Madras Fertilizers Ltd Auditor Reports

To

The Members of Madras Fertilizers Limited

Report on Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying financial statements of Madras Fertilizers Limited (the Company), which comprise the Balance Sheet as at March 31, 2026, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of the material accounting policies and other explanatory information (hereinafter referred to as the financial statements).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 (the Act) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act (Ind AS) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2026, its profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis of Opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the 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 independence requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made 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 audit opinion on the financial statements.

Emphasis of Matter:

We draw attention to:

a. Note 30(14)(b) to the Financial Statements regarding the recognition of a subsidy for Neem coated urea under revenue from operations(net) of Rs. 1,834.78 crores for the year ended March 31, 2026 (read with Note No 30(15)(b). This recognition is on a provisional basis and is subject to variation upon the determination of final rates by the Government of India (GOI) under the new pricing scheme. The financial impact due to any variation in the subsidy rate, if any, will be recognized in the period in which the final approved rate is communicated by GOI.

(b) Note 30(15)(b) to the Financial Statements regarding the financial impact during the year ended March 31, 2026 on the account of notification of final rates for Neem coated urea subsidy and freight subsidy for the period pertaining to FY 2023-24 in respect of subsidy for neem coated urea and for FYs 2021-22, 2022-23 and 2023-24 in respect of freight subsidy.

(c) Note 30(3) to the Financial Statements pertains to the request submitted by the Company to the Department of Fertilizers (DOF), Government of India (GOI), seeking waiver of accrued interest and penal interest on loans extended by the GOI, along with conversion of the principal loan amount into borrowings repayable over a period at zero percent interest, as part of the proposed revival package. The DOF has communicated to the Company that, in light of the new Public Sector Enterprise (PSE) policy under Atmanirbhar Bharat, the requested financial revival proposal has been temporarily placed on hold. The Company has been advised to submit a fresh proposal.

Subsequent to this communication, the Company has reiterated to the DOF, with detailed reasoning, that the benefits envisaged under the earlier revival package would remain unchanged. Pending receipt of approval, the Company has continued to recognise interest costs on the loans obtained from the GOI, and no repayments have been made during the year ended March 31, 2026. As per the terms of sanction, GOI reserves right to levy penal interest at the rate of 2.75% in case of default in repayment. As no communication in this regard has been received from the Government, as on date, the penal interest of Rs. 443.33 crores (PY- Rs. 394.68 crores) is reported as contingent liability.

(d) Note 30(15)(a) to the Financial Statements regarding the request placed by the Company before GOI for extending the existing energy norm of 8.337 Gcal/MT of Urea (w.e.f July 18, 2024) until the energy reduction measures are implemented. Pending the approval of the above request, as a prudent measure, the Company has recognised the subsidy income for the year ended March 31, 2026 after considering the maximum penalty of 10% from the existing energy norm of 8.337 Gcal/MT. For the year ended March 31, 2026, penalties of Rs.164.25 crores have been considered.

(e) Note 30(16) to the Financial Statements which describe that slow/non-moving inventory of Stores & spares aggregating to Rs. 30.64 crores as at the year-end, are valued based on technical appraisal made by the Technical Committee (Plant Group) on serviceability and good condition of said inventories on which we have placed reliance. Further, raw materials held by the Company for manufacturing NPK as at the year ended is Rs. 27.89 crores. According to the Management, the NPK production has been under suspension since December 2022, and the materials are of stable/ natural characteristics and are not prone to significant degradation under normal storage conditions. The technical condition of the materials is being periodically assessed by an experienced inhouse team. The feasibility of utilization in the event of resumption of production, as well as disposal/alternative use, has been examined and is under consideration for value realization, and at present, no material loss of value is envisaged.

(f) Note 30(23) to the Financial Statements regarding in the absence of the requisite number of independent directors and women director, the composition of Board of Directors as required in terms of provisions of Section 149 of the Act and Regulation 17 read with Schedule II of the Listing Regulations as such have not been complied with. The Company is yet to fulfil the requirements leading to penalties imposed by the stock exchange which has been reported as part of contingent liabilities, since the appointment of independent directors is beyond the control of the Company, and the Company has requested the Department of Fertilizers to appoint such directors.

