national fertilizer ltd Auditors report

To the Members of

National Fertilizers Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Naonal Ferliz ers Limited (hereina er referred to as "the Company") which comprise the Standalone Balance Sheet as at 31 March 2023, the Standalone Statement of Pro t and Loss (including other comprehensive income), the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity for the year then ended and notes to the financial statements including a summary of the significant accounng policies and other explanatory informaon (herein a er referred to as "standalone financial statements").

In our opinion and to the best of our informaon and according to the explanaons given to us, the aforesaid standalone financial statements give the informaon 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 Accounng Standards ("IND AS") prescribed under secon 133 of the Act read with the Companies (Indian Accounng Standards) Rules, 2015, as amended, and other accounng principles generally accepted in India, of the state of a airs of the company as at 31 March 2023, its profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auding ("SAs") specified under secon 143(10) of the Act. Our responsibilies under those Standards are further described in the Auditors Responsibilies for the Audit of the Standalone Financial Statements secon of our report. We are independent of the company in accordance with the Code of Ethics issued by the Instut e 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 thereunder, and we have fulfilled our other ethical responsibilies in accordance with these requirements and the ICAIs Code of Ethics. 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.

Emphasis of Ma er

We draw atienon to:

(I) Note No. 2(d) of accompanying standalone financial statements regarding derecognizing Property, Plant & Equipment amounng to Rs. 67.65 crores on account of permanent damage of part of Gas Turbine Generator (GTG) at Bathinda Unit.

(ii) Note No. 36 of accompanying standalone financial statements regarding recognion of subsidy amounng to Rs. 928.37 crores on managements esma tes, towards extension of the Revised Energy Norms.

(iii) Note No. 62 of accompanying standalone financial statements regarding write-off of advance recoverable from foreign supplier against import of urea amounng to Rs. 129.64 crores as per the decision of Board of Directors due to remote possibility of recovery.

Our opinion is not modified in respect of above matiers.

Key Audit Ma ers

Key audit matiers are those matiers that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matiers 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 matiers. We have determined the matiers described below to be the key audit matiers to be communicated in our report. Summary of the same is menoned here under:

