We have audited the accompanying Standalone Financial Statements of MANGALORE REFINERY AND
PETROCHEMICALS LIMITED ("the Company"), which comprise the Standalone Balance Sheet as at March 31, 2026,
and the Standalone Statement of Profit and Loss, (including other comprehensive income), the Standalone Statement
of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the Standalone
Financial Statements, including a summary of the Material Accounting Policies and other explanatory information ("the
Standalone Financial Statements").
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 Companies Act, 2013 ("the Act") in the manner so required
and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the
Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended ("Ind AS'') and other accounting
principles generally accepted in India, of the state of affairs of the Company as at March 31, 2026 and its profit, other
comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing ("SAs") specified under Section 143(10) of the
Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors' Responsibilities
for the audit of the Standalone Financial Statements section of our report. We are independent of the company in
accordance with the 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 Standalone Financial Statements under the provisions of the
Act and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion on the Standalone Financial Statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance 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 Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in
that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We
have fulfilled the responsibilities described in the auditors' responsibilities for the audit of the Standalone Financial
Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance
of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Financial
Statements. The results of our audit procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying Standalone Financial Statements.
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Sr. No.
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The Key Audit Matters
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Auditors' Response
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1.
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Property, Plant and Equipment
(Refer Note No.5 of the Standalone
Financial Statements)
The carrying value of property,
plant and equipment (PPE) and
the related depreciation involve
significant management judgement.
This includes decisions regarding the
capitalisation versus expensing of
costs, estimation of useful lives and
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Our audit procedures in relation to the carrying value of property,
plant and equipment (PPE) and related depreciation included,
among others:
• Evaluating the design and testing the operating effectiveness
of key controls over capital expenditure, including controls over
capitalisation of major repairs, maintenance, and shutdown costs.
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Sr. No.
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The Key Audit Matters
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Auditors' Response
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residual values at each reporting date,
and the application of assumptions
in determining measurement criteria,
particularly in cases of disposal,
replacement, derecognition, or
reclassification of PPE
Considering the materiality of PPE
balances in the Company's Balance
Sheet and the degree of judgement
and estimation involved, this area was
considered to be of significance in our
audit.
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• Assessing the appropriateness of the Company's accounting
policies with respect to capitalisation of refinery assets, including
componentisation and treatment of overhaul and repairs on
account of planned shutdown (other than replacement spare) in
accordance with applicable accounting standards.
• Testing, on a sample basis, capital expenditure incurred during
the year, including large projects and shutdown costs, to evaluate
whether such costs met the criteria for capitalisation and were
supported by relevant documentation.
• Reviewing management's identification of significant components
of refinery assets and assessing whether depreciation has been
applied appropriately over their respective useful lives.
• Evaluating the reasonableness of useful lives and residual values
by comparing them with technical assessments, past trends, and
industry practices.
• Verifying, on a sample basis, the accuracy of depreciation
calculations, including component-wise depreciation where ever
applicable.
• Assessing the accounting treatment of assets derecognised on
replacement of components, disposals, or scrapping, including
the recognition of any resulting gains or losses.
• Assessing the adequacy and appropriateness of disclosures
relating to PPE in the Standalone Financial Statements.
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2.
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Evaluation of Contingent Liabilities
and Recoverability of pre-deposit
thereto (Refer Note No 45 of the
Standalone Financial Statements)
The Company is involved in various
claims and litigations pending before
different judicial and regulatory
authorities, which have not been
recognised as liabilities but disclosed
as contingent liabilities in the
Standalone Financial Statements,
based on management's assessment.
The determination of whether an
obligation should be recognised as a
liability or disclosed as a contingent
liability requires significant
management judgement, including
evaluation of the likelihood of outflow
of economic resources and the
interpretation of applicable laws and
regulations.
Considering the number of such cases,
its potential financial impact, and
the significant judgement involved
in assessing the outcomes of these
matters, this area was considered to
be significant in our audit.
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Our procedures included among others:
• Evaluating the design and testing the operating effectiveness of
key controls over identification, assessment, and monitoring of
legal and tax exposures.