Further, the Financial Statements for the year ended March 31, 2026, have been approved on 12th May 2026 by the Board of Directors of the Company on the recommendation of the Audit Committee of the Company,

being reconstituted without having the requisite number of independent directors as required in terms of the Listing Regulations, since the term has been completed for two of the Companys independent directors on 16th April 2026.

(g) Note 27A to the Financial Statements regarding the exceptional items accounted for the year ended March 31, 2026 which includes recognition of the enhanced gratuity cost along with interest of Rs. 2.36 crores based on the Order passed by the Honourable High Court of Madras during the year against the suit filed by certain retired employees who have retired from 01.01.2007 to 23.05.2010. Further, the exceptional items include the service cost of Rs. 6.02 crores in respect of the change in the gratuity plan by increasing the benefits limit to Rs.

0.25 crore from Rs. 0.20 crore consequent to the Pay Revision Order passed during the year.

(h) Note No. 30(26) to the Financial Statements, the Statutory Auditors of Madras Fertilizers Limited Employees Contributory Provident Fund (MFLECPF) have issued a modified opinion in respect of the financial statements of MFLECPF for the year ended March 31,2025 in respect of a matter concerning realisability of overdue investments in certain debt instruments of two companies which are currently under CIRP/resolution process. A sum of Rs. 6.33 crores including interest accrued of Rs. 0.85 crore are overdue for more than three years. However, as the companies in question are still under CIRP, the exact amount of the deficiency which shall be made good by MFL cannot be accurately assessed or provided for at this time. Consequently, this fact has been reported as a contingent liability.

(i) Note 30(29) to the Financial Statements regarding regrouping/reclassification/re-presentation of some of the items appearing in the Financial Statements pertaining to the year ended March 31, 2025.

Our opinion on the Statement is not modified in respect of these matters.

Other Information

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Directors Report, but does not include the Financial Statements and our auditors report thereon. The other information as stated above is expected to be made available to us after the date of this report.

Key Audit Matters:

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the year ended March 31, 2026. These matters were addressed in the context of our audit of the standalone financial statements as a whole,

and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

S No Key Audit Matter	How our Audit procedures addressed the key audit matter
1 Recognition / de-recognition and measurement of Subsidy income and recoverability of subsidy receivables (Refer to Note No. 1.G and 18 to the financial statements).	Our audit procedure included:
	Accounting policies and principles:
	We have reviewed the Companys accounting policy for recognising Subsidy Income as mentioned in Note No. 1G under Material Accounting policies of the Ind AS financial statements.
Subsidy income pertaining to Urea is recognized on the basis of the rates notified by the Department of Fertilizers from time to time in accordance with the New Pricing Scheme (NPS) and Nutrient Based Subsidy (NBS) policy on the quantity of fertilizers sold by the Company, after adjusting for increase / decrease on account of annual escalation / de escalation in input prices in accordance with policy parameters in this regard.
	Tests of controls:
	We have evaluated the design, implementation and operating effectiveness of key controls over recognition of subsidy income. Evaluated the managements assessment of the recoverability of outstanding subsidy.
	Tests of details:
Adjustments, if any, for differences between the subsidy as per the Statement of Profit and Loss and the approved rate are subsequently accounted for during the year in which the final notification is received from GOI.	(a) Evaluated the managements assessment regarding reasonable certainty of complying with the relevant conditions as specified in the notifications / policies.
	(b) We also reviewed the calculation of subsidy income including escalation / de-escalation adjustments as per relevant policy parameters in this regard.
During the year ended March 31, 2026, the company has recognised subsidy income of Rs. 1,907.76 crores which constitute significant portion of its revenue from operations. The recognition and realisation of subsidy income depend on the rates and the period for which approval is issued by the GOI. While recognising income from subsidy, the company also needs to keep penalty for non achievement of energy norms as a prudent measure.
	(c) We also verified whether the quantities sold as reflected in the records of the company were in agreement with the quantities reflected in customer acknowledgements as appearing in the IFMS portal of the Department of Fertilizers on a selective sampling basis and tested the DBT claims (Subsidy claim) made by the company.
	(d) In respect of Subsidy recoverable from Government of India, as no confirmation of balance is on record, we have relied on the managements assertion and estimates on the recoverability.
Government Subsidy Receivables forms a significant part of the Companys current assets. amounting to Rs. 468.64 crores as at March 31, 2026
	(e) As subsidy receivable is outstanding from Department of Fertilizer, Government of India (i.e. Sovereign Authority) and is backed by the legitimate claims duly certified, amount outstanding as at balance sheet date has been considered as recoverable.
	(f) We assessed the reasonableness of the recoverability of subsidy receivable by reviewing the managements analysis and information used to determine the recoverability of subsidy receivable, ageing of receivables and historical collection trends and evaluated adequacy of disclosures in the financial statements.
	Based on the above procedures performed, we ensured that the recognition of Subsidy Income and recoverability of subsidy receivable is in accordance with applicable financial reporting framework and relevant notifications issued by the Department of Fertilizers, GOI and fairly presented in the financial statements.
2. Estimation of Provision & Contingent Liabilities (Refer to Note No. 1.R , 1 .V.b, and 30.1(a) to the financial statements).	Our audit procedure included:
	(a) Our audit process involved understanding of identification process relating to litigations, claims and contingent liabilities.
In the recognition and measurement of provisions, there is uncertainty about the timing or amount of the future expenditure required to settle the liability. In respect of contingent liabilities, there are estimates and assumptions made to determine the amount to be disclosed.
	(b) We have evaluated the design and testing the operating effectiveness of controls in respect of process.
	(c) We have evaluated managements assessment of the likely outcome and potential exposures arising from significant contingencies subject to ongoing court cases and arbitration proceedings and considered the requirements for any provision as per the best estimate of the possible expenditure.
As at the year ended 31 March 2026, the amounts recognised are material. There is a high degree of judgement required for the recognition and measurement of provisions and disclosure of contingent liabilities.
	(d) 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 ever available.
There is a risk of material misstatement that the estimates are incorrect and that the provisions or contingent liabilities are materially misstated.
	(e) We have assessed the adequacy and appropriateness of presentation and disclosure of contingent liabilities in the financial statements