S.No. Key Audit Ma er	Response to Key Audit Ma er
1 Revenue recognition	Principal Audit Procedures
Recognion of subsidy is made on the basis of in- principle recognion/ approval/ sefilement of claims from Fer lizer Industry Coordina on Committee (FICC), Department of Ferliz ers (DoF), Government of India, while nalizing the financial statements. Also the FICC regulates such subsidy and the bills raised on such no c aons. Escalaon/de-esc alaon in no ed rates is es mated taking into account the effect of guidelines, policies, instruc ons and clari ca ons given.	The following principal audit procedures have been performed by us in relaon to revenue recognion:
Since there is a me lag between actual expenditure incurred and no c aon of concession rates for the year, Management exercises significant judgment in arriving at the income entled on account of same for the year.	a) We have reviewed the companys Accounng policies for Revenue Recognion (Refer Note No. 1.2.6 of the standalone financial statements), relevant No c aons and Circulars issued by the DoF, Government of India.
Therefore, there is a risk of revenue being misstated on account of esma on of concession/ Import Parity Price (IPP) rates yet to be no ed. Regarding process of Collec on, u liza on and retenon of Retailer Margin.	b) We have carried out substanv e procedures on sample basis for evaluaon of operang e ecv eness of key controls over subsidy and each income stream, basis of management es ma on and their corresponding disclosure.
	c) We have reviewed direcons of FICC, various No c aons issued from me to me and management assessment in rela on to retailer margin.
2 Estimation of Provision & Contingent Liabilities	Principal Audit Procedures
The company has its operaons in various States within India, exposing it to a variety of different Central and State laws. Lig aons and claims may arise from direct and indirect tax proceedings. Resoluon of lig aons and claims proceedings may span over mulple years beyond 31 March 2023.	Our audit process involved understanding of iden ca on process rela ng to li ga ons, claims and con ngent liabili es. We have evaluated the design and tesng the operang effectiveness of controls in respect of process.
The determinaon of a provision or conng ent liability requires significant judgement by the company because of the inherent complexity in es ma ng future liabilies.	We have evaluated managements assessment of the likely outcome and potenal exposures arising from significant conng encies subject to ongoing court cases and arbitra on proceedings and considered the requirements for any provision as per the best esma te of the possible expenditure.
The company has reported con ngent liabili es amounng to Rs. 154.20 Crores in Note 49 to standalone financial statement.	In respect of significant claims, we checked the amount of claim, nature of issues involved, management submissions and corroborated the same with external evidence, where available.
The provisions and conng ent liabilies are subject to changes in the outcomes of lig aons and claims over me as new facts emerge as each legal case progresses and posi ons taken by the company. There is an inherent complexity in esma ons of magnitude of potenal exposures. Significant judgment is required to esma te the likelihood amount of cash oulow s, ming based on interpretaons of the legal aspects, opinions, demand noces, relevant judgements etc.
3 Trade receivables	Principal Audit Procedures
Trade Receivables appearing in financial statement consists of receivables from sale of products as well as receivable from Government of India in the form of subsidy. Trade Receivables as at 31 March 2023 amounng to Rs. 4118.53 crores includes subsidy receivable of Rs. 3522.11 crores.	Our audit approach was a combinaon of test of internal controls and substanv e procedures which included the following:
Refer Note 13 to the Standalone Financial Statements.	a) In respect of Subsidy recoverable from Government of India, as no con rmaon of balance is on record, we have relied on the managements asser on and esma tes on the recoverability.
	As subsidy receivable is outstanding from Department of Ferliz er, Government of India (i.e. Sovereign Authority) and is backed by the approved claims generated from MFMS (Mobile Fer lizer Management System), amount outstanding as at balance sheet date has been considered as recoverable (net of provisions).
	b) In respect of receivables other than subsidy receivables, management have sent request for con rmaon from the pares. The response to the request was checked together, subsequent realisaon check was also performed and long outstanding balances have been reviewed.
4 Property, Plant and Equipment	Principal Audit Procedures
Management judgment is applied for determining the carrying value of property, plant and equipment, intangible assets and their respecv e depreciaon/ amor za on rates. These include the decision to capitalize or expense costs; the annual asset life review; the melines of the capitalizaon/dec apitalize of assets and the measurement and recogni on criteria for assets rer ed from acv e use. Please refer accounng policy no 1.2.9.	a) Tesng of controls in place over the fixed assets cycle,
	b) Evalua on of appropriateness of capitalizaon process. Performed tests to verify the capitalized costs,
	c) Assessment of the melines of the capitalizaon of the assets and assessed the derecogni on criteria for assets rer ed from acvtie use.
	The useful life of assets has been assessed by the management. In performing these procedures, we reviewed the judgments made by management for the following:
	a) Iden c aon of the nature of underlying costs capitalized,
	b) Determinaon of realizable value of the assets rer ed from acv e use,
	c) Appropriateness of asset lives applied in the calcula on of deprecia on/ amorz aon,
	d) Useful lives of assets prescribed in Schedule II of the Companies Act, 2013.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

The companys management and board of directors are responsible for the preparaon of other in formaon. The other informaon comprises the Management Discussion and Analysis, Directors Report including annexures to Directors Report, Business Responsibility Report, Corporate Governance, Performance at a Glance and Chairmans Statement included in the annual report of the company, but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone financial statements does not cover the other informaon and we do not express any form of assurance conclusion thereon.

In connecon with our audit of the standalone financial statements, our responsibility is to read the other informaon iden ed above and, in doing so, consider whether the other informaon is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of audit, or otherwise appears to be materially misstated. On reading the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the mafter to those charged with governance and take necessary acons as per applicable laws and regulaons.

