National Fertilizer Ltd Auditor Reports

To

The Members of National Fertilizers Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of National Fertilizers Limited (hereinafter referred to as “the Company”) which comprise the standalone balance sheet as at 31st March 2024, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of cash flows and the standalone statement of changes in equity for the year then ended and notes to the financial statements including a summary of the material accounting policies and other explanatory information (herein after referred to as “standalone financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (“IND AS”) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India, of the state of affairs of the company as at 31st March 2024, its Profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the standards on auditing (“SAs”) 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 financial statements section of our report. We are independent of the company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made 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 standalone financial statements.

Emphasis of Matter

We draw attention to:

(I) Note No. 37(C)(iii)(a) of accompanying standalone financial statements regarding recognizing insurance claim amounting to Rs.77.01 crores pertaining to Gas Turbine Generator (GTG) at Bathinda Unit.

(ii) Note No. 37(C)(iii)(b) of accompanying standalone financial statements regarding recognizing receipt of interim payment of insurance claim amounting to 5.96 crores as income pending finalisation of claim and recognising loss of 18.92 crore towards damaged stock at tuna port.

(iii) Note No. 37(A) (ii) of accompanying standalone financial statements regarding recognition of revenue

for adversity of subsidy amounting to ? 486.53 crores on the basis of DOF letter for “No Profit - No Loss” basis and valuation of inventory at Cost instead of NRV.

(iv) Note No. 37(A) (iii) of accompanying standalone financial statements regarding recognition of subsidy on account of DAP amounting to? 58.02 crores.

Our opinion is not modified in respect of above matters.

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 of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report. Summary of the same is mentioned here under:

S.No. Key Audit Matter	Response to Key Audit Matter
1 Revenue Recognition	Principal Audit Procedures
Recognition of subsidy is made on the basis of in principle recognition/approval/orders settlement of claims from Fertilizer Industry Coordination	The following principal audit procedures have been performed by us in relation to revenue recognition:
Committee (FICC), Department of Fertilizers (DoF), Government of India, while finalizing the financial statements. Also the FICC regulates such subsidy and the bills raised on such notifications. Escalation/de-escalation in notified rates is estimated taking into account the effect of guidelines, policies, instructions and clarifications	a) We have reviewed the companys material accounting policies for Revenue Recognition (Refer Note No. 1.2.3 (b) of the standalone financial statements), relevant Notifications and Circulars issued by the DoF, Government oflndia.
given.	b) We have carried out substantive
Since there is a time lag between actual expenditure incurred and notification of concession rates for the year, management exercises significant judgment in arriving at the income entitled on account of same for the year.	procedures on sample basis for evaluation of operating effectiveness of key controls over subsidy and each income stream, basis of management estimation and their corresponding disclosure.
Therefore, there is a risk of revenue being misstated on account of estimation of concession/ Import Parity Price (IPP) rates yet to be notified.	c) We have reviewed directions of FICC, various Notifications/orders issued from time to time and management assessment in relation to retailer margin.
Regarding process of Collection, utilization and retention of Retailer Margin.
2 Estimation of Provision & Contingent Liabilities	Principal Audit Procedures
The company has its operations in various States within India, exposing it to a variety of different Central and State laws. Litigations and claims may	Our audit process involved understanding of identification process relating to litigations, claims and contingent liabilities.
arise from direct and indirect tax proceedings. Resolution of litigations and claims proceedings may span over multiple years beyond 31 st March 2024.	We have evaluated the design and testing the operating effectiveness of controls in respect of process.
The determination of a provision or contingent liability requires significant judgement by the company because of the inherent complexity in	We have evaluated managements assessment of the likely outcome and potential exposures arising from significant
estimating future liabilities.	contingencies subject to ongoing court cases
The company has reported contingent liabilities amounting to Rs. 185.71 Crores in Note No. 50 to standalone financial statement.	and arbitration proceedings and considered the requirements for any provision as per the best estimate of the possible expenditure.
The provisions and contingent liabilities are subject to changes in the outcomes of litigations and claims over time as new facts emerge as each legal case progresses and positions taken by the company. There is an inherent complexity in estimations of magnitude of potential exposures. Significant judgment is required to estimate the likelihood amount of cash outflows, timing based on interpretations of the legal aspects, opinions, demand notices, relevant judgements etc.	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.
3 Trade Receivables	Principal Audit Procedures
Trade Receivables appearing in financial statement consists of receivables from sale of products as well as receivable from Government	Our audit approach was a combination of test of internal controls and substantive procedures which included the following:
of India in the form of subsidy. Trade Receivables amounting to Rs. 4037.09 crores including subsidy receivable of Rs. 3592.02 crores were outstanding as at 31st March 2024.	a) In respect of Subsidy recoverable from Government of India, as no confirmation of balance is on record, we have relied on the
Refer Note No. 13 to the Standalone Financial	recover ability.
Statements.	As subsidy receivable is outstanding from Department of Fertilizer, Government of India (i.e. Sovereign Authority) and is backed by the approved claims generated from MFMS (Mobile Fertilizer Management System), amount outstanding as at balance sheet date has been considered as recoverable (net of provisions).
	b) In respect of receivables other than subsidy receivables, management have sent request for confirmation from the parties. The response to the request was checked together, subsequent realisation check was also performed and long outstanding balances have been reviewed.
4 Property, Plant and Equipment	Principal Audit Procedures
Management judgment is applied for determining the carrying value of property, plant and	a) Testing of controls in place over the fixed assets cycle,
equipment, intangible assets and their respective depreciation/amortization rates. These include the decision to capitalize or expense costs; the annual asset life review; the timelines of the	b) Evaluation of appropriateness of capitalization process. Performed tests to verify the capitalized costs,
capitalization/decapitalization of assets and the	c) Assessment of the timelines of the
measurement and recognition criteria for assets retired from active use. Please refer material accounting policy no 1.2.9.	capitalization of the assets and assessed the derecognition criteria for assets retired from active use.
	The useful life of assets has been assessed made by the management. In performing these procedures, we reviewed the judgments made by management for the following:
	a) Identification of the nature of underlying costs capitalized,
	b)Determination of realizable value of the assets retired from active use,
	c) Appropriateness of asset lives applied in the calculation of depreciation/ amortization,
	d)Useful lives of assets prescribed in Schedule II of the Companies Act, 2013.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

