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Auditor Report of Mangalore Refinery And Petrochemicals Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of MANGALORE REFINERY AND PETROCHEMICALS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 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.

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 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.

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 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 reasonab -leness 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.

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 31st March, 2015, and its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we have given in Annexure 1, a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. Based on the verification of Records of the Company and based on information and explanations given to us, , we give below a report on the Directions issued by the Comptroller and Auditor General of India in terms of Sec 143(5) of the Companies Act, 2013...

a) The Company has not been selected for disinvestment and hence reporting on this direction does not arise.

b) There are no cases of waiver/write off of debts, loans/ interest etc other than Central Sales Tax on sales to PSU Oil Marketing Companies amounting to '' 1930.80 million which are being expensed to the Profit & Loss Account, which has arisen on account of prevailing industry practice.

c) The Company has maintained adequate records in respect of inventories lying with third parties. No assets have been received by the Company as gift from Government or other authorities.

d) A report on age wise analysis of pending legal/ arbitration cases is given as Annexure 2 to this report. We report that the Company has in place an adequate monitoring mechanism for tracking expenditure on such legal cases

3. As required by Section 143 (3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss, 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 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the other matters to be included in the 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 pending litigations on its financial position in its financial statements - Refer Note 31.14.03 and 31.14.04 to the financial statements;

ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

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 referred to under paragraph 1 of the Report on Other Legal and Regulatory Requirements of the Auditors'' Report Re: Mangalore Refinery and Petrochemicals Limited (''the Company'')

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) All the Assets have not been physically verified by the management during the year ,but there is a regular programme of verification, which, in our opinion is reasonable having regard to the size of the Company and nature of its assets. As per the reports submitted by the Company, no material discrepancies have been noticed on such verification

(ii) (a) We are informed that the inventory of stores and spares are physically verified during the year by the management on a continuous basis as per programme of perpetual inventory. Inventories of other items have been physically verified at the year end., the frequency of which, in our opinion is reasonable, having regard to the size of the Company and nature of its business.

(b) In our opinion and according to the explanation given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification by the Management between the physical stock and book records have been properly dealt with in the books of account and were not material.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, with regard to the purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company.

(v) The Company has complied with the provisions of section 73 to 76 and the rules framed there under with regard to filing of statutory Returns as required under these provisions and the relevant rules, subject however to delay in filing Return.

(vi) We have broadly reviewed the cost records maintained by the Company and report that the directions specified by the Central Government under sub-section (1) of section 148 of the Companies Act, with regard to maintenance of Cost Records have been complied with.

(vii) (a) According to the information and explanations given to us and as per the records of the Company, the Company has been generally regular in depositing undisputed statutory dues including Provident fund, Income tax, Wealth tax, service tax, Duty of Customs, Duty of Excise, Value added tax, cess and other statutory dues with appropriate authorities during the year. There are no arrears of undisputed statutory dues of material nature outstanding for a period of more than six months, from the date on which they became payable.

(b) According to information and explanations given to us and as per our verification of records of the Company, the disputed dues of tax which are not deposited with appropriate authorities as at 31st March, 2015 are as follows.

Name of the Nature of the Dues Total Total Amt Paid Statute Demand under protest/ (Rs Millions) adjusted (Rs Millions)

The Karnataka Central Sales Tax 4.53 Nil Sales Tax Act 1957/ - Penalty

Central Sales Tax Central Sales Tax 18.33 12.10 Act 1956 - interest

Value Added Tax 0.43 0.21 - Interest

Value Added Tax 0.13 0.13 - Interest

Value Added Tax 0.66 0.66 - Interest

Value Added Tax 3.48 Nil - Penalty

Value Added Tax 4.80 2.48 - Interest

Income Tax Act, Income Tax / Interest / 296.30 296.30 1961 Penalty 10.93 10.93

233.58 111.10

129.39 129.39

362.49 362.49

1014.82 1014.82

126.72 Nil

754.77 698.02

594.02 297.01

Name of the Period to which Forum Where the the Statute Amount dispute is pending Relates (FinancialYear)