Responsibili es of Management and those charged with Governance for the

Standalone Financial Statements

The companys management and board of directors is responsible for the matiers stated in secon 134(5) of the Act with respect to the preparaon of these standalone financial statements that give a true and fair view of the financial posion, financial performance including other comprehensive income, cash flows and changes in equity of the company in accordance with the accounng principles generally accepted in India, including the IND AS prescribed under secon 133 of the Act read with relevant rules issued thereunder. This responsibility also includes maintenance of adequate accounng records in accordance with the provisions of the Act for safeguarding the assets of the company and for prevenng and detecng frauds and other irregularies; selecon and applicaon of appropriate accounng policies; making judgements and esma tes that are reasonable and prudent; and design, implementaon and maintenance of adequate internal financial controls, that were operang e ecv ely for ensuring the accuracy and completeness of the accounng records, relevant to the preparaon and presentaon of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the companys ability to connue as a going concern, disclosing, as applicable, matiers related to going concern and using the going concern basis of accounng unless management either intends to liquidate the company or to cease operaons, or has no realisc alternav e but to do so.

The board of directors is also responsible for overseeing the companys financial reporng process.

Auditors Responsibility for the Audit of the Standalone Financial Statements

Our objecv es 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 skepcism throughout the audit. We also:

Idenf y 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 detecng a material misstatement resulng from fraud is higher than for one resulng from error, as fraud may involve collusion, forgery, intenonal omissions, misrepresentaons, or the override of internal control.

Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under secon 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operang e ecv eness of such controls.

Evaluate the appropriateness of accounng policies used and the reasonableness of accounng esma tes and related disclosures made by management and the board of directors.

? Conclude on the appropriateness of the management and the board of directors use of the going concern basis of accounng and, based on the audit evidence obtained, whether a material uncertainty exists related to events or condions that may cast significant doubt on the ability of the company to connue as a going concern. If we conclude that a material uncertainty exists, we are required to draw atienon in our auditors report to the related disclosures in the Statement 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 condions may cause the company to cease to connue as a going concern.

Evaluate the overall presentaon, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transacons and events in a manner that achieve fair presentaon.

We communicate with those charged with governance regarding, among other matiers, the planned scope and ming of the audit and significant audit findings, including any significant deficiencies in internal control that we idenf y 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 relaonships and other matiers that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matiers communicated with those charged with governance, we determine those matiers that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matiers. We describe these matiers in our auditors report unless law or regulaon precludes public disclosure about the mafter or when, in extremely rare circumstances, we determine that a mafter 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 communicaon.

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 secon 143(11) of the Act, we give in the "Annexure A", a statement on the matiers specified in the paragraph 3 and 4 of the order to the extent applicable.

2. As required by Secon 143(5) of the Act, we have considered the direcon and sub-direcons issued by the Comptroller & Auditor General of India. We give our report in the atiached "Annexure B".

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

(a) We have sought and obtained all the informaon and explanaons 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 examinaon of those books;

(c) The standalone balance sheet, the standalone statement of profit and loss, 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) In our opinion, the aforesaid standalone financial statements comply with the IND AS specified under

Secon 133 of the Act read with relevant rule issued thereunder;

(e) As per no c aon number G.S.R. 463(E) dated 5 June 2015 issued by the Ministry of Corporate A airs, secon 164(2) of the Act regarding disquali caons of directors is not applicable to the company, since it is a Government Company;

(f) With respect to the adequacy of the internal financial controls over financial reporng of the company and the operang e ecv eness of such controls, refer to our separate report in "Annexure C". Our report expresses an unmodi ed opinion on the adequacy and operang e ecv eness of the companys internal financial controls over financial reporng;

(g) As per no c aon number G.S.R. 463 (E) dated 5 June 2015 issued by the Ministry of Corporate A airs, secon 197 of the Act regarding remuneraon to director is not applicable to the company, since it is a Government Company; and

(h) With respect to the other matiers 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 informaon and according to the explanaons given to us:

i. The company has disclosed the impact of pending lig aons on its financial posion in its

standalone financial statements Refer Note 49 to the standalone financial statements;

ii. The company did not have any long-term contracts including derivav e 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

Educaon and Protecon Fund by the company.

