We have audited the accompanying Standalone Financial Statements of MANGALORE REFINERY ANDPETROCHEMICALS 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 Statementof Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the StandaloneFinancial Statements, including a summary of the Material Accounting Policies and other explanatory information ("theStandalone Financial Statements").
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid StandaloneFinancial Statements give the information required by the Companies Act, 2013 ("the Act") in the manner so requiredand give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of theAct read with the Companies (Indian Accounting Standards) Rules, 2015 as amended ("Ind AS'') and other accountingprinciples generally accepted in India, of the state of affairs of the Company as at March 31, 2026 and its profit, othercomprehensive 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 theCompanies Act, 2013. Our responsibilities under those Standards are further described in the Auditors' Responsibilitiesfor the audit of the Standalone Financial Statements section of our report. We are independent of the company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with theethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of theAct and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriateto 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 theStandalone Financial Statements of the current period. These matters were addressed in the context of our audit of theStandalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separateopinion on these matters. For each matter below, our description of how our audit addressed the matter is provided inthat context.
We have determined the matters described below to be the key audit matters to be communicated in our report. Wehave fulfilled the responsibilities described in the auditors' responsibilities for the audit of the Standalone FinancialStatements section of our report, including in relation to these matters. Accordingly, our audit included the performanceof procedures designed to respond to our assessment of the risks of material misstatement of the Standalone FinancialStatements. 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.
Sr. No.
The Key Audit Matters
Auditors' Response
1.
Property, Plant and Equipment(Refer Note No.5 of the StandaloneFinancial Statements)
The carrying value of property,plant and equipment (PPE) andthe related depreciation involvesignificant management judgement.This includes decisions regarding thecapitalisation versus expensing ofcosts, estimation of useful lives and
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 effectivenessof key controls over capital expenditure, including controls overcapitalisation of major repairs, maintenance, and shutdown costs.
residual values at each reporting date,and the application of assumptionsin determining measurement criteria,particularly in cases of disposal,replacement, derecognition, orreclassification of PPEConsidering the materiality of PPEbalances in the Company's BalanceSheet and the degree of judgementand estimation involved, this area wasconsidered to be of significance in ouraudit.
• Assessing the appropriateness of the Company's accountingpolicies with respect to capitalisation of refinery assets, includingcomponentisation and treatment of overhaul and repairs onaccount of planned shutdown (other than replacement spare) inaccordance with applicable accounting standards.
• Testing, on a sample basis, capital expenditure incurred duringthe year, including large projects and shutdown costs, to evaluatewhether such costs met the criteria for capitalisation and weresupported by relevant documentation.
• Reviewing management's identification of significant componentsof refinery assets and assessing whether depreciation has beenapplied appropriately over their respective useful lives.
• Evaluating the reasonableness of useful lives and residual valuesby comparing them with technical assessments, past trends, andindustry practices.
• Verifying, on a sample basis, the accuracy of depreciationcalculations, including component-wise depreciation where everapplicable.
• Assessing the accounting treatment of assets derecognised onreplacement of components, disposals, or scrapping, includingthe recognition of any resulting gains or losses.
• Assessing the adequacy and appropriateness of disclosuresrelating to PPE in the Standalone Financial Statements.
2.
Evaluation of Contingent Liabilitiesand Recoverability of pre-depositthereto (Refer Note No 45 of theStandalone Financial Statements)
The Company is involved in variousclaims and litigations pending beforedifferent judicial and regulatoryauthorities, which have not beenrecognised as liabilities but disclosedas contingent liabilities in theStandalone Financial Statements,based on management's assessment.The determination of whether anobligation should be recognised as aliability or disclosed as a contingentliability requires significantmanagement judgement, includingevaluation of the likelihood of outflowof economic resources and theinterpretation of applicable laws andregulations.
Considering the number of such cases,its potential financial impact, andthe significant judgement involvedin assessing the outcomes of thesematters, this area was considered tobe significant in our audit.
Our procedures included among others:
• Evaluating the design and testing the operating effectiveness ofkey controls over identification, assessment, and monitoring oflegal and tax exposures.
• Obtaining a list of ongoing litigations and claims from managementand assessing its completeness through inquiries withmanagement and review of minutes of meetings, correspondencewith regulatory authorities, and legal expenses.
• Reviewing management's assessment of the likelihood of outflowof economic resources in respect of significant cases, including theassumptions and judgements applied.
• Discussing key matters with in-house legal and finance personnelto understand the status and merits of significant cases.
• Obtaining, in selected cases, direct confirmations from externallegal counsel to corroborate management's assessment of thestatus of litigations and the likely outcome.
• Assessing the appropriateness of management's conclusions onwhether provisions are required or whether the matters should bedisclosed as contingent liabilities, in accordance with applicableaccounting standards.
• Evaluating the adequacy and completeness of disclosures inthe Standalone Financial Statements, including the nature oflitigations and associated uncertainties.
