Rashtriya Chemicals & Fertilizers Ltd Auditor Reports

TO THE MEMBERS OF RASHTRIYA CHEMICALS AND FERTILIZERS LIMITED

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying Standalone Ind AS Financial Statements of RASHTRIYA CHEMICALS AND FERTILIZERS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2026, the Statement of Profit and Loss (including Other Comprehensive

Income), Statement of Changes in Equity and Statement of Cash Flows for the year ended March 31, 2026 and notes to the financial statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as "the Standalone Ind AS Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013 ("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 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2026 and its profit and total

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 Ind AS 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 Standalone Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the Standalone Ind AS 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 Ind AS Financial Statements.

Emphasis of Matter

We draw attention to the following matters:

a) Note No. 46 – Property, Plant and Equipment: Title deeds of Immovable properties:

In respect of immovable properties other than land i.e. buildings and other structures, situated at its Trombay and Thal units they are self-constructed properties on the land owned by the Company as evidenced by property cards/title deeds of land. The Company asserts that all these properties are its own and has clear title to the same since such properties are self-constructed on the Companys land, although no separate title documents for self-constructed properties are readily available. The Company has initiated the process of obtaining appropriate evidence of the approvals/permissions taken for construction of the self-constructed properties from the respective regulatory authorities.

b) Note No. 48 – Gas pooling applicable to Fertilizer (Urea) sector:

Gas Pool operator in ascertaining the contribution to pool account, considered cheaper market price gases specifically contracted by the Company for non-urea operations instead of EPMC/SPOT gas meant for Urea Operations sourced as per DOF directives. Accordingly differential price or contribution to the pool by the company was worked out and issued debit note.

The Company is of the view that EPMC gas / Spot gas is specifically meant for urea operations and thus needs to be subsumed in arriving at the final pool price and the same should be considered in the subsidy of urea, since the cost of gas is a pass through.

As the non-recognition of such EPMC Gas / Spot gas sourced as per DoFs directives for Urea Operations is not in accordance with the principles of gas pooling mechanism, the Company has continued to recognize such differential i.e. (EPMC / Spot gas price

– Cheaper market gas price) amounting to Rs 80.57 crore for the period FY 2021-22 to FY 2023-24 which has been shown as receivable from DoF.

Further, Company has disputed the demand of

Rs 52.18 crore raised by GAIL towards pool price differential as against receivable of Rs 71.39 crore for FY 22-23 which has been arrived at on account of non-recognition of EPMC gas/Spot gas in Urea by FICC by substituting EPMC gas/Spot gas with cheaper

RLNG gas sourced for non-urea operations. The total disputed amount for the year 2022-23 stands at Rs 123.57 crore. Based on Companys representation

FICC has directed GAIL and stated that the said matter is under examination by DoF. Total exposure is about to Rs.204.14 crore. Accounting impact (If any) of the above will be taken in the year in which the matter is resolved by DoF. c) Note No. 50 - Price adversity and Upward/Downward Revision in CFR prices on Imported Phosphatic and Potassic (P&K) fertilizers:

Department of Fertilizers (DoF), vide letter No. F.21-

01/2023-FM dated 21st September, 2023 issued to

Fertilizer CPSEs and subsequently vide letter No. F.21-01/2023-FM dated 08th February, 2024 issued to the Company, had directed ensuring availability of Phosphatic and Potassic (P&K) fertilizers during

Rabi 2023-24 by undertaking procurement on priority basis, with the assurance that any price adversity arising on such procurements beyond the applicable Nutrient Based Subsidy (NBS) rates would be addressed by DoF on a "No Profit No Loss" basis. Further, DoF vide File No. 21-01/2023-FM-Part (1) dated 29th May, 2024 also allowed consideration of price adversity beyond applicable NBS rates in respect of unsold inventory and sales pendingin acknowledgment in PoS by farmers as on 30th September, 2023. Based on the aforesaid directions/ guidelines, the Company had recognized differential subsidy claims up to 31st March, 2025. Against the above provision, an amount of Rs. 217.50 crore remains pending for settlement by DoF as on 31st

March, 2026. d) Note No. 66 – Exceptional Item:

During the year, the Company has surrendered land admeasuring 7,435.96 sq. mtrs. to the Municipal

Corporation of Greater Mumbai (MCGM), pursuant to which Development Rights Certificate receivable valued at Rs. 41.04 crore is recognized under exceptional items. Further, the impact of fair valuation of TDRs received/accrued amounting to Rs. 4.06 crore has also been included under Exceptional

Items.