iv. (a) The respecv e management has represented that, to the best of its knowledge and belief, 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 or enty , including foreign enes ("Intermediaries"), with the understanding, whether recorded in wring or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or enes iden ed in any manner whatsoever by or on behalf of the company ("Ulma te Bene ciaries")

provide any guarantee, security or the like on behalf of the Ulma te Bene ciaries;

(b) The management has represented, that, to the best of its knowledge and belief, no funds have been received by the company from any persons or enes, including foreign enes ("Funding Pares"), with the understanding, whether recorded in wring or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or enes iden ed in any manner whatsoever by or on behalf of the funding party ("Ulma te Bene ciaries") or provide any guarantee, security or the like on behalf of the Ulma te Bene ciaries; and

(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our noce that has caused us to believe that the representaons under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material mis-statement.

v. No dividend has been declared or paid during the financial year by the company. However, the board of directors of the company in its meeng held on 29 May 2023, have declared an interim dividend of

Rs. 1.53 per equity share aggregang to Rs. 75.06 crore in respect of the financial year ended 31 March 2023, which is yet to be paid. The dividend declared is in accordance with secon 123 of the Act to the extent it applies to declaraon of dividend.

vi. Since applicability of maintenance of audit trail in accounng sow are has been deferred to 1 April 2023, reporng under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended 31 March 2023.

For ARUN K. AGARWAL & ASSOCIATES For DHAWAN & CO. Chartered Accountants Chartered Accountants

Firms Registration No.: 003917N Firms Registration No.: 002864N

Lokesh Kumar Garg Deepak Kapoor Partner Partner M. No. : 413012 M. No.: 072302

UDIN No. : 23413012BGWRJP7020 UDIN No. : 23072302BGXHAU2085

Place: Noida Date: 29-05-2023

‘ANNEXURE A to Independent Auditors Report on the Standalone Financial Statements of National Fertilizers Limited for the year ended 31 March 2023

(Referred to in para 1 under ‘Report on Other Legal and Regularity Requirements section of our report of even date)

To the best of our informaon and according to the explanaons provided to us by the company and the books of account and records examined by us in the normal course of audit, we report that:

(i) (a) (A) The company has maintained proper records showing full parcular s including quant av e details and situaon of Property, Plant & Equipment and relevant details of right-of-use assets.;

(B) The company has maintained proper records showing full parcular s of intangible assets.

(b) The company has a regular program of physical veri caon of Pr operty, Plant & Equipment and right-of-use assets by which all the assets are veri ed in a phased manner, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. Accordingly, the physical veri caon of pr operty, plant and equipment has been carried out by the management during the year. We are informed that discrepancies noced on such veri caon were not material and have been properly dealt with in the books of account. Further, as per the Government direcons, the company have installed PoS devices at different retail points, for which no physical veri caon is carried out.

(c) The tle deeds of immovable properes (other than properes where the company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the company except the following:

Description of property	Gross carrying value	Held in name of	Whether promoter, director or their relafive or employee	Property held since which date	Reason for not being held in name of company
Freehold Land	Rs.0.15	Government	No	11.02.1988	Out of 685.301 Acres of land, 14.261
at Bhanda	crores	of Punjab		10.03.1988	Acres of land for construcon of
				20.01.1988	Ferliz ers Minor was acquired at
				21.01.1988	the cost of NFL but there is no
				23.05.1984	provision in the Government rules to transfer the ownership of Government Property.
Leasehold Land at Vijaipur	Nil*	Government of Madhya Pradesh	No	12.07.1984	Lease Deed is not yet executed.
Freehold Land at Alwar	Rs.1	Urban Improvement Trust, Alwar	No	05.04.1986	As informed, the land has not yet been registered in the name of NFL due to ongoing lig aon between Urban Improvement Trust, Alwar and the concerned farmers.
3190.46 Sq Mtrs in Core - III, SCOPE Complex, Lodhi Road, New Delhi under Investment Property	Rs.1.18 crores	Standing Conference of Public Enterprises (SCOPE)	No	19.10.1979	There is no tle deed in f avour of the company, however, as informed, the company is a deemed owner of the property.