The Karnataka 2009-10 Karnataka Appellate Tribunal Sales Tax Act 1957

Central Sales tax 2009-10 Karnataka Appellate Tribunal Act 1956

2006-07 Appellate Authority - Mangalore

2009- 10 Karnataka Appellate Tribunal

2010- 11 Karnataka Appellate Tribunal

2011- 12 Appellate Authority - Mangalore

2011-12 Appellate Authority - Mangalore

Income Tax Act AY 1993-03 Mumbai High Court 1961

AY 2003-04 Income Tax Appellate Tribunal - Mumbai

AY 2006-07 Income Tax Appellate Tribunal - Mumbai

AY 2007-08 Income Tax Appellate Tribunal - Mumbai AY 2008-09 Income Tax Appellate Tribunal - Mumbai AY 2009-10 Income Tax Appellate Tribunal - Mumbai

AY 2008-09 Commissioner of Income Tax (Appeals) - Mumbai

AY 2010-11 Commissioner of Income Tax (Appeals) - Mumbai

AY 2011-12 Commissioner of Income Tax (Appeals) - Mumbai

Name of the Nature of the Dues Total Total Amt Paid Statute Demand under protest/ (Rs Millions) adjusted (Rs Millions)

The Customs Act, Custom Duty / Interest / 101.53 Nil 1962 Penalty 645.97 Nil

Central Excise Act, Central Excise Duty / 10.37 Nil 1944 Service Tax / Interest / Penalty 248.18 23.07

1.24 0.72

54.59 Nil

Total 4617.26 2959.43



Name of the Period to which Forum Where the the Statute Amount dispute is pending Relates (FinancialYear)

The Customs Act, 1996- 2006 Supreme Court Of India 1962 1997- 2008 CESTAT - Bangalore

Central Excise Act, 2011-12 to Commissioner (Ap- 1944 2013-14 peals) - Mangalore

1996-97 to CESTAT - Bangalore 2012-13

2002-03 to Joint Secretary, MOF 2012-13

1999-2000 to Commissioner 2012-13 - Mangalore

(viii) The Company does not have accumulated losses as the end of the financial year . It has however incurred a cash loss during the financial year, but for the immediately preceding financial year, it has made a cash profit..

(ix) According to the information and explanations given to us and as per our verification of the records of the Company, the Company has not defaulted in repayment of dues to financial Institution or Bank or debenture holders.

(x) According to the information and explanations given to us, the Terms and Conditions of the guarantees given by the Company, for the Loans taken by others from Banks and Financial Institutions are not prejudicial to the interests of the Company.

(xi) According to the information and explanations given to us, the Term Loans have been applied for the purpose for which the Loans were obtained except Rs 11704.73 Million which were invested in deposits with banks.

(xii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

As per our report of even date attached

For GOPALAIYERAND SUBRAMANIAN For A. RAGHAVENDRA RAO & ASSOCIATES Chartered Accountants Chartered Accountants Firm Registration No.: 000960S Firm Registration No. : 003324S

CA K. R. SURESH CA.GOPALAKRISHNA BHAT T.M Partner Partner Membership No. 025453 Membership No. 019798

New Delhi : 22nd May, 2015


Mar 31, 2014

We have audited the accompanying financial statements of Mangalore Refnery And Petrochemicals 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.

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 principles generally accepted in India including Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 ("the Act"). 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.

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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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 suffcient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) in the case of the Statement of profit and Loss, of the PROFIT for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of Section 227 (4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) The Balance Sheet, Statement of profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of profit and Loss, and CashFlow Statement comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956;

e) Being a Government company, provision of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956, is not applicable as per notifcation no. GSR 829(E) dated October 21, 2003, issued by the Ministry of Corporate Affairs.