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

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

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

Responsibilities of Management and those charged with Governance for the Standalone Financial Statements

The companys management and board of directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone 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 IND AS prescribed under section 133 of the Act read with relevant rules issued thereunder. 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 judgements 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the companys

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 also responsible for overseeing the companys financial reporting process. Auditors Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

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

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal 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 and the board of directors.

• Conclude on the appropriateness of the management and the board of directors 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 ability of the company 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 Statement or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the company to cease to continue as a going concern.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably

be expected to outweigh the public interest benefits of such communication.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2020 (“the Order”) issued by the Central Government of India in terms of section 143(11) 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. As required by Section 143(5) of the Act, we have considered the directions issued by the Comptroller & Auditor General of India. We give our report in the attached “Annexure B”.

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 standalone balance sheet, the standalone statement of profit and loss, the standalone statement of cash flows and the standalone statement of changes in equity dealt with by this report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone financial statements comply with the IND AS specified under Section 133 of the Act read with relevant rule issued thereunder;

(e) Notification number G.S.R. 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, section 164(2) of the Act regarding disqualifications of directors is not applicable to the company, since it is a Government Company;

(f) With respect to the adequacy of the internal financial controls over financial 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;

(g) Notification number G.S.R. 463 (E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, section 197 of the Act regarding remuneration to director is not applicable to the company, since it is a Government Company; and

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

I. The company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note No. 50 to the standalone financial statements;

ii. The company did not have any long-term contract including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the company.

iv. (a) The management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person or entity, 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”); • 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 have been received by the company from any persons or entities, including foreign entities (“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; and

(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 mis-statement.

v. The interim and final dividend declared and paid by the Company during the year 31st March 2024 is in

accordance with section 123 of the Act, as Applicable.

vi. As required, maintenance of audit trail in accounting software under Rule 11(g) of the Companies

(Audit and Auditors) Rules, 2014, we have to report as under;

a. Based on our examination which included test checks, except for the instances mentioned in Para b and c below, the Company has used Oracle System (Accounting Software for recording financial transactions) for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software.