• Obtaining a list of ongoing litigations and claims from management
and assessing its completeness through inquiries with
management and review of minutes of meetings, correspondence
with regulatory authorities, and legal expenses.
• Reviewing management's assessment of the likelihood of outflow
of economic resources in respect of significant cases, including the
assumptions and judgements applied.
• Discussing key matters with in-house legal and finance personnel
to understand the status and merits of significant cases.
• Obtaining, in selected cases, direct confirmations from external
legal counsel to corroborate management's assessment of the
status of litigations and the likely outcome.
• Assessing the appropriateness of management's conclusions on
whether provisions are required or whether the matters should be
disclosed as contingent liabilities, in accordance with applicable
accounting standards.
• Evaluating the adequacy and completeness of disclosures in
the Standalone Financial Statements, including the nature of
litigations and associated uncertainties.
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Sr. No.
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The Key Audit Matters
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Auditors' Response
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3.
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Recognition and measurement of
Deferred Tax Liability (Refer Note
No.25 of the Standalone Financial
Statements)
The Company has recognised a
deferred tax liability (net) during
the year as against a deferred tax
asset(net) recognised in the previous
year. This change is primarily driven
by a reassessment of temporary
differences, the Company's decision to
opt for a lower income tax rate under
the applicable tax regime, and the
underlying assumptions relating to
future taxable profits.
The recognition and measurement
of deferred tax balances involve
significant management judgement,
particularly in evaluating the
recoverability of deferred tax assets,
estimation of future taxable income,
and interpretation of applicable tax
laws.
Considering the magnitude of
the deferred tax balances and the
significant judgement involved,
this matter was considered to be of
significance in our audit.
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Our audit procedures in relation to the recognition and measurement
of deferred tax balances included, among others:
• Evaluating the design, implementation, and operating
effectiveness of key controls over the identification, recognition,
and measurement of deferred tax assets and liabilities.
• Assessing the appropriateness of the Company's accounting
policies in respect of deferred taxes in accordance with applicable
accounting standards.
• Obtaining an understanding of the basis for the change from
deferred tax asset to deferred tax liability during the year, including
management's reassessment of temporary differences and the
decision to opt for a lower income tax rate.
• Verifying the mathematical accuracy of deferred tax computations
and recalculating deferred tax balances using the applicable
enacted or substantively enacted tax rates.
• Evaluating the recognition of deferred tax assets by assessing
management's projections of future taxable profits and testing
the underlying assumptions, on a sample basis.
• Assessing the completeness and accuracy of temporary differences
by reconciling tax bases with carrying amounts of assets and
liabilities.
• Evaluating the impact of the change in tax rate on deferred tax
balances and assessing whether the remeasurement has been
appropriately recognised in the Standalone Financial Statements.
• Assessing the adequacy and appropriateness of disclosures made
in the Standalone Financial Statements in respect of deferred tax
balances.
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4.
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Assessment of impact of newly
implemented Labour Codes on
employee benefit obligations
(Refer Note No.51 of the Standalone
Financial Statements)
The Company is subject to the Labour
Codes which have become effective
from November 21, 2025. These
Codes introduce significant changes,
particularly in the definition of wages,
which may impact the computation of
various employee-related obligations.
The Management has carried out
an assessment of the potential
impact based on currently available
information and has disclosed that
there is no financial implication on the
Standalone Financial Statements of
the company at this stage. However,
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Our audit procedures in relation to the assessment of the impact of
newly implemented Labour Codes on employee benefit obligations
included, among others:
• Evaluating the design and testing the operating effectiveness of
key controls over the assessment of regulatory changes and their
impact on employee benefit obligations.
• Obtaining an understanding of the relevant provisions of the
Labour Codes, particularly changes in the definition of wages,
and assessing their potential implications on employee benefit
computations.
• Reviewing management's assessment of the impact of the
Labour Codes, including the assumptions, interpretations, and
judgements applied.
• Assessing the completeness and accuracy of underlying employee
data used in management's evaluation, on a sample basis.
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Sr. No.
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The Key Audit Matters
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Auditors' Response
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the detailed rules are still evolving,
the assessment involves significant
judgment and interpretation, and
there is uncertainty regarding the
extent of any additional liability that
may arise. Accordingly, this matter
required significant auditor attention
and has been considered as a Key
Audit Matter.