Annexure to Independent Auditors'' Report Referred to in Paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date.

(i) a) The Company has maintained proper records, showing full particulars, including quantitative details and situation of fixed assets.

b) All the assets have not been physically verifed by the management during the year but there is a regular programme of verifcation, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. As per the reports submitted by the company, no material discrepancies have been noticed on such verifcation.

c) In our opinion and according to the explanations given to us, the Company has not disposed off substantial part of fixed assets, during the year and the Going Concern Concept of the Company has not been affected.

(ii) a) We are informed that the inventories of stores and spares are physically verifed, during the year, by the management on a continuing basis as per programme of perpetual inventory. Inventories of other items have been physically verifed at the year end, the frequency of which, in our opinion is reasonable, having regard to the size of the company and nature of its business. b) In our opinion and according to the explanation given to us, the procedures of physical verifcation of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. c) The company is maintaining proper records of inventory.The discrepancies noticed on verifcation by the Management between the physical stock and book records have been properly dealt with in the books of account and were not material. (iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (b) 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 (Auditor''s Report) Order, 2003, are not applicable. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, with regard to the purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the company.

(v) a) In our opinion and according to the information and explanations given to us, there is no contract 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) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year and hence the directives issued by the Reserve Bank of India and provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable.

(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, for maintenance of Cost Records and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) a) According to the information and explanations given to us and as per the records of the company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other statutory dues with the appropriate authorities during the year. There are no arrears of undisputed statutory dues of material nature outstanding for a period of more than 6 months, from the date on which they became payable. However, provisions of Employees State Insurance Act are not applicable to the Company

b) According to the information and explanations given to us and as per our verifcation of records of the company, the disputed amounts of tax which are not deposited with appropriate authorities as at 31st March, 2014, are as follows:

Name of the Statue Nature of the Dues Total Amount Period to which the amount (Rs. Millions) relates (Financial Year)

The Karnataka Sales Tax Central Sales Tax- Penalty 4.53 2009-10 Act, 1957/ Central Sales tax Act, 1956

Central Sales Tax- Interest 18.33 2009-10

Value Added Tax - interest 0.43 2006-07

Value Added Tax - interest 0.13 2009-10

Value Added Tax - interest 0.66 2010-11

Value Added Tax - Penality 3.48 2011-12

Value Added Tax - interest 4.80 2011-12

Income Tax Act, 1961 Income Tax / Interest / Penalty 122.48 AY 2006-07

Income Tax / Interest / Penalty 56.75 AY 2010-11

The Customs Act, 1962 Customs Duty/Interest /Penalty 105.42 1996-2006

603.02 1997-2008

3.24 1995-2007

Central Excise Act, 1944 Central Excise Duty/ Service 56.33 2000-01 to 2013-14 Tax/ Interest/ Penalty

142.19 1996-97 to 2012-13

0.52 2002-03 To 2012-13

26.72 1999-2000 TO 2012-13

Total 1149.03

Name of the Statue Forum where the dispute is pending

The Karnataka Sales Tax Act, 1957/ Central Sales tax Act, 1956 Karnataka Appellate Tribunal

Karnataka Appellate Tribunal

Appellate Authority - JCCT Mangalore Karnataka Appellate Tribunal Karnataka Appellate Tribunal Appellate Authority - JCCT Mangalore Appellate Authority - JCCT Mangalore

Income Tax Act, 1961 Income Tax Appellate Tribunal - Mumbai Commissioner of Income Tax(Appeals) - Mumbai

The Customs Act, 1962 Supreme Court of India CESTAT - Bangalore Commissioner ( Appeals) - Mangalore

Central Excise Act, 1944 Commissioner ( Appeals)- Mangalore

CESTAT - Bangalore Joint Secretary,MOF Commissioner - Mangalore

Total

(x) The Company has no accumulated losses at at 31st March 2014.The Company has not incurred cash losses during the year and in the immediately preceding Financial Year.