3.
Recognition and measurement ofDeferred Tax Liability (Refer NoteNo.25 of the Standalone FinancialStatements)
The Company has recognised adeferred tax liability (net) duringthe year as against a deferred taxasset(net) recognised in the previousyear. This change is primarily drivenby a reassessment of temporarydifferences, the Company's decision toopt for a lower income tax rate underthe applicable tax regime, and theunderlying assumptions relating tofuture taxable profits.
The recognition and measurementof deferred tax balances involvesignificant management judgement,particularly in evaluating therecoverability of deferred tax assets,estimation of future taxable income,and interpretation of applicable taxlaws.
Considering the magnitude ofthe deferred tax balances and thesignificant judgement involved,this matter was considered to be ofsignificance in our audit.
Our audit procedures in relation to the recognition and measurement
of deferred tax balances included, among others:
• Evaluating the design, implementation, and operatingeffectiveness of key controls over the identification, recognition,and measurement of deferred tax assets and liabilities.
• Assessing the appropriateness of the Company's accountingpolicies in respect of deferred taxes in accordance with applicableaccounting standards.
• Obtaining an understanding of the basis for the change fromdeferred tax asset to deferred tax liability during the year, includingmanagement's reassessment of temporary differences and thedecision to opt for a lower income tax rate.
• Verifying the mathematical accuracy of deferred tax computationsand recalculating deferred tax balances using the applicableenacted or substantively enacted tax rates.
• Evaluating the recognition of deferred tax assets by assessingmanagement's projections of future taxable profits and testingthe underlying assumptions, on a sample basis.
• Assessing the completeness and accuracy of temporary differencesby reconciling tax bases with carrying amounts of assets andliabilities.
• Evaluating the impact of the change in tax rate on deferred taxbalances and assessing whether the remeasurement has beenappropriately recognised in the Standalone Financial Statements.
• Assessing the adequacy and appropriateness of disclosures madein the Standalone Financial Statements in respect of deferred taxbalances.
4.
Assessment of impact of newlyimplemented Labour Codes onemployee benefit obligations(Refer Note No.51 of the StandaloneFinancial Statements)
The Company is subject to the LabourCodes which have become effectivefrom November 21, 2025. TheseCodes introduce significant changes,particularly in the definition of wages,which may impact the computation ofvarious employee-related obligations.The Management has carried outan assessment of the potentialimpact based on currently availableinformation and has disclosed thatthere is no financial implication on theStandalone Financial Statements ofthe company at this stage. However,
Our audit procedures in relation to the assessment of the impact ofnewly implemented Labour Codes on employee benefit obligationsincluded, among others:
• Evaluating the design and testing the operating effectiveness ofkey controls over the assessment of regulatory changes and theirimpact on employee benefit obligations.
• Obtaining an understanding of the relevant provisions of theLabour Codes, particularly changes in the definition of wages,and assessing their potential implications on employee benefitcomputations.
• Reviewing management's assessment of the impact of theLabour Codes, including the assumptions, interpretations, andjudgements applied.
• Assessing the completeness and accuracy of underlying employeedata used in management's evaluation, on a sample basis.
the detailed rules are still evolving,the assessment involves significantjudgment and interpretation, andthere is uncertainty regarding theextent of any additional liability thatmay arise. Accordingly, this matterrequired significant auditor attentionand has been considered as a KeyAudit Matter.
• Assessing the adequacy and appropriateness of disclosures madein the Standalone Financial Statements, including the descriptionof uncertainties associated with the evolving regulatoryframework.
5.
Verification and valuation ofinventories (Refer Note Nos 16 of theStandalone Financial Statements)
Inventories of the Company primarilycomprise crude oil, stock in process,and finished petroleum products,which are significant in the context ofthe Standalone Financial Statements.The measurement and valuationof inventories involve significantmanagement judgement, particularlyin determining quantities, estimationof process losses, and assessment ofnet realisable value.
Further, the application of appropriatecosting methodologies, includingallocation of production overheadsand conversion costs, requires the useof assumptions and estimates.Considering the materiality ofinventory balances and the significantjudgement involved in theirmeasurement and valuation, this areawas considered to be of significance inour audit.
Our audit procedures in relation to the verification and valuation of
inventories included, among others:
• Evaluating the design, implementation, and operatingeffectiveness of key controls over inventory monitoring, recording,and valuation.
• Assessing the procedures followed by management for physicalverification of inventories at various locations and evaluatingwhether such procedures are reasonable and adequate.
• Participating in the year-end physical verification of inventories atselected locations and performing independent test counts on asample basis.
• For locations where physical verification could not be attended,reviewing management's physical verification reports andreconciling the same with inventory records.
• In respect of inventories held at leased storage facilities, theCompany has carried out physical verification wherever feasible.For locations where physical verification was not feasible, weobtained third-party confirmations and reconciled the same withthe Company's records.