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

Key Audit Matters

Key audit matters are those matters that, in our our professional judgment, were of most significance audit of the standalone Ind AS financial statements of the current period. These matters were addressed in the context of our audit of the Standalone Ind AS Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters identified in our audit are:

1. Revenue Recognition and measurement in respect of subsidy income.

2. Estimation of Provision & Contingent Liabilities.

3. Information Technology General Control.

Sr. No. Key Audit matter	Response to Key Audit Matter
1. Revenue recognition and measurement in respect to subsidy income.	Our Procedure included:
Recognition of subsidy is made on the basis of in- principle recognition / approval / orders settlement of claims from Fertilizer Industry Coordination 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.	Accounting policies and principles: We have reviewed the CompanyRs.s accounting policies for Subsidy on Urea as mentioned under "Note A. Statement of Material Accounting policies III) B) Revenue Recognition" of the standalone Ind AS financial statements and the same is compared with the applicable Ind AS.
Escalation/de-escalation in notified rates is estimated taking into account the effect of guidelines, policies, instructions and clarifications given.	Tests of controls:
Since there is a time lag between actual expenditure incurred and notification year, management exercises significant judgment in arriving at the income entitled on account of same for the year.	We have evaluated the design, implementation and operating effectiveness of key controls over recognition of subsidy income.
MRP of Urea being fixed by the Government of India, the Company is entitled to subsidy under the applicable Urea policies, wherein certain input costs are treated as pass-through costs and compensation for production beyond reassessed capacity is restricted to the lower of Import Parity Price (IPP) of Urea plus incidental import-related charges incurred by the Government, or the concession rate determined under the extant subsidy policies. Further, subsidy income is recognized net of adjustments relating to recoveries towards sale/ transfer of surplus ammonia and non-conversion of ammonia into Urea.	Tests of details: of concession rates for the We have verified the supporting documentation for determining that the subsidy was recognized in the correct accounting period and as per notified rates.
Therefore, there is a risk of revenue being misstated on account of errors in estimation of concession/IPP rates yet to be notified, due to absence of notification available and change in methodology/ calculation, if any for arriving at price concession.	In absence of notified rates, we have verified calculation of estimated rates based on information available with the Company for such costs which are a pass through.
	In case estimation of income is based on other parameters like IPP of Urea etc. The verificationof the same is based on available information, judgments the management made in relation to the notifications/ policies, subsequent evidence etc. as applicable.
		Testing reasonability of assumptions based on past trends, consistency in application and changes in the same owing to change in Government policies.
		Performing substantive analytical procedures: -
		Ascertainment and analysis of variations with respect of amounts estimated and actually entitled upon notification with respect to previous years.
		We also assessed as to whether the disclosures in respect of revenue were adequate.
2 Estimation of Provision & Contingent Liabilities		Internal enquiry:
In the recognition and measurement of provisions, there is uncertainty about the timing or amount of the future expenditure required to settle the liability.		We enquired of the senior management and inspected the minutes of the board and various committees of the board where relevant, for claims arising and challenged whether provisions are required.
In respect of contingent liabilities, there are estimates and assumptions made to determine the amount to be disclosed.		Tests of details:
As at the year ended 31 March 2026, the amounts involved are significant. There is a high degree of judgmentrequiredfortherecognitionandmeasurement of provisions and disclosure of contingent liabilities.		In respect of significant claims, of claim, nature of issues involved, management submissions and corroborated the same with external evidence, where available.
There is a risk of material misstatement that the estimates are incorrect and that the provisions or contingent liabilities are materially misstated.		Enquiry and confirmation of lawyers:
		In respect of matters which are under dispute, we have assessed opinion of the Companys in-house Legal Department / external lawyers wherever necessary.
3 Information Technology Controls		We focused our audit on those IT systems and controls that are significant to the Companys financial reporting process.
A significant part of the Companys financial reporting process is heavily reliant on IT systems with automated processes and controls over the capture, storage and extraction of information. A fundamental component of these processes and controls is ensuring appropriate user access and change management protocols exist and being adhered to. These protocols are important because they ensure that access and changes to IT systems and related data are made and authorised in an appropriate manner. As our audit sought to place a high level of reliance on IT systems and application controls related to financial reporting, high proportion of the overall audit effortwas in Information Technology		We assessed the design and tested the operating effectiveness of the Companys IT controls including those over user access and change management as well as data reliability.
		In a limited number of cases, we adjusted our planned audit approach as follows:
		- We extended our testing to identify whether there had been unauthorized or inappropriate access or changes made to critical IT systems and related data;
		- Where automated procedures were supported by those IT systems and controls that are significant to systems with identified deficiencies, we extended our procedures to identify and test alternative controls; and
		- Where required, we performed a greater level of testing to validate the integrity and reliability of associated data and reporting.