* The deemed cost of Leasehold Land at Vijaipur Unit as on 01.04.2015 (Transion to Ind AS) was Nil.

Further, symbolic possession of 325.70 acres of land at Nangal (having gross carrying value Rs. 0.12 crores) was taken by the Punjab Government on 29.10.1998 by an order against which the company has led a Civil Writ Peon in the

Punjab & Haryana High Court and the mafter is sub-judice.

Also, there is a lig aon in respect of land measuring 1.7 acres approx., which is not in possession of the company, before Punjab & Haryana High Court, Chandigarh. The Regular Second Appeal (RSA) preferred by appellant is pending wherein Honble High Court has ordered status-quo in the matier.

(d) The company has not revalued any of its Property, Plant and Equipment (including right-of-use assets)and intangible assets during the year.

(e) No proceedings have been inia ted during the year or are pending against the company as at 31 March 2023 for holding any benami property under the Benami Transacons (Prohibion) Act, 1988 (as amended in 2016) and rules made thereunder.

(ii)(a) The physical veri caon of the inventory, except Carbon Slurry amounng to Rs. 25.55 crore, has been conducted by the management in accordance with the perpetual inventory programme, at regular intervals during the year and the coverage and procedure of such veri caon by the management is appropriate. The discrepancies noced on veri caon have been properly dealt within the books of account. No discrepancy of 10% or more in the aggregate for each class of inventory was noced.

(b) The company has been sanconed working capital limits in excess of rupees ve crore, in aggregate, from banks or financial instuons which are secured on the basis of security of current assets. The quarterly returns or statements led by the company with such banks or financial instuons are in agreement with the books of account of the company.

(iii) The company has not made investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, rms, limited liability partnerships or any other pares during the year and hence reporng under clause 3(iii)(a), (b), (c), (d), (e) and (f) of the Order is not applicable.

(iv) The company has complied with the provisions of secon 185 and 186 of the Act, with respect to the loans,investments, guarantees and security made.

(v) The company has not accepted any deposits within the provisions of secons 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph 3(v) of the Order is not applicable.

(vi) We have broadly reviewed the cost records maintained by the company specified by Central Governmentunder Sub Secon (1) of secon 148 of the Act, and are of the opinion that prima facie the prescribed records have been maintained. We have, however, not made a detailed examinaon of the Cost Records with a view to determine whether they are accurate or complete.

(vii) (a) The company is generally regular in deposing , with the appropriate authories, undisputed statutory dues including Goods and Service Tax, Provident Fund, Employees State Insurance, Income tax, Sales tax, Service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues. Further, no undisputed amounts remain payable in respect of such statutory liabilies as at 31 March 2023 for a period of more than six months from the date they became payable.

(b) Details of statutory dues referred to in sub-clause (a) above which have not been deposited as on 31 March 2023 on account of disputes are given below:

Name of Statute	Nature of Dues	Amount Involved (Rs. in crore)	Period to which the amount relates	Forum where the dispute is pending
Income Tax	Income Tax	0.12	AY 2006-07	ITAT, Delhi
Act, 1961	Income Tax	0.45	AY 2011-12	ITAT, Delhi
	Income Tax	0.71	AY 2012-13	CIT (Appeals)
	Income Tax	0.16	AY 2013-14	ITAT, Delhi
	Income Tax	0.14	AY 2014-15	ITAT, Delhi
	Income Tax	17.91	AY 2017-18	CIT (Appeals)
	Income Tax	10.57	AY 2018-19	CIT (Appeals)
Custom Act, 1962	Custom Duty	1.37	1996-97	CESTAT, Mumbai
Central Excise	Excise Duty	3.69	2013-14	CESTAT, Ahmedabad
Act, 1944	Penalty on Excise Duty	0.02	FY 2017-18	Commissioner (Appeals), Bhopal
Punjab	Property Tax	1.21	2007-08 to 2009-10	Punjab & Haryana High Court
Municipal Act		0.10	1982-83 to 1991-92
Haryana Local Development Tax Act, 2000	Entry tax	6.72	2000-01 to 2002-03	Joint Excise & Taxaon Commissioner, Rohtak
MP Value Added Tax Act, 2002	VAT	0.01	2008-09	Madhya Pradesh High Court
MP Entry Tax Act, 1976	Entry Tax	0.08	2013-14, 2014-15 and 2016-17	Addional Commissioner , Gwalior
	Entry Tax	0.03	2010-11 & 2012-13	Madhya Pradesh High Court, MPCTAB
MP Vidyut Shulk	Electricity	0.47	2008-09 to 2012-13	MP High Court, Jabalpur Bench,
Adhiniyam, 2012	Generaon Duty & Cess			Gwalior
Municipal	Octroi	0.40	FY 1998-99, 1991-92	Punjab and Haryana High Court
Corporaon Ba thinda	Charges
Finance Act	Service Tax, Interest and Penalty on Service Tax	0.33	01.07.2012 to 31.12.2014	CESTAT, Chandigarh
Punjab State GST Act	GST	0.05	2017-18	Appellate Authority GST
Bihar State GST Act	GST	3.37	2019-20	Commissioner Appeal, Bihar

(viii) There were no transacons relang to previously unrecorded income that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).

(ix) (a) The company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender dues to any bank or bonds/debenture holders as at the Balance Sheet date.

(b) The company has not been declared wilful defaulter by any bank or financial instuon or other lender.

(c) Term loans were applied for the purpose for which the loans were obtained;

(d) Based on an overall examinaon of the financial statements of the company, funds raised on short term basis have, prima facie, not been used during the year for long-term purposes by the company.

(e) Based on an overall examinaon of the financial statements of the company, the company has not taken any funds from any enty or person on account of or to meet the obligaons of its joint ventures.

(f) The company has not raised any loans during the year on the pledge of securies held in its joint ventures.

(x) (a) The company has not raised moneys by way of inial public offer or further public offer (including debt instruments) during the year. Accordingly, paragraph 3(x)(a) of the Order is not applicable.

(b) During the year, the company has not made any preferenal allotment or private placement of shares or converble debentures (fully, parally or oponally converble) and hence reporng under clause 3(x)(b) of the Order is not applicable

(xi) (a) During the year, a case of fraudulent misappropriaon of seed stock amounng to Rs. 0.64 crores by a Wheat Seed Producer under Warehousing and Processing of Wheat Seed Agreement with the company has been observed for which police complaint has also been led by the company.

(b) No report under sub-secon (12) of secon 143 of the Companies Act has been led in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year and upto the date of this report.

(c) As informed, no whistle blower complaints have been received by the company during the year.

(xii) The company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) In our opinion, the company is in compliance with Secon 177 and 188 of the Act with respect to applicable transacons with the related pares and the details of related party transacons have been disclosed in the standalone financial statements as required by the applicable accounng standards

(xiv) (a) In our opinion, the company has an adequate internal audit system commensurate with the size and the nature of its business.

(b) We have considered the internal audit reports for the year under audit, issued to the company during the year and ll date, in determining the nature, ming and extent of our audit procedures.

(xv) The company has not entered into non-cash transacons with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) (a) The company is not required to be registered under secon 45-IA of the Reserve Bank of India Act 1934.

Accordingly, paragraph 3(xvi) (a), (b) and (c) of the Order is not applicable to the company.

(b) In our opinion, there is no core investment company within the Group (as defined in the Core InvestmentCompanies (Reserve Bank) Direcons, 2016). Accordingly, paragraph 3(xvi) (d) of the Order is notapplicable to the company.

(xvii) The company has not incurred cash losses during the financial year covered by our audit and the immediatelypreceding financial year.

(xviii) There has been no resignaon of the statutory auditors of the company during the year.