Further, for the periods where audit trail (edit log) facility was enabled and operated throughout the year for the respective accounting software, we did not come across any instance of the audit trail feature being tampered with.

b. The Company is using different software/application for recording Payroll, sales transactions and for maintaining price store ledgers for stores and spares items. The data generated through these systems do not auto feed to the Oracle System and its summary is manually posted in Oracle System. In the absence of any information on existence of audit trail (edit logs) for any changes made at the application level in the aforesaid systems, we are unable to comment on whether audit trail features of the said systems was enabled and operated throughout the year.

c. Beside this, the feature of recording audit trail at database level is enabled and maintained throughout the year which contains standard log feature enabled in oracle system. However, the said audit log doesnt have the feature of recording what data was changed.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 1st April 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended 31st March 2024.

For Dhawan & Co.	For R S P H & Associates
Chartered Accountants	Chartered Accountants
Firms Registration No.: 002864N	Firms Registration No.: 003013N

 

Sunil Gogia	Tarun Kumar Batra
Partner	Partner
M. No.: 073740	M. No.: 094318
UDIN No. : 24073740BKFAKI1908	UDIN No.: 24094318BKFLDL6832

Place: Noida Date: 30-05-2024

ANNEXURE A to Independent Auditors Report on the Standalone Financial Statements of National Fertilizers Limited for the year ended 31st March 2024

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

To the best of our 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 report that:

(i) (a) (A) The company has maintained proper records showing full particulars including quantitative details and situation of 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) The company has a regular program of physical verification of Property, Plant & Equipment and right-of-use assets by which all the assets are verified in a phased manner, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. Accordingly, the physical verification of property, plant and equipment has been carried out by the management during the year. We are informed that discrepancies noticed on such verification were not material and have been properly dealt with in the books of account. Further, as per the Government directions, the company have installed PoS devices at different retail points, for which no physical verification is carried out.

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

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

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

Further, symbolic possession of 325.70 acres of land at Nangal (having gross carrying value 0.12 crores) was taken by the Punjab Government on 29.10.1998 by an order against which the company has filed a Civil Writ Petition in the Punjab & Haryana High Court and the matter is sub-judice.

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

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

(e) No proceedings have been initiated during the year or are pending against the company as at 31st March 2024 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

(ii) (a) The physical verification of the inventory, except Carbon Slurry amounting to 24.62

crore, has been conducted by the management in accordance with the perpetual inventory programme, at regular intervals during the year and the coverage and procedure of such verification is appropriate. The discrepancies noticed on verification have been properly dealt with in the books of account. No discrepancy of 10% or more in the aggregate for each class of inventory was noticed.

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

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

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

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

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

(vii) (a) The company is generally regular in depositing, with the appropriate authorities, undisputed

statutory dues including Goods and Service Tax, Provident Fund, Employees State

Insurance, Income tax, Sales tax, Service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues. Further, no undisputed amounts remain payable in respect of such statutory liabilities as at 31st March 2024 for a period of more than six months from the date they became payable.

(b) Details of statutory dues referred to in sub-clause (a) above which have not been deposited as on 31st March 2024 on account of disputes are given below:

