Fertilizers & Chemicals Travancore Auditors Report


To the Members of The Fertilisers and Chemicals Travancore Limited

Report on the Audit of the Standalone Ind AS Financial Statements

OPINION

We have audited the accompanying Standalone Ind AS Financial Statements of The FERTILISERS AND CHEMICALS TRAVANCORE LIMITED (hereinafter referred to as “the Company”), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the Standalone Ind AS Financial Statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013, as amended (the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards specified 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, 2023, the profit and total comprehensive income, its cash flows and changes in equity for the year ended on that date.

Basis for Opinion

We have conducted our audit of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Standalone Ind AS 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 Ind AS Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities 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 opinion on the Standalone Ind AS Financial Statements.

Emphasis of Matter

1. We draw attention to Note #2.3 of the Standalone Ind AS Financial Statements regarding the restatement of the opening balance of Property, Plant & Equipment on April 1, 2021 valued at Rs. 47,956 lakhs.

Our opinion is not modified in respect of the above matter.

Other Matters

1. Company has a system of obtaining balance confirmations relating to the customers and vendors. However, only a few customers and vendors have responded with confirmation.

Our opinion is not modified in respect of the above matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Standalone Ind AS Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Ind AS Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters:

Sl No Key Audit Matter Auditors Response
1 Accounting of subsidy income from Government of India under DBT Scheme: Our principal audit procedures included the following:
Under Direct Benefit Transfer (DBT) scheme of Government of India (GoI), the Company is entitled to receive subsidy only upon sale of fertilizer by the dealer to the ultimate beneficiary through Point of Sale (PoS) devices. However, the Company continues to account subsidy as income at the time of sale to dealers as in the earlier scheme, considering the reasonable certainty that the sale will take place and subsidy will be received based on the industry practice and past experience. Refer Note #28 to the Standalone Ind AS Financial Statements • Analysed the scheme framed by the Department of Fertilizers (DoF) notified through Notification F. No. D(FA)/2016/ DBT dated March 17th, 2017.
• Reviewed the agreement with dealers.
• Performed analytical review procedures on the subsidy claim lodged by the Company from the inception of the DBT scheme and subsidy accounted by the Company.
• Analysed post Balance Sheet sales through PoS devices in Integrated Fertiliser Management System (iFMS) to assess the sales trend.
• Considered the ageing of the stock with the dealers for which sales not reported in the iFMS and assessed the conservative approach adopted by the Company.
• Compliance with Ind AS 20 on Accounting for Government Grants and Disclosure of Government Assistance
• Method consistently followed by the Company from year to year.
2 Property, Plant & Equipment: • We examined whether the Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant & Equipment and our observations are shown in clause (i)(a) to Annexure A to this report.
Estimates of useful lives and residual value of Property, Plant and Equipment is a significant area requiring Management judgment of estimates and application of accounting policies that have significant effect on the amounts recognized in the Standalone Ind AS Financial Statements. • Reviewed the report of the committee that studied the Impairment of the assets.
• Reviewed the capitalisation made during the year under review
• Reviewed the valuation report of the assets held for sale.
• Reviewed the report on the physical verification of Property, Plant and Equipment carried out by the Management and comments of the branch auditors in their report regarding physical verification conducted at depots/ zonal offices. The deficiencies in the physical verification process are reported in clause (i)(b) of Annexure A to this report.
• The deficiencies in the reconciliation of land as per documents with the books of accounts and consequent effect on the verification of completeness and correctness of the land are reported inclause (i)(c)(iv)of Annexure A to this report

Information Other than the Standalone Ind AS Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Annual report, but does not include the Standalone Ind AS Financial Statements and our Auditors Report thereon.

Our opinion on the Standalone Ind AS 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 Ind AS Financial Statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the Standalone Ind AS Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

The said other information is expected to be made available to us after the date of this audit report. When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and shareholders.