(xi) According to information and explanations given to us and as per our verifcation of the records of the company, the company has not defaulted in repayment of dues to the financial institutions and banks.

(xii) The Company has not granted any loans or advances on the basis of the security by way of pledge of share, debenture and other securities.

(xiii) Since the company is not a Chit Fund/ Nidhi/ Mutual benefit Fund/ Society, the related reporting requirements are not applicable.

(xiv) The Company was dealing in Mutual Fund Investments during the Year. Proper Records of Transactions and Contracts have been maintained and timely entries have been made. The said investments have been held by the company in its own name.

(xv) According to the information and explanations given to us, the terms and conditions of the Guarantees given by the Company, for the loans taken by New Mangalore Port Trust from Banks and Financial Institutions, are not prejudicial to the Interest of the Company. Except for the above, the Company has not given any guarantee, for loans taken by others, from banks or financial institutions.

(xvi) According to the information and explanations given to us, the company has availed term loans during the year and the same have been applied for the purpose for which the Loans were obtained except Rs.15,861.05 Million availed at the end of the year invested in deposits with banks.

(xvii) According to the information and explanations given to us and on an overall examination of the Financial Statements of the Company, we report that the funds raised on short term basis have not been utilized for long term investment.

(xviii) During the year the Company has not made any preferential allotment of shares .

(xix) The Company has no outstanding debentures at the end of the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year.

For GOPALAIYER AND SUBRAMANIAN For A.RAGHAVENDRA RAO & ASSOCIATES

Chartered Accountants Chartered Accountants

Firm Registration No 000960S Firm Registration No 003324S

CA. S KASI VISWANATHAN CA. A.RAGHAVENDRA RAO

Partner Partner

Membership No.026975 Membership No. 007533

Place : New Delhi Date : 20th May 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fi nancial statements of Mangalore Refinery And Petrochemicals Limited ("the Company”), which comprise the Balance Sheet as at March 31,2013, and the Statement of Profi t and Loss and Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

ManagementÊs Responsibility for the Financial Statements

Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting principles generally accepted in India including Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 ("the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AuditorsÊ Responsibility

Our responsibility is to express an opinion on these fi nancial 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 fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the fi nancial 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 fi nancial statements in order to design audit procedures that are appropriate in the circumstances. 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 fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given

to us, the aforesaid fi nancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Statement of Profi t and Loss, of the LOSS for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.

Report on Other legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 ("theOrder”) issued by the Central Government of India in terms of Section 227 (4A) of the Act, we give in the Annexure a statement on the matters pecifi ed in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion ,proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) The Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profi t and Loss, and CashFlow Statement comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956;

e) Being a Government company provision of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956, is not applicable as per notifi cation no. GSR 829(E) dated October 21, 2003, issued by the Ministry of Corporate Affairs.

(i) a) The Company has maintained proper records, showing full particulars, including quantitative details and situation of fi xed assets.

b) All the assets have not been physically verifi ed by the management during the year but there is a regular programme of verifi cation, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies have been noticed on such verifi cation.

c) In our opinion and according to the explanations given to us, the Company has not disposed off substantial part of fi xed assets, during the year and the Going Concern Concept of the Company has not been affected.

(ii) a) We are informed that the inventories of stores and spares are physically verifi ed, during the year, by the management on a continuing basis as per programme of perpetual inventory. Inventories of other items have been physically verifi ed at the year end, the frequency of which, in our opinion is reasonable, having regard to the size of the company and nature of its business. b) In our opinion and according to the explanation given to us, the procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. c) The company is maintaining proper records of inventory.The discrepancies noticed on verifi cation by the Management between the physical stock and book records have been properly dealt with in the books of account and were not material. (iii) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (b) The Company has not taken any loans, secured or unsecured from companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. And consequently, the reportingrequirements of clause (iii) (f) and (iii) (g) of paragraph 4 of the Companies

(Auditor’s Report) Order, 2003, are not applicable. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, with regard to the purchases of inventory, fi xed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the company.