Name of the statute	Nature of Dues	Amount Involved (Rs. in crores)	Period to which the amount relates	Forum where the dispute is pending
Central Excise Act	Excise Duty	3.69	2013-14	CESTAT, Ahmedabad
Finance Act	Service Tax, Interest and Penalty on Service Tax	0.33	FY 2012-13 (01.07.2012) to FY 2014-15 (Dec-14)	CESTAT, Chandigarh
Punjab State GST Act	GST	0.05	2017-18	Appellate Authority GST
Income Tax Act, 1961	Income Tax	0.45	AY 2011-12	ITAT, Delhi
Income Tax Act, 1961	Income Tax	0.71	AY 2012-13	CIT (Appeals), Delhi
Income Tax Act, 1961	Income Tax	0.16	AY 2013-14	ITAT, Delhi
Income Tax Act, 1961	Income Tax	0.14	AY 2014-15	ITAT, Delhi
Income Tax Act, 1961	Income Tax	17.91	AY 2017-18	CIT (Appeals), Delhi
Income Tax Act, 1961	Income Tax	10.57	AY 2018-19	CIT (Appeals), Delhi
MP Entry Tax Act 1976	Entry Tax	0.08	2013-14, 2014-15 & 2016-17	Additional Commissioner, Gwalior
MP Entry Tax Act 1976	Entry Tax	0.03	2010-11,2012-13	Madhya Pradesh High Court, MPCTAB
MP VAT Act, 2002	VAT	0.01	2008-09	Madhya Pradesh High Court
MP Vidhyut Shulk Adhiniyam 2012	Electricity Generation Duty & Cess	0.47	2008-09 to 2012-13	MP High Court, Jabalpur Bench, Gwalior
Municipal Corporation Bathinda	Octroi Charges	0.40	FY1998-99, 1991-92	Punjab and Haryana Court
Punjab Municipal Act	Property Tax	1.21	FY 2007-08 to 2009-10	Punjab & Haryana High Court
Punjab Municipal Act	Property Tax	0.10	FY 1982-83 to 1991-92	Punjab & Haryana High Court
The Haryana Local Area Development Tax Act, 2000	Entry Tax	6.72	2000-01 to 2002-03	Joint Excise & Taxation Commissioner, Rohtak
Name of the statute	Nature of Dues	Amount Involved (Rs. in crores)	Period to which the amount relates	Forum where the dispute is pending
Haryana State GST Act, 2017	GST, Interest and Penalty	0.42	FY 2017-18	Commissioner (Appeals), CGST, Panchkula
Haryana State GST Act, 2017	GST, Interest and Penalty	1.48	FY 2017-18	Commissioner (Appeals), CGST, Panchkula
Bihar State GST Act, 2017	GST, Interest and Penalty	2.02	FY 2017-18	Commissioner (Appeals), Bihar
Rajasthan State GST Act, 2017	GST, Interest and Penalty	0.21	FY 2017-18	Commissioner (Appeals), Sri-Ganganagar
UP State GST Act, 2017	GST, Interest and Penalty	0.42	FY 2017-18	Commissioner (Appeals), Lucknow
UP State GST Act, 2017	GST, Interest and Penalty	0.84	FY 2017-18 to FY 19-20	Commissioner (Appeals), Lucknow

(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 other borrowings or in the payment of interest thereon to any lender/dues to any bank or bonds/debenture holders as at the Balance Sheet date.

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

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

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

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

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

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

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

(xi) (a) According to the information and explanations given to us and as represented by the

Management and based on our examination of books and records of the company in accordance with generally accepted auditing practices in India, no case of material fraud by the Company or on Company has been noticed or reported during the year.

(b) We have not submitted any report under sub-section (12) of section 143 of the Companies

Act, 2013 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) The company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

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

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

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

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

(xvi) (a) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, provisions of clause (xvi)(a) of the Order are not applicable to the Company.

(b) According to the information and explanations provided to us, the Company has not conducted any Non-Banking Financial or Housing Finance activities. Therefore, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, provisions of clause 3(xvi)(b) of the Order are not applicable.

(c) The Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Accordingly, provisions of clause 3(xvi)(c) of the Order are 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). Accordingly, provisions of clause 3(xvi)(d) of the Order are 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 payment of financial liabilities, other information accompanying the standalone financial statements 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 as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the company. We further state that our 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) In respect of other than ongoing projects, there are no unspent amounts that are required to

be transferred to a fund specified in Schedule VII of the Companies Act, in compliance with second proviso to sub section 5 of section 135 of the Act.

(b) Amounts that are unspent under sub-section (5) of section 135 of the Act, amounting to Rs.

0.48 Crores, pursuant to any ongoing project, has been transferred to a special account in compliance with the provision of sub-section (6) of section 135 of the said Act on April 23, 2024.

For Dhawan & Co.	For R S P H & Associates
Chartered Accountants	Chartered Accountants
Firms Registration No.: 002864N	Firms Registration No.: 003013N

 

Sunil Gogia	Tarun Kumar Batra
Partner	Partner
M. No.: 073740	M. No.: 094318
UDIN No.: : 24073740BKFAKI1908	UDIN No.: 24094318BKFLDL6832

Place: Noida Date: 30-05-2024

‘ANNEXURE B to Independent Auditors Report on the Standalone Financial Statements of National Fertilizers Limited for the year ended 31st March 2024

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

COMPLIANCE CERTIFICATE

We have conducted the audit of the accounts of National Fertilizers Limited for the year ended 31st March 2024 in accordance with the Directions issued by the C&AG of India under Section 143(5) of the Companies Act, 2013 and certify that we have complied with all the directions issued to us.