Managements Responsibility for the Standalone Ind AS Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Ind AS 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 Ind AS Financial Statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone Ind AS 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 Ind AS Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Standalone Ind AS 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 our opinion on whether the company has adequate internal financial controls with reference to financial control 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 managements 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 Companys 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 Ind AS Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidences 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 Ind AS Financial Statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Materiality is the magnitude of misstatements in the Standalone Ind AS Financial Statements that individually or aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Ind AS Financial Statements maybe in uenced. 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 Ind AS

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 Ind AS 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

Other Matters

1. We did not audit the financial statements of five states comprising marketing offices of the Company included in the Standalone Ind AS Financial Statements of the Company, whose financial statements reflect total revenue of Rs. 2,40,896.66 lakhs for the year ended on that date, as considered in the Standalone Ind AS Financial Statements and total assets not quantifiable in the absence Of certified trial balance of the areas as at March 31, 2023. The Company has submitted certain “ financial schedules” only which have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the Standalone Ind AS Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these states and our report, in so far as it relates to the aforesaid states, is based solely on the reports of other auditors.

2. Our opinion on the Standalone Ind AS Financial Statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters, with respect to our reliance on the work done and the reports of the other auditors and the Standalone Ind AS Financial Statements / Financial Information certified by the Management, except on the limitation of scope reported by other auditors due to non-provision of the trial balance of the states audited by them and their inability to ensure the correctness of the financial schedules due to this.

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 Act, we give in the “Annexure A”, a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable;

2. Based on verification of books of accounts of the company and according to 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 Companies Act, 2013.

3. The company does not have the required number of Independent Directors on its Board due to vacancy arising out of end of term of the existing independent directors, from June 2019 onwards hence being non-compliant with relevant Regulations of SEBI Listing Obligation and Disclosure Requirements (LODR) Regulations, 2015. A penalty had been levied on the Company for this non-compliance.

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 purposes of our audit except for the internal audit reports of the Company relating to the fourth quarter and portions of internal audit reports relating to the third quarter for the financial year 2022-23.

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 and returns generally adequate for the purpose of our audit have been received from the units/ marketing of ces not audited by us.

c) The reports on the accounts of the ve states of the Company audited under Section 143(8) of the Act by other auditors have been given to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flows Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account and with the returns received from ve states not audited by us, subject to the limitation of scope by other auditors.

e) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015.

f) In view of exemption given vide notification no. G.S.R. 463(E) dated June 5, 2015, as amended vide notification no. G.S.R 582(E) dated June 13, 2017, issued by Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of directors, are not applicable to the Company.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to the Standalone Ind AS Financial Statements and the operating effectiveness of such controls, refer to our separate report in “Annexure C”.

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, as amended, 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 the Standalone Ind AS Financial Statements. (Refer Note #48 of the Standalone Ind AS Financial Statements).

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts as at March 31, 2023.

ii. There were no amounts which were required to be transferred to the Investor education and Protection Fund by the Company during the year.

iv. (a) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, 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, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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 that has 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), as provided under (a) and (b) above, contain any material misstatement. v. The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.

Being a Government Company, the provisions of section 197 of the Act with respect to the matters to be included in the Auditors Report is not applicable vide notification no. G.S.R. 463(E) dated June 5, 2015, as amended vide notification no. G.S.R 582(E) dated June 13, 2017, issued by Ministry of Corporate Affairs.

For K Venkatachalam Aiyer & Co.

Chartered Accountants

FRN: 004610S

Sd/-

CA V Ramachandran

Partner

Membership No:020504

UDIN:23020504BGWUBV1894

Place: Kochi

Date: May 5, 2023

Annexure A to the Independent Auditors Report of even date to the members of The Fertilisers and Chemicals Travancore Limited on the Standalone Ind AS Financial Statements for the year ended March 31, 2023

[Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements in the Independent Auditors Report of even date to the members of

The Fertilisers and Chemicals Travancore Limited (“the Company”) on the Standalone Ind AS Financial Statements as of and for the year ended March 31, 2023]:

To the best of our information and according to the explanations provided to us by the Company and the books of account and records examined by us in the normal course of audit, we state that

i. In respect of the Companys Property, Plant & Equipment and Intangible Assets:

a) A] The Company has maintained proper records showing full particulars, including quantitative details and situation of the Property, Plant & Equipment,and relevant details of right of use assets.