(v) a) In our opinion and according to the information and explanations given to us, there is no contract 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) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year and hence the directives issued by the Reserve Bank of India and provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable. (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, for

maintenance of Cost Records and we are of the opinion that prima facie the

prescribed accounts and records have been made and maintained.

(ix) a) According to the information and explanations given to us and as per the records of the company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee’s State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other statutory dues with the appropriate authorities during the year. There no arrears of undisputed statutory dues of material nature outstanding for a period of more than 6 months, from the date on which they became payable.

(x) The Company has no accumulated losses as at 31st March 2013.The Company has not incurred cash losses during the year and in the immediately preceding Financial Year.

(xi) According to information and explanations given to us and as per our verifi cation of the records of the company, the company has not defaulted in repayment of dues to the fi nancial institutions and banks.

(xii) The Company has not granted any loans or advances on the basis of the security by way of pledge of share, debenture and other securities.

(xiii) Since the company is not a Chit Fund/ Nidhi/ Mutual Benefi t Fund/ Society, the related reporting requirements are not applicable.

(xiv) The Company was dealing in Mutual Fund Investments during the Year. Proper Records of Transactions and Contracts have been maintained and timely entries have been made. The said investments have been held by the company in its own name.

(xv) According to the information and explanations given to us, the terms and conditions of the Guarantees given by the Company, for the loans taken by New Mangalore Port Trust from Banks and Financial Institutions, are not prejudicial to the Interest of the Company. Except for the above, the Company has not given any guarantee, for loans taken by others, from banks or fi nancial institutions.

(xvi) According to the information and explanations given to us, the company has availed term loans during the year and the same have been applied for the purpose for which the Loans were obtained except Rs. 2078.80 Million availed at the end of the year invested in deposits with banks.

(xvii) According to the information and explanations given to us and on an overall examination of the Financial Statements of the Company we report that the funds raised on short term basis have not been utilized for long term investment.

(xviii) During the year the Company has not made any preferential allotment of shares .

(xix) The Company has no outstanding debentures at the end of the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year.

For MAHARAJ N.R.SURESH AND CO For GOPALAIYER AND SUBRAMANIAN

Chartered Accountants Chartered Accountants

Firm Registration No 001931S Firm Registration No 000960S

CA. N.R.SURESH CA. S. SUNDAR

Partner Partner

Membership No. 021661 Membership No.202725

Place : Mumbai Date : 24th May 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Mangalore Refinery and Petrochemicals Limited, as at 31st March, 2012, the Statement of Profit and Loss and also the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956.

We enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred under Paragraph (3) above, we report that:

i. 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;

ii. 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.

iii. The Balance Sheet, Statement of Profit and Loss and Cash Flow statement dealt with by this report are in agreement with the books of account.

iv. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 and without qualifying our opinion reference is drawn to note no 30.05 on AS-17 Segment Reporting.

v. Being a Government Company Provision of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956, is not applicable as per notification no. GSR 829(E) dated October 21,2003, issued by the Ministry of Corporate Affairs.

vi. In our opinion, and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of affairs of the company asat31stMarch,2012;

b. in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

c. in the case of the Cash Flow statement, of the cash flows for the year ended on that date.

Referred to in paragraph 3 of our report of even date

(i) a) The Company has maintained proper records, showing full particulars, including quantitative details and situation of fixed assets.

b) All the assets have not been physically verified by the management during the year but there is a regular programme of verification, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies have been noticed on such verification.

c) In our opinion and according to the explanations given to us, the Company has not disposed off substantial part of fixed assets, during the year and the Going Concern Concept of the Company has not been affected.