Our opinion on the Financial Statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other information identified above and in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

When we read the Directors Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate action as applicable under the relevant laws and regulations.

Responsibility of Management for the 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 financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the 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 is responsible for overseeing the Companys financial reporting process.

Auditors Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

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

• Identify and assess the risks of material misstatement of the 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 financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 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 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 financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the 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 Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the 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.

Other Matters

1. During the audit, we observed that most of charges already satisfied are still appearing in the records of Index of charges under Ministry of Corporate Affairs (MCA) portal. The company has to take appropriate measures in order to clear the charges which are not live as on date.

2. The financial statements for the year ended March 31, 2025 were audited by M/s Chandran and Raman, who issued an unmodified opinion vide their report dated May 28, 2025.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements:

1. Based on verification of books of accounts of the company and according to information and explanations given to us, we give in Annexure A 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.

2. 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 B, a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable.

3. 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.

(b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the

Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.

(e) In view of exemption given vide notification no. G.S.R. 463(E) dated June 5, 2015, 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.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure C. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting;

(h) 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; and

(g) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31st March 2026 on its financial position in its financial statements - Refer Note No. 30(1)(a) to the financial statements;

ii. The Company did not have any material foreseeable losses on long-term contracts including derivative contracts; and

iii. There were no amounts required to be transferred to the Investor Education and Protection Fund by the Company except the following

The Company is in possession of the three deposits amounting to Rs.0.005/- crore, having maturity value of Rs.0.006/- crore which were seized by the Income Tax department in the course of search and seizure operations carried at the premises of the depositor. The said deposits had matured during 2001, however due to the intimation received from the department, these are neither encashed nor transferred to the fund in accordance with the Companies Act, 2013.

iv. (a) 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 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 entity, including foreign entity (Intermediaries), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. The Company has not declared or paid any dividend during the year.

vi. Based on the representation received from the Management and on our examination carried out in accordance with the Implementation Guidance on Reporting on Audit Trail under Rule 11(g) of the Companies (Audit and Auditors) Rules,2014 (Revised 2024 Edition) issued by the Institute of Chartered Accountants of India, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended March 31, 2026 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit, we did not come across any instance of the audit trail feature being tampered with. Additionally, audit trail has been preserved by the company as per the statutory requirements for record retention. Our examination of the audit trail was in the context of an audit of financial statements carried out in accordance with the Standard of Auditing and only to the extent required by Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