• Evaluating the methods used by management for determiningquantities of inventory and estimation of losses, where everapplicable.
• Testing, on a sample basis, the valuation of inventories, includingthe cost of products, allocation of production overheads, andconversion costs.
• Assessing the reasonableness of net realisable value by comparingcarrying values with recent selling prices and market data, whereavailable.
• For inventory in transit, verifying supporting documentationsuch as purchase contracts, shipping documents (including billof lading), and goods receipt records, and assessing whether suchinventory has been appropriately recognised and valued as at thereporting date
• Verifying the accuracy of inventory valuation and relatedaccounting entries in the Standalone Financial Statements.
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 theinformation 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'sInformation, but does not include the Standalone Financial Statements and our auditors' report thereon. The abovereferred 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 anyform of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other informationidentified above when it becomes available and, in doing so, consider whether the other information is materiallyinconsistent with the Standalone Financial Statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated. When we read the information, if, we conclude that there is a material misstatement therein, weare required to communicate the matter to those charged with governance and take appropriate actions necessitatedby 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 ofthe financial position, financial performance, total comprehensive income, changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in India, including the Indian AccountingStandards specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequateinternal financial control that were operating effectively for ensuring the accuracy and completeness of the accountingrecords, relevant to the preparation and presentation of the Standalone Financial Statements that give true and fair viewand 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'sability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the goingconcern 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 wholeare free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economicdecisions 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 scepticismthroughout the audit. We also:
• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraudor error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve 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 areappropriate in the circumstances. Under Section 143(3)(i) of the Companies Act, 2013, we are also responsible forexpressing an opinion on whether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.
• Conclude on the appropriateness of the management's use of the going concern basis of accounting and, basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertaintyexists, we are required to draw attention in our auditors' report to the related disclosures in the Standalone FinancialStatements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditors' report. However, future events or conditions may cause thecompany to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including thedisclosures, and whether the Standalone Financial Statements represent the underlying transactions and events ina 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 FinancialStatements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope ofour audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatementsin the Standalone Financial Statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control that we identifyduring our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and other matters that mayreasonably 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 mostsignificance in the audit of the Standalone Financial Statements of the current period and are therefore the key auditmatters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure aboutthe matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected to outweigh the public interestbenefits 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 ofIndia in terms of sub-section (11) of Section 143 of the Companies Act 2013, we give in the "Annexure - A", astatement 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 explanationsgiven to us, we give in "Annexure - B" a report on the directions issued by The Comptroller and Auditor Generalof 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 theprovisions of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Department ofPublic Enterprises (DPE) Guidelines, and the Companies Act, 2013 for constituting a duly compliant Board andits sub-committees, including the Audit Committee. Consequently, in the absence of the required quorum, nomeetings of the Audit Committee were held after March 27, 2026. In such circumstances, the functions ordinarilyperformed by the Audit Committee were carried out by the Board of Directors. Accordingly, the Standalonefinancial statements have been reviewed and approved by the Board of Directors. (Also refer Note No.57 to theStandalone 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 andbelief 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 appearsfrom our examination of those books;
c) The Standalone Balance Sheet, Standalone Statement of Profit and Loss (including other comprehensiveincome), the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity dealtwith 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 Standardsspecified 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 CorporateAffairs, provisions of Section 164(2) of the Act regarding disqualification of directors, are not applicable to theCompany, since it is a Government Company.
f) With respect to the adequacy of the internal financial controls with reference to Standalone FinancialStatements 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 byMinistry of Corporate Affairs, the provisions of Section 197 of the Act as regards managerial remuneration arenot applicable to the company.
h) With respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of theCompanies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and accordingto the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financial position in its StandaloneFinancial 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 wereany material foreseeable losses.
(iii) There has been no delay in transferring amounts required to be transferred to the Investor Education andProtection 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 orinvested (either from borrowed funds or share premium or any other sources or kind of funds) bythe 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, directlyor indirectly lend or invest in other persons or entities identified in any manner whatsoever by oron behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like onbehalf of the Ultimate Beneficiaries.
b. The Management has represented that, to the best of its knowledge and belief, as disclosed in theNote no. 48.12 to the Standalone Financial Statements, no funds have been received by the Companyfrom 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 investin 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 UltimateBeneficiaries.
c. Based on the audit procedures performed that have been considered reasonable and appropriate in thecircumstances, nothing has come to our notice that has caused us to believe that the representationsunder sub-clause (i) and (ii) of Rule 11(e) of the Companies (Audit and Auditors) Rules, 2014, as providedunder (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 theAct.
(vi) Based on our examination which included test checks, the company has used an accounting software formaintaining its books of account which has a feature of recording audit trail (edit log) facility and the samehas operated throughout the year for all relevant transactions recorded in the software. Further, duringthe 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 accordancewith 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