submittedby the Company no material discrepancies have been noticed on such verification.
(iii) According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to Companies Firms LimitedLiability Partnerships or other parties covered in the register maintained under Section189 of the Companies Act 2013. (iv) According to the information and explanations givento us the Company has not advanced any loan given any guarantee or provided any securityto the parties covered under Section 185. The Company has not given any loan or made anyinvestment covered under Section 186 of the Companies Act 2013.
(v) According to the information and explanations given to us theCompany has not accepted any deposits within the meaning of sections 73 to 76 or any otherrelevant provisions of the Companies Act 2013 and the rules framed thereunder.
(vi) We have broadly reviewed the records maintained by the Companypursuant to the rules prescribed by the Central Government for maintenance of cost recordsunder Subsection (1) of Section 148 of the Companies Act 2013 and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. Howeverwe have not made a detailed examination of the records.
(vii) a. According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is generallyregular in depositing undisputed statutory dues including Provident Fund Income TaxGoods and Services Tax Sales Tax Duty of Excise and other statutory dues applicable toit during the year with appropriate authorities. According to the information andexplanations given to us there were no undisputed amounts payable in respect of ProvidentFund Income Tax Sales Tax Duty of Excise and other statutory dues outstanding as at 31stMarch 2019 for a period of more than six months from the date they became payable.
b. According to information and explanations given to us and as per ourverification of records of the Company the disputed tax which are not deposited with theappropriate authorities as at 31st March 2019 are given below.
(viii) According to the information and explanation given to us and therecords of the Company examined by us the Company has not defaulted in repayment of loansor borrowing to any bank or Government during the year.
(ix) The Company has not raised money by way of initial public offer orfurther public offer (including debt instruments) during the year. The term loans borrowedwere applied for the purpose for which they were raised.
(x) According to the information and explanations given to us and thebooks of account examined by us no instance of fraud by the Company or on the Company byits officers or employees has been noticed or reported during the year.
(xi) As per notification no. GSR 463(E) of the Ministry of CorporateAffairs dated 05/06/2015 provisions of section 197 as regards managerial remuneration arenot applicable to the Company since it is a Government Company.
(xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it; the provisions of Clause 3(xii) of the Order are not applicableto the Company.
(xiii) The Company has entered into transactions with related partiesin compliance with the provisions of Sections 177 and 188 of the Act. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder the applicable accounting standards.
(xiv) According to the information and explanations given to us theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year under review.
(xv) According to the information and explanations given to us theCompany has not entered into any non-cash transactions with directors or persons connectedwith the directors during the year.
(xvi) According to the information and explanations given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly the provisions of Clause 3(xvi) of the Order are not applicable tothe Company.
ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in our report of even date)
Report on the Internal Financial Controls with reference to theseStandalone Financial Statements under Clause (i) of Sub-section 3 of section 143 of theCompanies Act 2013 ("the Act")
We have audited the internal financial controls with reference tofinancial statements of MANGALORE REFINERY AND PETROCHEMICALS LIMITED ("theCompany") as of 31st March 2019 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 andmaintaining internal financial controls based on the internal control with reference tofinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia (ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to these standalone financial statements basedon our audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting (the "Guidance Note")issued by the Institute of Chartered Accountants of India (ICAI) and the Standards onAuditing prescribed under Section 143(10) of the Companies Act2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to these standalone financial statements was established and maintained and ifsuch controls operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem with reference to these standalone financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to these standalone financial statements assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion on the internal financial controls system with reference to these standalonefinancial statements of the Company.
Meaning of Internal Financial Controls with Reference to theseStandalone Financial Statements
A company's internal financial control with reference to thesestandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial control with reference to these standalonefinancial statements includes those policies and procedures that
1. Pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
2. Provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and
3. Provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with Reference tothese Standalone Financial Statements
Because of the inherent limitations of internal financial controls withreference to these 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 these standalone financial statements to futureperiods are subject to the risk that the internal financial control with reference tothese standalone financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
As a part of the system audit initiative undertaken by the company conguration testing on all SAP modules was conducted during the year. No material errors orfraud were observed by us on a testing of representative sample transactions on thepotential high-risk control gaps identified by system auditors. The management has alsoconfirmed that the defficiencies in the con gurations have since been recalibrated toclose all the control gaps.
In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial control system with reference to these standalone financial statements and suchinternal financial controls with reference to these standalone financial statements wereoperating effectively as at 31st March 2019 based on the internal control withreference to 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.
We have considered the defficiencies in control gaps identified andreported above in determining the nature timing and extent of audit tests applied in ouraudit of the March 31 2019 standalone financial statements of the Company and thesedefficiencies in control gaps do not affect our opinion on the financial statements of theCompany.