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Mangalore Refinery and Petrochemicals

BSE: 500109  |  NSE: MRPL  |  ISIN: INE103A01014  |  Refineries

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Auditor's Report Year End : Mar '08
We have audited the attached Balance Sheet of Mangalore Refinery and
 Petrochemicals Limited as at 31st March 2008, the Profit and Loss
 Account and the Cash Flow Statement for the year ended on that date
 together with the schedules annexed thereto which are in agreement with
 the books of account maintained. These financial statements are the
 responsibility of the companys management. Our responsibility is to
 express an opinion on these financial statements based on our audit.
 We conducted our audit in accordance with auditing standards generally
 accepted in India.
 
 Those Standards require that we plan and perform the audit to obtain
 reasonable assurance about 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 the management as well as
 evaluating the overall financial statement presentation. We believe
 that our audit provides a reasonable basis for our opinion.
 
 1.  As required by the Companies (Auditors Report) Order, 2003 as
 amended by the Companies (Auditors Report) Amendment Order, 2004
 issued by the Government of India in terms of section 227 (4A) 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.
 
 2.  Further to our comments in the Annexure referred to 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 purpose 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) In our opinion, the Balance Sheet and Profit and Loss Account and
 Cash Flow Statement dealt with by this report read with the notes
 thereon are in compliance with the Accounting Standards referred to in
 sub-section (3C) of section 211 of the Companies Act, 1956 to the
 extent applicable.
 
 iv) Since the provisions of clause (g) of sub section (1) of section
 274 of the Companies Act are not applicable to your company, being a
 Government Company under the Act, no comments are offered on the
 question of disqualification of directors under the said provisions of
 the Act.
 
 v) 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 other notes on accounts attached
 thereto, 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 as at 31 March 2008.
 
 b) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 c) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH I OF OUR AUDIT REPORT OF EVEN DATE ON
 THE ACCOUNTS OF MANGALORE REFINERY AND PETROCHEMICALS LIMITED FOR THE
 YEAR ENDED 31st MARCH 2008
 
 1. (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.
 
 (cl The Company has not disposed off substantial part of fixed assets
 during the year.  2.(a) We are informed that the inventories of stores
 and spares are physically verified by the management on a continuing
 basis as per a 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.
 
 lb) 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 and as
 informed to us, discrepancies noticed on physical verification by the
 management, which are reported to be not material, same have been
 properly dealt with in the books of account of the company.
 
 3.(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 except for advance against
 share capital and hence we do not offer any comments thereon.  (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.
 
 4.  In our opinion and according to the information and explanations
 given to us, internal control procedures are fairly adequate,
 commensurate with the size of the company and nature of its business
 for the purchase of inventory and fixed assets and for the sale of
 goods. During the course of our audit no major weakness has been
 noticed in the internal controls.
 
 5.  According to the information and explanations given to us, Company
 has not entered into any transactions that need to be entered in a
 register maintained pursuant to section 301 of the Companies Act, 1956.
 
 6.  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 the provisions of sections 58A, 58AA or any other relevant
 provisions of the Companies Act, 1956 and the rules framed there under
 are not applicable.
 
 7.  The Company has an internal audit system, the scope and coverage of
 which is commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the records maintained by the company
 pursuant to the order by the Central Government under section 209 (1)
 (d) of the Companies Act, 1956 for maintenance of Cost records in
 respect of the products of the Company and are of the opinion that
 prima facie, the prescribed accounts and records have been made and
 maintained. We have, however, not made details examination of these
 records with a view to determine whether they are accurate or complete.
 
 9.(a) The Company has been generally regular in depositing undisputed
 statutory dues including Provident Fund, Employees State Insurance,
 Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess,
 Investor Education and Protection Fund, Service Tax and other statutory
 dues with the appropriate authorities during the year except for
 interest demand on Electricity Tax under the Karnataka Electricity,
 (Taxation and Consumption) Act 2004 amounting to Rs. 4.42 million for
 which the company has requested for waiver. Pending final decisions by
 the Government the same remains unpaid. Except for the dues as above,
 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 following disputed
 amounts of tax not provided for in the accounts of the Company and not
 deposited with appropriate authorities as at 31 March 2008.
 
 Name of                Nature of             Amount
 the                    the dues              (Rs.million)
 Statue
 
 The Karnataka        Sales Tax/Entry           2,910.70
 Sales Tax Act,       Tax/ Interest
 1957/Central         and Penalty
 Sales Tax Act,
 1956/The
 Karnataka Tax on
 Entry of Goods
 Act, 1979.
 Income Tax Act,     Income Tax/                  833.84
 1961                Interest;
 Penalty
 Central Excise      Central Excise               132.08
 Act, 1944           Duty/Interest/
 Penalty
 The Customs         Customs Duty                 126.67
 Act, 1962
 
 Period to           Forum
 which the           where dispute
 amount              is pending
                     relates (financial
                     year)
 
 1993-2007           Commercial Tax
                     Appellate
                     Authorities/
                     Honble High
                     Court of
                     Karnataka.
                     Entry tax -
                     Before Govt, of
                     Karnataka for
                     conciliation and
                     settlement
 1992-2002           Income Tax
                     Appellate
                     Authorities
 1996-2007           Central Excise
                     Appellate
                     Authorities/
                     Ministry of
                     Finance,
                     Government of
                     India.
 1996-2007           Customs
                     Appellate
                     Authorities
 
 10.  There are no accumulated losses at the end of the financial year.
 The Company has also not incurred cash losses during the year -and in
 the immediately preceding financial year.
 
 11.  According to information and explanations given to us and as per
 our verification of the records of the Company, the Company has not
 defaulted repayment of dues to the financial institutions and banks.
 
 12.  The Company has not granted any loans or advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  Since the Company not a Chit Fund/Nidhi/Mutual Benefit Fund/
 Society, the relative reporting requirements are not applicable.
 
 14.  Since the Company is not dealing or trading in shares, securities,
 debentures or other investments, the relative reporting requirements
 are not applicable.
 
 15.  According to the information and explanations given to us and as
 per the verification of the records of the company, the terms and
 conditions- of the guarantee 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,
 company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 16.  According to the information and explanations given to us, the
 company has not availed any fresh term loans during the year.
 
 17.  According to the information and explanations given to us and as
 per the verification of the records of the company, on an overall
 basis, the company has not utilized short term funds for long term
 purposes.
 
 18.  The Company has not made any preferential allotment of shares to
 the parties and companies covered in the register maintained under
 section 301 of the Act.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  According to the information and explanations given to us and as
 per the verification of the records of the company, no fraud either on
 or by the company having a material financial impact has been noticed
 or reported during the year.
 
                                     For S.R.R.K. SHARMA ASSOCIATES
                                     Chartered Accountants
 
                                           G.S. KRISHNA MURTHY
 Place : New Delhi                               Partner
 Date  : 7th May 2008.                           M.No. 13841
 
Source : Religare Technova

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