For Sundar Srini & Sridhar Chartered Accountants

Firm Registration Number: 004201S

	S Sridhar
	Partner
Place: Chennai	Membership No: 025504
Date: 12/05/2026	UDIN: 26025504MYUSBG7906

ANNEXURE - A TO THE AUDITORS REPORT

(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements section of our report to the Members of Madras Fertilizers Limited of even date)

Report on Directions issued by the Comptroller and Auditor General of India under section 143(5) of the Companies Act, 2013.

PART- I - DIRECTIONS

1. Assess the fair valuation of all the investments, both quoted and unquoted, made directly by the Company or through Trusts, for Post retirement benefits of the employees. This includes verifying valuation methodologies, ensuring consistency with Ind AS and reviewing supporting documentation. The auditor shall provide a brief note on the valuation approach, its reasonability, and compliance with applicable regulations, reporting any material deviations or misstatements.

The Company does not hold any investments in its books of account towards post retirement benefits of employees. However, it has established a Fund titled Madras Fertilizers Limited Employees Contributory Provident Fund (MFLECPF) under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The said Fund is governed by the Preliminary Provident Fund Rules, deemed applicable from March 1, 1971, and is not controlled by the Company.

The audited financial statements of the Fund for the year ended March 31, 2026 were not made available to us as of the date of signing this Report. As disclosed under the Emphasis of Matter paragraph, the Statutory Auditors of MFLECPF have issued a modified opinion in respect of the financial statements of the Fund for the year ended March 31, 2025, relating to the realisability of overdue investments in certain debt instruments of two companies presently under CIRP/resolution process. A sum of Rs. 6.33 crores, including accrued interest of Rs. 0.85 crore, has remained overdue for more than three years.

As the companies in question are still under CIRP, the exact deficiency, if any, that may be required to be made good by MFL cannot be presently assessed or provided for. Further, we were unable to independently verify the valuation methodologies applied for all investments to comment on any material deviations.

2. Whether the Company has a system in place to process all the accounting transactions through IT system? If yes, whether review of this system and controls that are significant to the Companies financial reporting process as well as cyber security has been done by Information Security Auditing Organisations empanelled by Cert-In at a minimum frequency of once in a year and material discrepancies found, if any, have been suitably reported? The implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications may also be reported.

The Company has implemented the SAP system to achieve fully integrated and centralized information processing. The system enables integrated processing of most accounting transactions. However, certain transactions relating to subsidy income and certain year end provisions are processed directly in the financial module. These transactions and balances are adequately supported by relevant documentation and calculations maintained in Excel workbooks. Accordingly, the integrity of the accounts is considered to be maintained, and no financial implications are envisaged.

We have been informed that during the year, no review of the SAP system and related controls significant to the Companys financial reporting process, as well as cyber security, has been carried out by any Information Security Auditing Organization.

3. Whether funds (grants/ subsidy etc.) received/ receivable for specific schemes from Central/ State Government or its agencies were properly accounted for as per the applicable accounting standards or norms and whether the received funds were utilised as per its terms and conditions? Whether accounting of interest earned on grants received has been done as per terms and conditions of the Grant. List the cases of deviation.

According to the information and explanations given to us and based on our examination of books of accounts of the company, the company has not received any funds for specific schemes from Central/State Government or its agencies.

4. Whether the Company has identified the key Risk areas? If yes, whether the Company has formulated any Risk Management Policy to mitigate these risks? If yes, (a) whether the Risk Management Policy has been formulated considering global best practices? (b) whether the Company has identified its data assets and whether it has been valued appropriately?

Based on the information and explanations provided by the unit management, the Company has identified key risk areas and has formulated a Risk Management Policy to mitigate such risks. Risks have been identified and grouped under categories such as input, operational, utilities, environmental, project implementation, regulatory, business, competition, market, asset, financial, HR, MIS, legal, and internal control risks. A detailed Risk Management Policy exists, outlining identification, classification, indicators, mitigation strategies (short term and long term), reporting practices, and review mechanisms. The policy is comprehensive and tailored to the fertilizer industry. While policy recognizes MIS risks (server failure, hacking, intrusion, communication network failure), the Company has not formally identified or valued its data assets other than software recognised under Intangible Assets.