B] The Company has maintained proper records showing full particulars of intangible assets.

b) Major portion of the Property, Plant & Equipment have been stated to be physically verified by the Management during the year and are not observed by us. However, we report that the physical verification has to be done on a systematical order and the procedure needs to be strengthened. As explained to us, no material discrepancies were noticed on such physical verification.

c) i] In our opinion and according to information and explanations given to us, the records examined by us and based on the examination of the conveyance deeds/ registered sale deeds of immovable properties included in Property, Plant & Equipment, we report that, out of the 1498.97 acres of land held by the Company, we have been informed that the original title deeds of immovable properties of 768.34 acres of land are submitted to District Court, Ernakulam, pledging 80.50 acres of land as a security against claim of a contractor (Refer Note #2.2 and Note #48.2 to the Standalone Ind AS Financial Statements), title deeds of 374.65 acres of land submitted to a bank for pledging 36.08 acres as security against credit facilities sanctioned (con rmation received from bank for custody of title deeds for 361.66 acres only) (Refer Note #2.8 to the Standalone Ind AS Financial Statements). We have verified the original title deeds of 41 parcels of freehold land having an aggregate area of 156.24 acres in the name of the Company. We had verified the conversion of leasehold to freehold title of 143.22 acres of land (Refer Note #2.3 to the Standalone Ind AS Financial Statements).

ii] We have not verified the documents in respect of the remaining lands as the title deeds are not made available for our verification/ confirmations are not received.

iii] Further, based on the information provided to us, title deeds in respect of the following freehold and leasehold immovable properties are not held in the name of the Company.

Description of the property Gross carrying value Held in the name of Whether promoter, director or their relative or employee Period held indicate range, where appropriate Extend of land (in acres) Reasons for not being held in the name of the Company
Freehold land Not available Unascertained No Not ascertainable *42.26 Title deeds are yet to be registered/ received due to dispute in compensation.
Lease hold land (Right of use asset) Not available Cochin Port Trust No From 2014 **14.26 The lease agreement not yet executed.

*As provided by the management (Refer Note #2.4 to the Standalone Ind AS Financial Statements)

**The lease deed executed by the Company has expired and no fresh deed is executed till date, though the Company continues to occupy the land and pay lease rentals (Refer Note #2.2 and #2C to the Standalone Ind AS Financial Statements)

iv] The Company has not reconciled the value of the land as per the financial statements with the cost of acquisition of the land as per the title deeds and the additional compensation paid for the acquisition of land. Hence, we could not verify the completeness and correctness of the amount disclosed in the financial statements with respect to these title deeds. However, the management con rms that the said non reconciliation will not affect the financial position and financial performance of the Company for the year ended March 31, 2023.

d) The Company has not revalued any of its Property, Plant and Equipment (including Right of Use asset) and intangible assets during the year.

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

ii. a] The inventories have been physically verified by the Management as at year-end. In our opinion, the coverage and procedure of such verification by the management though appropriate, frequency needs to be increased. Discrepancies in the nature of excess physical stock compared to book records were noticed in case of bulk materials of Rock Phosphate and Sulphur which is more than 10% of total raw material stock as on date of inspection. These have been properly dealt in the books of accounts by the Company.

b] The Company has been sanctioned working capital limits in excess of Rs. 5 crores, in aggregate, during the year, from banks on the basis of security of current assets in the form of bill discounting facility. The Company has confirmed that they are not required to submit any quarterly return/ statements with the bank in respect of this facility. Hence, we are unable to comment on its agreement with the books of accounts of the company.

iii. No.

a] The Company has not made any investment in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured/ unsecured, to companies, firms LLPs or any other parties during the year. Hence reporting under clause 3(iii)(a)(A) & (B) of the Order is not applicable.

b] The Company has not made any investment in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured/ unsecured, to companies, firms LLPs or any other parties during the year. Hence reporting under clause 3(iii)(b) of the Order is not applicable.

c] The Company has not made any loans and advances in the nature of loans during the year and hence reporting under clause 3(iii)(c) of the Order is not applicable.

d] The Company has not made any loans and advances in the nature of loans during the year and hence reporting under clause 3(iii)(d) of the Order is not applicable.

e] The Company has not made any loans and advances in the nature of loans during the year and hence reporting under clause 3(iii)(e)of the Order is not applicable.

f] The Company has not made any loans and advances in the nature of loans during the year including any amounts of loans granted to promoters, related parties as defined in clause (76) of section 2 of the Act and hence reporting under clause 3(iii)(f) of the Order is not applicable.

iv. The Company has not made any loans, investments, guarantees, and security to the parties covered under section 185 & 186 of the Act during the year. Accordingly, reporting under clause 3(iv) of the Order is not applicable.