(xix) On the basis of the financial raos, ageing and expected dates of realisaon of financial assets and payment of financial liabilies, other informaon accompanying the financial statements and our knowledge of the board of directors and management plans and based on our examinaon of the evidence supporng the assumpons, nothing has come to our atienon, which causes us to believe that any material uncertainty exists as on the date of the audit report indicang that company is not capable of meeng its liabilies exisng at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the company. We further state that our reporng is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilies falling due within a period of one year from the balance sheet date, will get discharged by the company as and when they fall due.

(xx) (a) In respect of other than ongoing projects, the company has transferred unspent amount as at the end of the previous financial year, to a fund specified in Schedule VII to the Act within a period of six months of the expiry of said financial year in compliance with second proviso to sub-secon (5) of secon 135 of the said Act.

In respect of other than ongoing projects, the company has not transferred the unspent amount as at the Balance Sheet date out of the amounts that was required to be spent during the year, to a fund specified in Schedule VII to the Act in compliance with second proviso to sub-secon (5) of secon 135 of the said Act ll the date of our report since the me period for such transfer i.e. six months of the expiry of said financial year has not elapsed ll the date of our report.

(b) Amount remaining unspent under sub-secon (5) of secon 135 of the Act, pursuant to any ongoing project, has been transferred to a special account in compliance with the provision of sub-secon (6) of secon 135 of the said Act.

For ARUN K. AGARWAL & ASSOCIATES For DHAWAN & CO. Chartered Accountants Chartered Accountants

Firms Registration No.: 003917N Firms Registration No.: 002864N

Lokesh Kumar Garg Deepak Kapoor Partner Partner M. No. : 413012 M. No.: 072302

UDIN No. : 23413012BGWRJP7020 UDIN No. : 23072302BGXHAU2085

Place: Noida Date: 29-05-2023

ANNEXURE B to Independent Auditors Report on the Standalone Financial Statements of National Fertilizers

Limited for the year ended 31 March 2023

(Referred to in para 2 under Report on Other Legal and Regularity Requirements section of our report of even date)

COMPLIANCE CERTIFICATE

We have conducted the audit of the accounts of Naonal Ferliz ers Limited for the year ended 31 March 2023 in accordance with the Direcons / Sub-Direcons issued by the C&AG of India under Secon 143(5) of the Companies Act, 2013 and cerf y that we have complied with all the direcons/ sub-direcons issued to us.

For ARUN K. AGARWAL & ASSOCIATES For DHAWAN & CO. Chartered Accountants Chartered Accountants

Firms Registration No.: 003917N Firms Registration No.: 002864N

Lokesh Kumar Garg Deepak Kapoor Partner Partner M. No. : 413012 M. No.: 072302

UDIN No. : 23413012BGWRJP7020 UDIN No. : 23072302BGXHAU2085

Place: Noida Date: 29-05-2023

Enclosed: Direcon and Sub-dir econ u/ s 143(5)

AUDIT REPORT OF NATIONAL FERTILIZERS LIMITED FOR THE YEAR 2022 -2023

PURSUANT TO DIRECTIONS UNDER SECTION 143(5) OF THE COMPANIES ACT, 2013

I. Directions for the year 2022-23

1. Whether the company has system in place to process all the accounting transac ons through IT system? If yes, the implications of processing of accounting transac ons outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.

Yes, the company has its system in place to process majority of the accounng transacons through IT system except:

a. Calculaon of depreciaon of fixed asset b. Valuaon of Closing Stock of traded goods c. Calculaons of subsidy on Urea producon (through GC-4)

Unit-wise accounng is maintained on different computer systems which are not interconnected. However,integrity of the accounts is not in jeopardy.

2. Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc. made by a lender to the company due to the companys inability to repay the loan? If yes, the financial impact may be stated. Whether such cases are properly accounted for? (In case, lender is a Government Company, then this direction is also applicable for statutory auditor of the lender company).

Based on Audit Procedure performed by us and as per the informaon and explanaon given to us, there has been no restructuring of an exisng loan or cases of waiver/write off of debts/ loans/interest etc. made by a lender to the company.

3. Whether funds (grants/subsidy etc.) received/receivable for specific schemes from Central/State Government or its agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation.

Funds received/receivable for specific schemes from Central/State Government or its agencies were properly

accounted for/uliz ed as per its terms and condions.