5. Whether the Company is complying with the Securities and Exchange Board of India (SEBI) (Listing Obligation and Disclosure Requirements) Regulations, 2015, and other applicable rules and regulations of SEBI, Department of Investment and Public Asset Management, Ministry of Corporate Affairs, Department of Public Enterprises, Reserve Bank of India, Telecom Regulatory Authority of India, CERT-IN, Ministry of Electronics and Information Technology and National Payments Corporation of India wherever applicable? If not, the cases of deviation may be highlighted.

Based on the information, explanations and representations provided by the Management, we report that the Company is, in general, complying with the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015, and other applicable rules and regulations of SEBI, Department of Investment and Public Asset Management, Ministry of Corporate Affairs, Department of Public Enterprises, Reserve Bank of India, Telecom Regulatory Authority of India, CERT IN, Ministry of Electronics and Information Technology, and National Payments Corporation of India, wherever applicable.

However, the composition of the Board of Directors has not been complied with in terms of Section 149 of the Companies Act, 2013 and Regulation 17 read with Schedule II of the Listing Regulations, due to the absence of the requisite number of independent directors and a woman director. The Company is yet to fulfil these requirements, which has resulted in penalties imposed by the Stock Exchange.

SUB-DIRECTIONS

NIL for the current Financial Year

For Sundar Srini & Sridhar Chartered Accountants

Firm Registration Number: 004201S

Sd/-

S Sridhar Partner

Place: Chennai Membership No: 025504

Date: 12/05/2026 UDIN: 26025504MYUSBG7906

ANNEXURE - B TO THE AUDITORS REPORT

Referred to in Paragraph 2 under Report on Other Legal and Regulatory Requirements section of our report to the Members of the Company of even dated

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) (a) In respect of the Companys Property, Plant and

Equipment and Intangible Assets:

(A) The Company has maintained proper records showing full particulars with respect to including quantitative details and situation of Property, Plant and Equipment.

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

(b) The Property, Plant and Equipment (including Right of Use Assets) were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and based on examination of the records of the Company, the title deeds of immovable properties disclosed in the financial statements are held in the name of the company.

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

(e) No proceedings have been initiated during the year or are pending against the Company as at March 31, 2026 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

(ii) (a) In respect of company Inventories:

(i) Physical verification of inventories inside factory premises (including stores and spares) and at Chennai Port has been carried out by management at the year-end. As explained to us, the physical verification

of inventories was carried out by the management as at the year-end only and there were no material discrepancies of 10% or more in the aggregate for each class of inventory.

In our opinion the physical verification of inventories conducted by the management is not consistent with the requirements of this clause with regard to reasonable intervals, as the inventory count generally takes place only at the year-end.

(ii) The Company has been sanctioned working capital limits (i.e. both Fund and non-Fund based facilities) in excess of Rs. 5 crores, in aggregate, at any points of time during the year, from banks or financial institutions on the basis of the security of inventories and book debts including GOI subsidy receivable.

On the basis of examination of relevant records, the quarterly returns or statement filed by the company with bank are not in agreement with books of accounts. The particulars of difference are furnished in note 30(24)(g) to the Financial Statements.

Quarter ended	As per Books	As per returns filed with bank	Variation*
June 30, 2025
Inventories	213.59	414.81	(201.22)
Trade receivables	46.86	494.12	(447.26)
Trade payables	279.75	343.43	(63.68)
September 30, 2025
Inventories	165.78	176.99	(11.21)
Trade receivables	1.06	231.58	(230.52)
Trade payables	211.28	170.45	40.83
December 31, 2025
Inventories	177.08	244.12	(67.04)
Trade receivables	79.43	357.27	(277.84)
Trade payables	314.82	199.68	115.14
March 31, 2026
Inventories	167.14	275.04	(107.90)
Trade receivables	472.33	711.29	(238.96)
Trade payables	316.72	246.78	69.94
*Variance primari	ly arises on account of filing the

Statements before completely closing the books of account for that quarter concerned.