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• Assessing the adequacy and appropriateness of disclosures made
in the Standalone Financial Statements, including the description
of uncertainties associated with the evolving regulatory
framework.
• Obtaining an understanding of the relevant provisions of the
Labour Codes, particularly changes in the definition of wages,
and assessing their potential implications on employee benefit
computations.
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5.
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Verification and valuation of
inventories (Refer Note Nos 16 of the
Standalone Financial Statements)
Inventories of the Company primarily
comprise crude oil, stock in process,
and finished petroleum products,
which are significant in the context of
the Standalone Financial Statements.
The measurement and valuation
of inventories involve significant
management judgement, particularly
in determining quantities, estimation
of process losses, and assessment of
net realisable value.
Further, the application of appropriate
costing methodologies, including
allocation of production overheads
and conversion costs, requires the use
of assumptions and estimates.
Considering the materiality of
inventory balances and the significant
judgement involved in their
measurement and valuation, this area
was considered to be of significance in
our audit.
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Our audit procedures in relation to the verification and valuation of
inventories included, among others:
• Evaluating the design, implementation, and operating
effectiveness of key controls over inventory monitoring, recording,
and valuation.
• Assessing the procedures followed by management for physical
verification of inventories at various locations and evaluating
whether such procedures are reasonable and adequate.
• Participating in the year-end physical verification of inventories at
selected locations and performing independent test counts on a
sample basis.
• For locations where physical verification could not be attended,
reviewing management's physical verification reports and
reconciling the same with inventory records.
• In respect of inventories held at leased storage facilities, the
Company has carried out physical verification wherever feasible.
For locations where physical verification was not feasible, we
obtained third-party confirmations and reconciled the same with
the Company's records.
• Evaluating the methods used by management for determining
quantities of inventory and estimation of losses, where ever
applicable.
• Testing, on a sample basis, the valuation of inventories, including
the cost of products, allocation of production overheads, and
conversion costs.
• Assessing the reasonableness of net realisable value by comparing
carrying values with recent selling prices and market data, where
available.
• For inventory in transit, verifying supporting documentation
such as purchase contracts, shipping documents (including bill
of lading), and goods receipt records, and assessing whether such
inventory has been appropriately recognised and valued as at the
reporting date
• Verifying the accuracy of inventory valuation and related
accounting entries in the Standalone Financial Statements.
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Information Other than Standalone Financial Statements and Auditors' Report thereon
The Company's Board of Directors are responsible for the other information. The other information comprises the
information included in the Company's Board of Director's Report including Annexure to Board of Director's Report,
Management Discussion and Analysis, Business Responsibility Report, Corporate Governance and Shareholder's
Information, but does not include the Standalone Financial Statements and our auditors' report thereon. The above
referred information is expected to be made available to us after the date of this auditors' report.
Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information
identified above when it becomes available and, in doing so, consider whether the other information is materially
inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. When we read the information, if, we conclude that there is a material misstatement therein, we
are required to communicate the matter to those charged with governance and take appropriate actions necessitated
by the circumstances and the applicable laws and regulations.
Responsibilities of Management and those charged with governance for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the the Companies Act,
2013 with respect to the preparation of these Standalone Financial Statements that give a true and fair view of
the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the
Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting
Standards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing
and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate
internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting
records, relevant to the preparation and presentation of the Standalone Financial Statements that give true and fair view
and are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Financial Statements, the Board of Directors is responsible for assessing the company's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations,
or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the company's financial reporting process.
Auditors' Responsibilities for the audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these Standalone Financial Statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are
appropriate in the circumstances. Under Section 143(3)(i) of the Companies Act, 2013, we are also responsible for
expressing an opinion on whether the company has adequate internal financial controls system in place and the
operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of the management's use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditors' report to the related disclosures in the Standalone Financial
Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the
company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the
disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in
a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate,
makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial
Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of
our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements
in the Standalone Financial Statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit
matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order, 2020 (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 the "Annexure - A", a
statement on the matters specified in the paragraph 3 and 4 of the order, to the extent applicable.