v. The Company has not accepted any deposit or amounts which are deemed to be deposits within the meaning of section 73 to 76 of the Act and rules made thereunder. Hence, reporting under clause 3(v) of the Order is not applicable. However, we report that advance from customers includes an amount of Rs. 346.44 lakhs outstanding for more than 365 days as on the balance sheet date. As per the information given by the Company, the goods/services are not made against these advances due to non-placement of orders, disputes and other reasons. Also, no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal for any contravention in this regard.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under section 148(1) of the Act and are of the opinion that, prima facie, the prescribed cost records have been made and maintained by the Company. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete

vii. In respect of statutory dues:

a) In our opinion, the Company has generally been regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Goods and Services Tax, Customs Duty, Cess and other material statutory dues applicable to it with the appropriate authorities during the year. As per the information and explanation given to us and based on our verification of documents produced before us, there were no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Goods and Services Tax, Customs Duty, Cess and other material statutory dues in arrears as at March 31, 2023 for a period of more than six months from the date they became payable except the following:

Sl No Name of the statute Nature of dues Amount ( Rs in Lakhs)* Period to which amount relates
1 Income Tax Act, 1961 Income Tax and interest due thereon 140.76 1995-96 to 1998-99
2 Income Tax Act, 1961 Income Tax and interest due thereon 13.26 1997-98
3 Income Tax Act, 1961 Income Tax and interest due thereon 79.03 1995-96
4 The Central Sales Tax Act, 1956 Central Sales Tax and interest due thereon 6.68 2013-14
5 The Central Sales Tax Act, 1956 Central Sales Tax and interest due thereon 20.65 2014-15
6 The Central Sales Tax Act, 1956 Central Sales Tax and interest due thereon 5.31 2015-16
7 The Employee Provident Fund Act, 1952 Employer provident fund contribution 3.37 2022-23

*These are the amounts outstanding in the books as per the information given to us by the Company.

b) The details of dues towards Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and goods and services tax which have not been deposited as at March 31, 2023, on account of disputes are given below:

Name of the statute Nature of dues Demand-net of payment ( Rs in Lakhs) Period to which dispute relates Forum where dispute pending
Customs Act, 1962 Customs duty and interest due thereon 36.77 1990-92 Rectification application led by the Department before CESTAT
Kerala Value Added Tax Act, 2003 Kerala Value Added Tax 83.40 2006-07 Special leave petition before Supreme Court by Commercial taxes Department, Govt. of Kerala
Central Excise Act, 1944 Excise duty, interest and penalty against utilization of CENVAT credit against duty payable. 10,976.57 2010-11 to 2013-14 Customs, Excise and Service Tax Appellate Tribunal, Bengaluru
Central Excise Act, 1944 Excise duty, interest and penalty on shortage of raw material written off. 106.17 2003-04 High Court of Kerala (Stay order granted)
Finance Act, 1994 Service tax and interest thereon, up front premium on shares 346.81 2003-04 Customs, Excise and Service Tax Appellate Tribunal, Bengaluru
Finance Act, 1994 Service tax and interest thereon on training fee. 14.54 2012-13 Customs, Excise and Service Tax Appellate Tribunal, Bengaluru
Madhya Pradesh Entry Tax Entry Tax 3.67 1980-84 Board of Revenue (Commercial Tax Tribunal) Gwalior
Sales Tax Act, Punjab Sales Tax 85.28 1999 -00 and 2000-01 Deputy Excise and Taxation Commissioner (Appeals) Patiala
Sales Tax Act, Orissa Sales Tax 63.00 1985-1992 Sales Tax Tribunal, Orissa, Cuttack
Kerala Value Added Tax Act, 2003 Penalty u/s 47(6) of the Kerala Value Added Tax, Act, 2003 7.68 2011-12 Kerala Value added Tax Appellate Tribunal, Ernakulam
Income Tax Act, 1961 Tax demand due to disallowance 1.32 2005-06 Commissioner of Income Tax (Appeals), Kochi
Income Tax Act, 1961 Interest on Income Tax 2.94 2001-02 Commissioner of Income Tax (Appeals), Kochi

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

ix. a] The Company has defaulted in repayment of loans or borrowings to Government of India.