Other Information

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report but does not include the standalone Ind AS financial statements and our auditors report thereon. The Companys Annual report is expected to be made available to us after the date of this auditors report.

Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and in doing so, consider whether the other information is materially inconsistent with the standalone

Ind AS financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the Companys annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Management and Board of Directors Responsibilities for the Standalone Ind AS Financial Statements and appropriate The Companys Management and Board of Directors are responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Standalone Ind AS Financial

Statements that give a true and fair view of the financial position, the financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act. 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 that were operating effectively and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Ind AS Financial Statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Companys financial reporting process.

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

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

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

- Identify and assess the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is 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 with reference to the standalone Ind AS financial statements 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. forensuringtheaccuracy

- Conclude on the appropriateness of managements use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the

Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the Standalone Ind AS Financial Statements or if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit 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 Ind AS Financial Statements, including the disclosures and whether the Standalone Ind AS Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation. Materiality is the magnitude of misstatements in the Standalone Ind AS Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone Ind AS 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 standalone Ind AS financial statements.

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

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Ind

AS Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report)

Order, 2020 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143 (5) of the Act, we give in "Annexure B" the directions and sub-directions issued by the Comptroller and Auditors General of India (CAG), the action taken thereon and its impact on the accounts and the standalone Ind AS financial statements of the Company.

3. Non - Compliance of the SEBI Listing Obligation and Disclosure Requirements (LODR) Regulations, 2015

- as per Regulation 17(1)(b), the Chairman being an Executive Director, at least half of the Board of Directors should be comprised of Independent Directors. As on 31.03.2026, the Company does not have required number of Independent Directors on its board. (Refer Note 42.4 to the standalone Ind AS

Financial Statements).

4. (A) 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. audit findings, c) The Standalone Balance sheet, the Standalone

Statement of Profit and Loss (including Other

Comprehensive Income), Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flow dealt with by this report are in agreement with the relevant books of account. d) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act. e) The Company being a government company, the provision of section 164(2) is not applicable in accordance with the Notification No. GSR

463 (E) dated June 5, 2015 issued by Ministry of Corporate Affairs. Accordingly, no reporting regarding Clause 3(g) of section 143 is required. f) With respect to the adequacy of the internal financial controls with reference to the standalone Ind AS financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in

"Annexure C".

(B) In accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us: i. The Company has disclosed the impact of pending litigations on its financial position in its

Standalone Ind AS Financial Statements – Refer Note 42 to the Standalone Ind AS financial statements; ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts; iii. There is 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 kind of funds) by the Company to or in any other persons or entities, 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 ("Ultimate Beneficiaries") by or on behalf of the Company or -provide any guarantee, security or the like to or 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:-directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Funding Party or -provide any guarantee, security or the like from or on behalf of the Ultimate Beneficiaries; and c) Based on such audit procedures as considered reasonableandappropriateinthecircumstances, nothing has come to our notice that has caused us to believe that the representations under clause (iv) (a) and (iv) (b) contain any material misstatement. v. The dividend declared or paid during the year by the Company is in compliance with section 123 of the Act.