2. Based on the verification of books of account of the Company and according to the information and explanations
given to us, we give in "Annexure - B" a report on the directions issued by The Comptroller and Auditor General
of India in terms of sub-section 5 of Section 143 of the Act.
3. The Company's Board does not have the requisite number of Independent Directors as required under the
provisions of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Department of
Public Enterprises (DPE) Guidelines, and the Companies Act, 2013 for constituting a duly compliant Board and
its sub-committees, including the Audit Committee. Consequently, in the absence of the required quorum, no
meetings of the Audit Committee were held after March 27, 2026. In such circumstances, the functions ordinarily
performed by the Audit Committee were carried out by the Board of Directors. Accordingly, the Standalone
financial statements have been reviewed and approved by the Board of Directors. (Also refer Note No.57 to the
Standalone Financial Statements)
4. 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 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 it appears
from our examination of those books;
c) The Standalone Balance Sheet, Standalone Statement of Profit and Loss (including other comprehensive
income), the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity dealt
with by this Report are in agreement with the books of account;
d) I n our opinion, the aforesaid Standalone Financial Statements comply with Indian Accounting Standards
specified under Section 133 of the Act.
e) In view of exemption given vide notification no. G.S.R. 463(E) dated June 5, 2015, issued by Ministry of Corporate
Affairs, provisions of Section 164(2) of the Act regarding disqualification of directors, are not applicable to the
Company, since it is a Government Company.
f) With respect to the adequacy of the internal financial controls with reference to Standalone Financial
Statements of the Company and the operating effectiveness of such controls, refer to our separate report in
"Annexure - C".
g) Being a Government Company, pursuant to the notification No GSR 463 (E) dated June 5, 2015 issued by
Ministry of Corporate Affairs, the provisions of Section 197 of the Act as regards managerial remuneration are
not applicable to the company.
h) With respect to the other matters to be included in the Auditors' 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 Standalone
Financial Statements - Refer Note No. 45 to the Standalone Financial Statements;
(ii) The Company did not have any long-term contracts including derivative contracts for which there were
any material foreseeable losses.
(iii) There has been no delay in transferring amounts required to be transferred to the Investor Education and
Protection Fund by the Company.
(iv) a. The Management has represented that, to the best of its knowledge and belief, as disclosed in the
Note no. 48.11 to the Standalone Financial Statements, no funds have been advanced or loaned or
invested (either from borrowed funds or share premium or any other sources or kind of funds) by
the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"),
with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly
or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.
b. The Management has represented that, to the best of its knowledge and belief, as disclosed in the
Note no. 48.12 to the Standalone Financial Statements, no funds have been received by the Company
from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding,
whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest
in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party
("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate
Beneficiaries.
c. Based on the audit procedures performed that have been considered reasonable and appropriate in the
circumstances, nothing has come to our notice that has caused us to believe that the representations
under sub-clause (i) and (ii) of Rule 11(e) of the Companies (Audit and Auditors) Rules, 2014, as provided
under (a) and (b) above, contain any material mis-statement.
(v) The dividend declared and paid during the year by the Company is in compliance with section 123 of the
Act.
(vi) Based on our examination which included test checks, the company has used an accounting software for
maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same
has operated throughout the year for all relevant transactions recorded in the software. Further, during
the course of our audit, we did not come across any instance of audit trail feature being tampered with.
Audit trail has been preserved by the company as per the statutory requirements for record retention in accordance
with the requirements of Rule 11 (g) of the Companies (Audit and Auditors) Rules, 2014
For YCRJ & ASSOCIATES For BSJ & ASSOCIATES
Chartered Accountants Chartered Accountants
Firm Registration No.: 006927S Firm Registration No.: 010560S
Sd/- Sd/-CA YASHAVANTH KHANDERI CA JOJO AUGUSTINE
Partner Partner
Membership No: 029066 Membership No: 214088
UDIN:26029066RTTSLT7614 UDIN:26214088SKWTMF7693
Place: Mangaluru Place: Mangaluru
Date: April 24, 2026 Date: April 24, 2026
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