Nature of borrowing, including debt securities Name of the lender Amount not paid on due date (in lakhs) Whether principal or interest No. of days delay or unpaid Remarks, if any
Loan Government of India Rs. 1,77,048.75* Principal 368 Refer Note No. 22 (2) to the Standalone Ind AS Financial Statements
Loan Government of India Rs. 1,43,409.49 Interest 368

*The Company has submitted a Financial Restructuring proposal for an amount of Rs.1,28,273 lakhs to Department of Fertilisers, Government of India. Principal includes Rs. 48,775.75 lakhs as interest converted as loan.

b] The Company has not been declared willful defaulter by any bank or financial institutions or government or any government authority.

c] The Company has not obtained any term loan during the year. However, we are informed that the term loan taken on March 29th, 2016 from Government of India has been utilized for the purpose for which it was disbursed.

d] On an overall examination 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] The company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.

f] The company has not raised any loans during the year on the pledge of securities held in its subsidiaries, associates or joint ventures.

x. a] The Company has not raised money by way of initial public offer or further public offer (including debt instruments) during the year and hence reporting under clause 3(x)(a) of the Order is not applicable.

b] During the year, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully or partly or optionally) and hence reporting under clause 3(x)(b) of the Order is not applicable.

xi. a] Based upon the audit procedures performed and according to the information and explanations given to us, we report that no fraud by the Company or on the Company has been noticed or reported during the year

b] No report under section 143(12) of the Act has been led by us Auditors in Form ADT - 4 during the year and till the audit report date.

c] The Company has con rmed that no whistle blower complaints have been received during the year.

xii. The Company is not a Nidhi Company and hence reporting under of clause 3(xii)(a),(b),(c) of the Order is not applicable to the Company and hence not commented upon.

xiii. In our opinion, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 with respect to applicable transactions with related parties and the details of the related party transactions have been disclosed in the Standalone Ind AS Financial Statements as required by the applicable accounting standards.

xiv. a] In our opinion, the Company has an internal audit system to commensurate with the size and the nature of its business.

b] We have considered the furnished internal audit reports of the audits conducted for the year under audit, issued to the Company during the year and till date, in determining the nature, timing, and extent of our audit procedures. The internal audit reports for the fourth quarter and portions of internal audit report for the third quarter have not been received and hence not considered.

xv. In our opinion, during the year Company has not entered into any non-cash transactions with its Directors or persons connected with its directors, and hence provisions of section 192 of the Companies Act, 2013 are not applicable to the Company.

xvi. a] In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

b] In our opinion, the Company has not conducted any Non-Banking Financial or Housing Finance activities without a valid Certificate of Registration (CoR) from the Reserve Bank of India as per the Reserve Bank of India Act, 1934.

c] In our opinion, the Company is not a core investment company as defined in the Core Investment Companies (Reserve Bank) Directions, 2016 and accordingly reporting under clause 3(xvi)(c) of the Order is not applicable.

d] In our opinion, there is no core investment company within the Group as defined in the Core Investment Companies (Reserve Bank) Directions, 2016 and accordingly reporting under clause 3(xvi)(d) of the Order is not applicable.

xvii. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

xviii. There has been no resignation of the statutory auditors of the Company during the year.

xix. On the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payments of financial liabilities, and our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating the Company is not capable of meeting its liabilities existing at the date of balance sheet date as and when they fall due within a period of one year from the balance sheet date except the Government of India loan including accrued interest of Rs. 3,20,458.24 lakhs which has fallen due as on March 31, 2022 for which the Company has submitted a restructuring plan pending approval. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantees nor any assurance that all liabilities 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] There are no unspent amount towards Corporate Social Responsibility (CSR) on other than ongoing projects requiring a transfer to a Fund specified in Schedule VII to the Companies Act in compliance with second proviso to sub-section (5) of Section 135 of the said Act. Accordingly, reporting under clause 3(xx)(a) of the Order is not applicable for the year.

b] The Company has ongoing projects commitment of Rs. 385.87 lakhs. The Company has transferred Rs. 385.90 lakhs on April 28, 2023.

xxi. Yes. There have been adverse comments in the case of FACT-RCF Building Products Limited (Joint Venture) and these have been reported in paragraph numbers (viii)(a) &(b), (xii), (xv), (xvii)of the Companies (Auditors Report) Order (CARO) report of that company.

For K Venkatachalam Aiyer & Co.