(ii) a) We are informed that the inventories of stores and spares are physically verified, during the year, by the management on a continuing basis as per programme of perpetual inventory. Inventories of other items have been physically verified at the year end, the frequency of which, in our opinion is reasonable, having regard to the size of the company and nature of its business.

b) In our opinion and according to the explanation given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The company is maintaining proper records of inventory. The discrepancies noticed on verification by the Management between the physical stock and book records have been properly dealt with in the books of account and were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) 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.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, with regard to the purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the company.

(v) According to the information and explanation given to us

(a) particulars of contracts or arrangements referred to in Section 301 of the Companies Act,1956 have been entered into and the register required to be maintained under that Section.

(b) transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market price at the relevant time.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year and hence the directives issued by the Reserve Bank of India and provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable.

(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, for maintenance of Cost Records and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) a) According to the information and explanations given to us and as per the records of the company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee's State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other statutory dues with the appropriate authorities during the year. There are no arrears of undisputed statutory dues of material nature outstanding for a period of more than 6 months, from the date on which they became payable.

b) According to the information and explanations given to us and as per our verification of records of the company, the disputed amounts of tax which are not deposited with appropriate authorities as at 31st March 2012, are as follows:

Name of the Statue Nature of the Dues Total Amount Period to which Forum where the dispute is pending (Rs. Millions) the amount relates (Financial Year)

The Karnataka Sales Tax Act,1957/ Central Sales tax Act, Sales Tax/ Entry Tax/ 321.49 1993-94 to 1998-99 Assessment are pending before the 1956/The Karnataka Tax on Entry of Goods Act, 1979. Interest and Penalty Assessing Authorities

Income Tax Act, 1961 Income Tax/ Interest/ 122.48 2005-06 Income Tax Appellate Authority and

Penalty Commissioner of Income Tax (Appeals)

Central Excise Act, 1944 Central Excise Duty/ 461.09 1996-97 to 2011-12 Central Excise Appellate Authorities/ Service Tax/ Interest/ Ministry of Finance, Government of Penalty India.

The Customs Act,1962 Customs Duty/Interest/ 647.54 1998-99 to 2009-10 Customs Appel late Authorities. Penalty

(x) The Company has no accumulated losses at at 31st March 2012.The Company has not incurred cash losses during the year and in the immediately preceding Financial Year.

(xi) According to information and explanations given to us and as per our verification of the records of the company, the company has not defaulted in repayment of dues to the financial institutions and banks.

(xii) The Company has not granted any loans or advances on the basis of the security by way of pledge of share, debenture and other securities.

(xiii) Since the company is not a Chit Fund/ Nidhi/ Mutual Benefit Fund/ Society, the related reporting requirements are not applicable.

(xiv) The Company was dealing in Mutual Fund Investments during the Year. Proper Records of Transactions and Contracts have been maintained and timely entries have been made. The said investments have been held bythe company in its own name.

(xv) According to the information and explanations given to us, the terms and conditions of the Guarantees given by the Company, for the loans taken by New Mangalore Port Trust from Banks and Financial Institutions, are not prejudicial to the Interest of the Company. Except for the above, the Company has not given any guarantee, for loans taken by others, from banks or financial institutions.

(xvi) According to the information and explanations given to us, the company has availed term loans during the year and the same have been applied for the purpose for which the Loans were obtained except Rs.640 Million availed at the end of the year invested in deposits with banks.

(xvii) According to the information and explanations given to us and on an overall examination of the Financial Statements of the Company we report that the funds raised on short term basis have not been utilized for long term investment.

(xviii) During the year the Company has not made any preferential allotment of shares.

(xix) The Company has no outstanding debentures at the end of the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year.

For MAHARAJ N.R.SURESH & Co For GOPALAIYER AND SUBRAMANIAN

Chartered Accountants Chartered Accountants

Firm Registration No.: 001931S Firm Registration No.: 000960S

CANR SURESH CA S. SUNDAR

Partner Partner

Membership No. 021661 Membership No. 202725

New Delhi: 23rd May, 2012

 
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