(C) With respect to the other matters to be included in the Auditors Report as per section 197 (16) of the Act:

In accordance with requirements of section 197 (16) of the act as amended: As per notification number G.S.R. 463 (E) dated June 5, 2015 issued by Ministry of Corporate Affairs, Section 197 of the Act as regards the managerial remuneration is not applicable to the Company, since it is a Government Company.

(D) Based on our examination which included test checks, the Company has used an SAP HANA software for maintaining its books of account 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 audit we did not come across any instance of audit trail feature being tampered with. [Additionally, the audit trail has been preserved by the Company as per the statutory requirements for record retention.]

For K. GOPAL RAO & CO For RAJU & PRASAD

Chartered Accountants Chartered Accountants

FRN : 000956S FRN : 003475S

CA GOPAL KRISHNA RAJU CA M. SIVA RAM PRASAD

Partner Partner

M. No.: 205929 M. No.: 018943

UDIN: 26205929ATJGIH4375 UDIN: 26018943TDUDUD3235

Place: Mumbai Date: 21^st May, 2026

ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in Para 1 ‘Report on Other Legal & Regulatory Requirements in our Independent Auditors Report to the members of the Company on the Standalone Ind AS Financial Statements for the year ended March 31, 2026.)

Statement on Matters specified in paragraphs 3 &

4 of the Companies (Auditors Report) Order, 2020:

(i) (a) A. The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment with original cost and depreciation written off in respect of identifiable units of assets and where such information for identifiableunits of assets is not available, the records show the cost and depreciation written off in respect thereof as a group or class. The items of assets in respect of which quantitative details are not linked with the cost or book value are of small value acquired prior to April 1978 and are fully depreciated particularly in respect of movable items acquired from Fertilizers

Corporation of India Limited.

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

(b) The Company has a regular program for physical verification of its Property, Plant and Equipment by which its Property, Plant and Equipment are verified in a phased manner by the management and the Companys internal auditors. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its Property, Plant and Equipment. No material discrepancies were noticed on such verification.

(c) Based on our examination of the registered sale deed / transfer deed / conveyance deed / property tax paid documents (which evidences title) provided to us and with reference to

Note 48 to the standalone Ind AS Financial

Statements, we report that, the title in respect of self – constructed buildings and title deeds of all other immovable properties, (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the Company) disclosed in the standalone Ind AS financial statements included in property, plant and equipment are held in the name of the Company as at the balance sheet date, except:-

Sr. No. Total No. of Cases	Type of assets	Gross Block as at March 31,2026 (Rs. Crore)	Held in Name of	Whether pro- moter, director or their relative or employee	Period held	Remarks
1 2	Free Hold Land Thal (18,24,903 Sq. Mtr. of land)	1.60	Government of India (incl. Central Railways) and pri- vate land owners	NO	48 Years	The Company is in the process of obtaining transfer of the title deeds.
2 1	Free Hold Land -Trom- bay (3,55,060.22 Sq. Mtr. of land)	0.24	The Fertilizer Cor- poration of India	NO	48 Years	The Company is in the process of obtaining transfer of the title deeds.
3 1	Building – Thal Kihim Township	3.09	Not applicable	NO	42 Years	The Company is in the process of obtaining evidence of title / permissions / approvals.

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

(e) According to the information and explanations given to us and on the basis of our examination of the records of the Company, no proceedings have been initiated during the year or are pending against the Company as at 31st March 2026 for holding any Benami property under the

Benami Transaction (Prohibition) Act, 1988, as amended and rules made thereunder.

(ii) (a) Th physical stocks outside the factory premises) has been conducted at reasonable intervals by the Management with the help of independent outside agency (Internal auditors and technical consultants) during the year and, in our opinion, the coverage and procedures of such verification by Management is appropriate.

In respect of inventory lying outside the factory premises are taken as per warehousing certificates for material stored in godowns and third-party confirmations where material is lying with third party (job-worker, agents etc.) respectively.

In respect of inventories of stores and spares, the management conducts physical verification with help of an independent outside agency in a phased program so as to complete the verification of all items over a period. The discrepancies noticed on physical verification of inventory as compared to book records were not 10% or more in aggregate for each class of inventory.