II. Sub-Directions under section 143(5) of Companies Act 2013 for the year 2022-23

1. Impact of revision of subsidies for Fertilizer Product viz NPK, Ammonium Sulphate and imported MoP in valuation of closing stock may be stated.

The downward revision of Subsidy by Govt. of India vide no c aon dated 18 May 2023, has resulted in lower valuaon of closing stock by Rs. 97.28 crores as on 31 March 2023 as detailed below:

S.No.	Product	Impact in Rs. crores
1	DAP	37.76
2	APS	39.52
3	NPK	20.00
	Total	97.28

For ARUN K. AGARWAL & ASSOCIATES For DHAWAN & CO. Chartered Accountants Chartered Accountants

Firms Registration No.: 003917N Firms Registration No.: 002864N

Lokesh Kumar Garg Deepak Kapoor Partner Partner M. No. : 413012 M. No.: 072302

UDIN No. : 23413012BGWRJP7020 UDIN No. : 23072302BGXHAU2085

Place: Noida Date: 29-05-2023

‘ANNEXURE C to Independent Auditors Report on the Standalone Financial Statements of National Fertilizers

Limited for the year ended 31 March 2023

(Referred to in para 3(f) under ‘Report on Other Legal and Regularity Requirements section of our report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of sec}on 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporng of National F erliz ers Limited (hereina er referred to as "the Company") as of 31 March 2023 in conjuncon with our audit of the standalone financial statements of the company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporng criteria established by the company considering the essenal components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporng issued by the Instut e of Chartered Accountants of India (‘ICAI). These responsibilies include the design, implementaon and maintenance of adequate internal financial controls that were operang e ecv ely for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevenon and de tecon of fr auds and errors, the accuracy and completeness of the accounng r ecords, and the mely preparaon of reliable financial informaon, as required under the Act.

Auditors Responsibility

Our responsibility is to express an opinion on the companys internal financial controls over financial reporng based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporng (the "Guidance Note") and the Standards on Auding , issued by ICAI and deemed to be prescribed under secon 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Instut e of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporng was established and maintained and if such controls operated e ecv ely in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporng and their operang e ecv eness. Our audit of internal financial controls over financial reporng included obtaining an understanding of internal financial controls over financial reporng , assessing the risk that a material weakness exists, and tesng and evaluang the design and operang e ecv eness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the companys internal financial controls system over financial reporng.

Meaning of Internal Financial Controls over Financial Reporting

A companys internal financial control over financial reporng is a process designed to provide reasonable assurance regarding the reliability of financial reporng and the pr eparaon of financial s tatements for external purposes in accordance with generally accepted accounng principles. A companys internal financial control over financial reporng includes those policies and procedures that:

1. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transacons and disposions of the assets of the company;

2. provide reasonable assurance that transacons are recorded as necessary to permit preparaon of financial statements in accordance with generally accepted accounng principles, and that receipts and expenditures of the company are being made only in accordance with authorizaons of management and directors of the company; and

3. provide reasonable assurance regarding prevenon or mely de tecon of unauthoriz ed acquision, use, or disposion of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitaons of internal financial controls over financial reporng , including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projecons of any evaluaon of the internal financial controls over financial reporng to future periods are subject to the risk that the internal financial control over financial reporng may become inadequate because of changes in condions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the company has, in all material respects, an adequate internal financial controls system over financial reporng and such internal financial controls over financial reporng were operang e ecv ely as at 31 March 2023, based on the internal control over financial reporng criteria established by the company considering the essenal components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporng issued by the ICAI.

For ARUN K. AGARWAL & ASSOCIATES For DHAWAN & CO. Chartered Accountants Chartered Accountants

Firms Registration No.: 003917N Firms Registration No.: 002864N

Lokesh Kumar Garg Deepak Kapoor Partner Partner M. No. : 413012 M. No.: 072302

UDIN No. : 23413012BGWRJP7020 UDIN No. : 23072302BGXHAU2085

Place: Noida Date: 29-05-2023