For Dhawan & Co.	For R S P H & Associates
Chartered Accountants	Chartered Accountants
Firms Registration No.: 002864N	Firms Registration No.: 003013N

 

Sunil Gogia	Tarun Kumar Batra
Partner	Partner
M. No.: 073740	M. No.: 094318
UDIN No.: : 24073740BKFAKI1908	UDIN No.: 24094318BKFLDL6832

Place: Noida Date: 30-05-2024

Enclosed: Direction u/s 143(5) are attached

AUDIT REPORT OF NATIONAL FERTILIZERS LIMITED FOR THE YEAR 2023 -2024 PURSUANT TO DIRECTIONS UNDER SECTION 143(5) OF THE COMPANIES ACT, 2013

I. Directions for the year 2023-24

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.

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

a. Calculation of depreciation of property, plant and equipment;

b. Valuation of Closing Stock of traded goods;

c. Calculations of subsidy on Urea production (through GC-4);

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

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

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

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

Funds received/receivable for specific schemes from Central/State Government or its agencies were properly accounted for/utilized as per its terms and conditions.

For Dhawan & Co.	For R S P H & Associates
Chartered Accountants	Chartered Accountants
Firms Registration No.: 002864N	Firms Registration No.: 003013N

 

Sunil Gogia	Tarun Kumar Batra
Partner	Partner
M. No.: 073740	M. No.: 094318
UDIN No.: : 24073740BKFAKI1908	UDIN No.: 24094318BKFLDL6832

Place: Noida Date: 30-05-2024

‘ANNEXURE C to Independent Auditors Report on the Standalone Financial Statements of National Fertilizers Limited for the year ended 31st March 2024

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

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

We have audited the internal financial controls over financial reporting of National Fertilizers Limited (hereinafter referred to as “the Company”) as of 31st March 2024 in conjunction with our audit of the standalone financial statements of the company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial 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 Institute of Chartered Accountants of India (‘ICAI). 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 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 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 applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial 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 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 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 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 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, the company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2024, 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 Dhawan & Co.	For R S P H & Associates
Chartered Accountants	Chartered Accountants
Firms Registration No.: 002864N	Firms Registration No.: 003013N

 

Sunil Gogia	Tarun Kumar Batra
Partner	Partner
M. No.: 073740	M. No.: 094318
UDIN No.: : 24073740BKFAKI1908	UDIN No.: 24094318BKFLDL6832

Place: Noida Date: 30-05-2024

Management replies to the observation of the Statutory Auditors in Standalone Audit Report of NFL for FY 2023-24.

S.No. Statutory Auditors observation	Comment of Management
1 Report on Other Legal and Regulatory Requirements
Sl. No. 3(h)vi.
As required, maintenance of audit trail in accounting software under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, we have to report as under;
a. Based on our examination which included test checks, except for the instances mentioned in Para b and c below, the Company has used Oracle System (Accounting Software for recording financial transactions) for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software.	No comment is required.
Further, for the periods where audit trail (edit log) facility was enabled and operated throughout the year for the respective accounting software, we did not come across any instance of the audit trail feature being tampered with.
b. The Company is using different software/ application for recording Payroll, sales transactions and for maintaining price store ledgers for stores and spares items. The data generated through these systems do not auto feed to the Oracle System and its summary is	The final data generated by different software / application posted in Oracle System (main accounting software for recording transactions) and companys financials are generated from Oracle System and not from software / applications.
manually posted in Oracle System. In the absence of any information on existence of audit trail (edit logs) for any changes made at the application level in the aforesaid systems, we are unable to comment on whether audit trail features of the said systems was enabled and operated throughout the year.	Due to limitation of existing systems, company is implementing ERP which has inbuilt audit trail and upon its implementation use of software / application shall be done away with.
	Further, till ERP is implemented, existing software has been upgraded to enable posting of data generated by different software / application directly to Oracle System, without manual intervention.
c. Beside this, the feature of recording audit trail at database level is enabled and maintained throughout the year which contains standard log feature enabled in oracle system. However, the said audit log doesnt have the feature of recording what data was changed.	The data generated on Oracle System has log features as standard configuration. This configuration has been updated and now audit log can be generated in readable format.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 1st April 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended 31st March 2024.