Chartered Accountants FRN: 004610S

Sd/-

CA V Ramachandran

Partner

Membership No:020504

UDIN:23020504BGWUBV1894

Place: Kochi

Date: May 5, 2023

Annexure B to the Independent Auditors Report of even date to the members of The Fertilisers and Chemicals Travancore Limited on the Standalone Ind AS Financial Statements for the year ended March 31, 2023

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

Sl No C & AG Directions Observations/findings
1 Whether the company has system in place to process all the accounting transactions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated Company has implemented SAP ERP system in order to make information processing fully integrated and centralised. It enables integrated processing of most of the accounting transactions. However, certain accounting transactions relating to the subsidy income, valuation of inventory, depreciation of the assets and certain year end provisions are processed directly in the financial module. Such transactions and balances are adequately supported by relevant documents maintained/ calculations maintained in excel work books.The integrity of the accounts is taken care of and no financial implications is envisaged.
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 lender company). According to information and explanations given to us, during the year, there was no restructuring of existing loans of the Company or cases of waiver/write off of debts /loans/interest etc. made by a lender to the Company due to Companys inability to repay the loan. However, we report that the company submitted a financial restructuring proposal to Department of Fertilisers, Government of India with respect to the Government of India loan and no decision was taken by the Government on this proposal as on the balance sheet date.
3 Whether funds (grants/subsidy etc.) received /receivable for speci c schemes from Central /State Government or its agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation According to information and explanations given to us, during the year, the Company received freight subsidy against the freight expenses incurred for the transportation of the fertilizers from plant/ port to the depots and DBT subsidy against the ultimate sale of fertilizers to the bene ciaries. These funds are properly accounted as per Ind AS 20 and utilized as per the terms and conditions of the scheme.
The company has not received / has receivable from any other fund for specific schemes of central/ state agencies during the year.
1 State the impact of revision of subsidies for fertilizers products viz. NPK, Ammonium Sulphate and imported MoP in valuation of its closing stock. As per Companys accounting policy, inventories are valued at lower of cost or net realizable value (“NRV”). In respect of fertilisers which are subsidised/are sold at prices lower than cost, subsidy being a component of revenue is included while arriving at the NRV.
Considering the steep fall in prices of raw materials, the company has estimated that the subsidy rates to be announced by the government for the period starting from April 1, 2023 will be substantially lower matching with the prevailing raw material prices and accordingly valued the closing stock of complex fertilisers (“NPK”) as on March 31, 2023 are valued at NRV of Rs. 42,554.50 lakhs whereas closing stock of ammonium sulphate (“AS”) is valued at cost at Rs. 8,180.57 lakhs except for stock in transit via rail to Karnataka at Rs. 388.64 lakhs which is valued at NRV.
However, had the closing stock been valued at the existing subsidy rates as on March 31, 2023, the entire closing stock of fertilisers (NPK & AS) would have been valued at cost and the notional impact would be increase in the closing stock value of fertilisers (NPK & AS) by Rs. 7,676.94 lakhs.

For K Venkatachalam Aiyer & Co.

Chartered Accountants FRN: 004610S

Sd/-

CA V Ramachandran

Partner

Membership No:020504

UDIN:23020504BGWUBV1894

Place: Kochi

Date: May 5, 2023

Annexure C to the Independent Auditors Report of even date to the members of The Fertilisers and Chemicals Travancore Limited on the Standalone Ind AS Financial Statements for the year ended March 31, 2023

[Referred to in paragraph 4(g) under Report on Other Legal and Regulatory Requirements section of our report of even date]

Independent Auditors Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of the FERTILISERS AND CHEMICALS TRAVANCORE LIMITED (the Company) as of March 31, 2023 in conjunction with our audit of the Standalone Ind AS 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 reporting” criteria established by the Company considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note) and the Standards on Auditing, issued by the ICAI and deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. 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 reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness 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 Ind AS 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 reporting

Meaning of Internal Financial Controls over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that:

1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of Standalone Ind AS Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the management and directors of the Company; and

3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the Standalone Ind AS Financial Statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, 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, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, reasonably adequate internal financial controls system over financial reporting with reference to these Standalone Ind AS Financial Statements and such internal financial controls over financial reporting with reference to these Standalone Ind AS Financial Statements were operating effectively as at March 31, 2023, based on the internal control over financial reporting criteria established by the Company, considering the essential components of internal control stated in the “Guidance Note on Audit of Internal Financial Controls Over Financial Reporting” issued by the ICAI.

For K Venkatachalam Aiyer & Co.

Chartered Accountants FRN: 004610S

Sd/-

CA V Ramachandran

Partner

Membership No:020504

UDIN:23020504BGWUBV1894

Place: Kochi

Date: May 5, 2023