(iii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not provided any guarantee or security or granted any secured or unsecured advances in the nature of loans, to companies, firms, limited liability partnerships or any other parties or made any investments during the year. However, the Company has granted advances in the nature of loans during the year to employees in respect of which the requisite information is as below.

a. According to the information and explanations given to us and on the basis of our examination of the records of the Company during the year, the Company has provided advances in the nature of interest free loans to employees and aggregate amount granted during the year is Rs. 0.67 crore and balance outstanding as at Balance Sheet date is Rs. 4.43 crores.

b. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the terms of the loans provided during the year are not prejudicial to the interest of the Company.

c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, in the case of loans to employees, the terms of the loans are governed by the Companys policies. The principal is recovered at periodical intervals as laid down in such policies.

d. According to the information and explanations given to us and on the basis of our examination of the records of the Company, there are no material overdue amounts as at the Balance Sheet date. Accordingly, reporting under clause 3(iii)(d) of the Order is not applicable.

e. According to the information and explanations given to us and on the basis of our examination of the

records of the Company, there were no cases where the loans have been renewed or extended or fresh loans granted to settle the overdues of existing loans given to the same parties in respect of loans which had fallen due during the year.

f. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not granted any loan which is repayable on demand or without specifying any terms or period of repayment. Accordingly, reporting under the other requirements of clause 3(iii)(f) is not applicable.

(iv) In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of section 186 of the Act in respect of investments made. Further, the Company has not entered into any transaction covered under Section 185.

(v) The Company has not accepted any deposit or amounts which are deemed to be deposits. Hence, reporting under clause 3(v) of the Order is not applicable. However, the Company is in possession of the three deposits amounting to Rs. 0.005/- crore, having maturity value of Rs.0.006/-crore which were seized by the Income Tax department in the course of search and seizure operations carried at the premises of the depositor. The said deposits had matured during 2001, however due to the intimation received from the department, these are not repaid.

(vi) The company is maintaining the cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act for its fertilizers products.

We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended prescribed by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013 and are of the opinion that, prima facie, the prescribed cost records have been made and maintained.

We have, however not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) In our opinion, the Company has generally been regular in depositing undisputed statutory dues, including Goods and Services tax, Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, duty of Custom, duty of Excise, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities.

There were no undisputed amounts payable in respect of Goods and Service tax, Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, duty of Custom, duty of Excise, Value Added Tax, Cess and other material statutory dues in arrears as at March 31, 2026 for a period of more than six months from the date they became payable.

According to the information and explanations provided to us, a sum of Rs.1.02 crores, being the amounts payable to the Contractors withheld by the Company pending for confirmation from the Contractors for having remitted the dues towards Provident Fund and Employee State Insurance, and further no communications were received from the from the concerned authorities demanding any amounts of such nature.

(b) According to the information and explanations given to us and from the examination of books of account and records of the Company, details of statutory dues referred to in sub-clause (a) above which have not been deposited as on March 31, 2026 on account of disputes are given below:

Name of the Statute	Nature of Dues	Amount (In Crores)		Period to which the amount relates	Forum where dispute is pending
		Disputed	Deposited
Goods & Service Tax	GST along with Interest & Penalty - Tamil Nadu	2.08	0.08	2017-18	Appeal before Appellate Authority.
Goods & Service Tax	GST along with Interest & Penalty - Tamil Nadu	131.92	-	2018-19	Before Honble High Court of Madras by way of Writ Petition
Goods & Service Tax	GST along with Interest & Penalty - Tamil Nadu	125.20	-	2019-20	Before Honble High Court of Madras by way of Writ Petition
Goods & Service Tax	GST along with Interest & Penalty - Karnataka	1.34	0.04	2021-22	Before Appellate Authority
Keralam Value Added Tax Act, 2003	VAT	1.71	-	Assessment Year 2009-10	Honble Supreme Court of India
		3.40	-	Assessment Year 2010-11
Customs Act, 1962	Differential Customs Duty, Redemption fine u/s 125(1) & Penalty u/s 114(A)	65.86	0.05	NA	Honble High Court of Madras

(viii) There were no transactions relating 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 borrowings to any financial institutions, banks, or dues to debenture holders except default committed in respect of repayment of the loans taken from the Government of India (GOI) Loans as detailed below:

Nature of borrowing	Amount of Default (Rs. in Crores)	Whether principal or interest	Period of Default
Plan Loans	411.17	Principal	From FY 2004-05 to till the date
Non-Plan Loans	20.77
Revamp Loans	122.30
Total (A)	554.24
Plan Loans	756.54	Interest	From FY 2004-05 to till the date
Non-Plan Loans	46.84
Revamp Loans	196.91
Total (B)	1,000.29
Grand Total (A+B)	1,554.53

(b) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(c) The Company has not taken any term loan during the year and there are no outstanding term loans at the beginning of the year and hence, reporting under clause 3(ix)(c) of the Order is not applicable.

(d) According to the information and explanations given to us and on an overall examination of the balance sheet of the Unit, we report that no funds have been raised on short-term basis by the Company. Accordingly, clause 3(ix)(d) of the Order is not applicable.

(e) The Company does not have any subsidiaries, associates or joint ventures at any point of time during the year. Hence reporting on clause 3(ix)(e) of the Order is not applicable.

(f) The Company does not have any subsidiaries, associates or joint ventures. Hence reporting on clause 3(ix)(f) of the Order is not applicable.

(x) (a) The Company has not raised moneys 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) No fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

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

(c) As represented to us by the management, there are no whistle blower complaints received by the company during the year.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Thus, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on the examination of the records of the Company, transactions with the related parties are in compliance with section 177 and section 188 of the Act where applicable and details of such related party transactions have been disclosed in the financial statements as required by the applicable Ind AS.

(xiv) (a) In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business. However, we recommend that the internal audits be conducted on a half yearly basis and that the scope be widened to include detailed ledger scrutiny as well as an evaluation of the Companys supervisory controls over the long outstanding payables and receivables.

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

(xv) According to the information and explanations given to us and based on our examination of the records, the Company has not entered into any noncash transactions with directors or persons connected with him. Accordingly, the Paragraph 3(xv) of the Order is not applicable.

(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

The Company has not incurred any cash losses for the financial year ended 31st March 2026 or for the year ended 31st March 2025.

(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 that 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. 1,554.53 crores which has fallen overdue as on March 31, 2026 for which the Company

has submitted a financial revival proposal which is pending for 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 guarantee 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) On the verification of books of accounts and other relevant records, it was observed that there was no unspent amount which is required to be transferred to a Fund specified in Schedule VII to the Companies Act, 2013 within a Period of six months of the expiry of the financial year.

(b) An amount of Rs. 0.28 crore remains unspent in respect of ongoing projects. Further, the Company has not transferred the said unspent amount to a Special Account as required under sub section (6) of Section 135 of the Companies Act, 2013 as on the date of signing this Report.

(xxi) There are no entities whose financial statements have been consolidated with the financial statements of the Company and accordingly, requirements as to the reporting under this (xxi) does not arise

For Sundar Srini & Sridhar Chartered Accountants

Firm Registration Number: 004201S

Sd/-

	S Sridhar
	Partner
Place: Chennai	Membership No: 025504
Date: 12/05/2026	UDIN: 26025504MYUSBG7906

ANNEXURE - C TO THE INDEPENDENT AUDITORS REPORT

Referred to in Paragraph 2(f) under Report on Other Legal and Regulatory Requirements section of our report to the Members of Madras Fertilizers Limited of even date)

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 Madras Fertilizers Limited (the Company) as of 31st March 2026 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Managements and Board of Directors Responsibility for Internal Financial Controls

The Companys Management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note. 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 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 Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to financial

statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. 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 with reference to financial statements were 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 with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 judgement, including the assessment of the risks of material misstatement of the 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 with reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A Companys internal financial controls with reference to financial statements 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 controls with reference to financial statements include 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements 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, an adequate internal financial controls with reference to Financial Statements and such internal

financial controls with reference to Financial Statements were operating effectively as at March 31, 2026, based on the criteria for internal financial control with reference to Financial Statements 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 Institute of Chartered Accountants of India.

For Sundar Srini & Sridhar Chartered Accountants

Firm Registration Number: 004201S

Sd/-

	S Sridhar
	Partner
Place: Chennai	Membership No: 025504
Date: 12/05/2026	UDIN: 26025504MYUSBG7906