(b) The Company has been sanctioned working capital limits in excess of Rs.5 crores, in aggregate, at any point of time during the year, from banks on the basis of security of current assets. In our opinion and according to the information and explanations given to us, the quarterly returns (FFR -I and QRR-I) and other stipulated financial information filed by the

Company with such banks are in agreement with the unaudited books of account of the

Company for the first three quarters and with the audited books of account in respect of fourth quarter ending 31st March 2026 and there are no material discrepancies.

(iii) The Company has investments in companies and

Joint Venture entities. During the year 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 except. i) an Inter-Corporate Loan aggregating to Rs.233.00 crore to a Joint venture company, carrying interest at a rate of 6-month SBI MCLR plus

0.65%, for a tenure not exceeding six months and ii) Pursuant to the Corporate Insolvency Resolution Process (CIRP) initiated against FACT-RCF

Building Products Limited (FRBL) a Joint venture company and as per the approved Resolution Plan, the Company was allotted 2,50,000 equity shares of Rs 10 each aggregating to Rs 25 lakh, resulting in reduction of shareholding and ceased to be a Joint venture company related party. a) Aggregate amount of inter-corporate loan given is Rs.233.00 crore and Balance outstanding as at 31.03.2026 is ‘Nil. b) In our opinion, the investments in companies/joint venture entities, financial guarantee given to FACT-RCF Building

Products Limited, and loans given to FACT Limited (a joint venture partner) in prior years and the above referred loan during the year are, prima facie, not prejudicial to the Companys interest. c) In respect of the said loan the schedule of repayment of principal and payment of interest has been stipulated. The said loan, along with applicable interest, has been fully repaid in accordance with the terms and conditions of the agreement As the said loan had terms of payment and was fully repaid during the year reporting under clauses (iii) (d), (e) and (f) of the order are not applicable (iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of the loans and investments made, and guarantees and security provided by it, as applicable.

(v) The Company has not accepted any deposits or amounts which are deemed to be deposits within the meaning of Sections 73 to 76 of the Act and the

Rules framed there under to the extent notified.

(vi) We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148 (1) of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(vii) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income-Tax, Sales

Tax, Service Tax, Duty of Customs Duty, Duty of Excise, Value Added Tax, Goods and Service

Tax, Cess and any other material statutory dues with the appropriate authorities. There are no arrears of outstanding statutory dues in respect of above as on the last day of the financial year for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us and the records examined by us, there are no material dues of Income tax, Sales tax, Service tax, Duty of customs, Duty of excise, Value added tax outstanding on account of any dispute, except for the following:

Sr. No. Name of the Statute	Nature of dues	Amount (Rs. in Crore)	Period to which the amount relates	Forum where dispute is pending
1 Customs Act, 1962	Demand of Differential Customs Duty on import of Urea, MOP & DAP (Marketing)	80.77	FY 2009-10	Central Excise and Service Tax Appellate Tribunal, Mumbai
2 Customs Act, 1962	Demand of Differential customs duty on import of Ground Rock Phosphate (Trombay)	0.23	FY 2018-19 & 2019-20	Dy. Commissioner of Custom - Mumbai
3 Income Tax Act, 1961	Demand of Tax for Short Deduction / non deduction of TDS	1.12	AY 2008-09 to AY 2025-26	Commissioner of Income Tax (Appeals)
4 Income Tax Act, 1961	Disallowance and Incorrect Adjustments	0.19	AY 2020-21	Commissioner of Income Tax (Appeals)
5 Income Tax Act, 1961 Central Excise Act, 1944	Erroneous/Incorrect Adjustments Demand of excise duty on account of Diversion of Urea for industrial usages (Thal Unit)	4.17 8.91	AY 2021-22 and 2023-24 FY 2013	Commissioner of Income Tax (Appeals) Central Excise and Service Tax Appellate Tribunal, Ahmedabad
6 Central	Availment of Service Tax Cenvat Credit on Common Input Services (Thal Unit)	19.32	FY 2011-2017	Central Excise and Service Tax Appellate Tribunal, Mumbai
	Demand of Central Excise duty in respect of Low Sulphur High Stock / Furnace Oil procured at concessional rates used for other than fertilizer products (Trombay Unit)	6.97	FY 1998-2000	Asstt .Commissioner of Central Excise and Service Tax
7 Excise Act, 1944	Rapid Wall Plaster cleared with Nil Rate of duty (Trombay Unit) Withheld of subsidy on account of Diversion of Urea for industrial usages (Trombay Unit)	4.95 1.49	July 2010 to March 2016 FY 2013	Central Excise and Service tax Appellate Tribunal Mumbai Central Excise and Service Tax Appellate Tribunal, Ahmedabad
8 Central Excise Act, 1944	Demand for wrong availment of Cenvat credit MBPT(Trombay Unit)	0.16	FY 2010-2015	Asstt .Commissioner of Central Excise and Service Tax
9 Central Excise Act, 1944	Wrong availment of MODVAT (Trombay Unit)	0.63	May 2000 to Sept 2000	Dy. Commissioner of Central Excise and Service Tax
10 Central Excise Act, 1944	Demand of Service Tax on wrong availment of CENVAT credit in respect of input services used in the manufacture of exempted goods (Trombay Unit)	2.32	April 2011 to June 2017	Central Excise & Service Tax Appellate Tribunal, Mumbai
11 Service Tax	Demand of Service Tax on supply of BTAL wagons (IPD Dept.)	0.27	Period from April 2008 to December 2012	Central Excise & Service Tax Appellate Tribunal, Mumbai
12 Service Tax	Demand of Service Tax on Dispatch Money (Mktg.Dept.)	0.21	FY 2012-2015	Central Excise & Service Tax Appellate Tribunal, Mumbai
13 Service Tax	Demand of Service Tax on Handling Charges	0.01	Period from April 2006 to March-2008	Superintendent Service Tax, Aurangabad
14 Service Tax	Demand of Service Tax on supply of wagon to Central Railway (Thal Unit)	0.66	Period from April 2012 to June 2017	Central Excise & Service Appellate Tribunal, Mumbai
15 Service Tax	Non-payment of service Tax on Routine Maintenance Charges of private railway Siding (Thal Unit)	1.93	Period from March 2012 to August 2015	Central Excise & Service Appellate Tribunal, Mumbai
16 Service Tax	Demand of Service Tax on Sponsorship (Marketing Unit)	0.38	Period from September 2012 to March-2015	Central Excise & Service Appellate Tribunal, Mumbai
17 Service Tax	Demand on Dispatch Money (Corporate Unit)	0.49	Period from September 2012 to March-2015	Central Excise & Service Appellate Tribunal, Mumbai
18 Service Tax	Demand of Service Tax on Sponsorship (Corporate Unit)	0.97	Period from September 2012 to March-2015	Central Excise & Service Appellate Tribunal, Mumbai
19 Service Tax	Demand on LD(Trombay Unit	3.6	Period from September 2012 to March-2015	Customs Excise & Service Tax Appellate Tribunal, Mumbai
20 Service Tax	Demand on Dispatch Money (Trombay Unit)	2.92	Period from September 2012 to March-2015	Customs Excise & Service Tax Appellate Tribunal, Mumbai
21 Service Tax	Service Tax on CS Deputation Manpower	0.10	2008-2014	Asst. Commissioner of Central Excise & Service Tax.
22 Service Tax	Service Tax on LD and other Misc. Recoveries (Thal Unit)	0.78	2012-14	Central Excise & Service Appellate Tribunal, Mumbai
23 GST	Demand of GST for ITC Availment	0.003	April 2017 to March-2020	GSTAT – Andhra Pradesh
24 GST	Demand of GST for ITC Availment / due to difference in return / Non-payment of GST under RCM on services received from BMC etc.	1.24	2018-19 and 2019-20	GSTAT - Karnataka, Commissioner of State Tax Appeal (Kerala / Madhya Pradesh / Maharashtra)
25 GST	Non-payment of GST under RCM on services received from BMC etc.	7.67	2020-21 to 2022-23	Commissioner of Central Tax - Appeal, Maharashtra
26 Bombay Municipal Corpora- tion Act, 1888	Sewerage Charges	33.48	April 1987 to November 1992	Bombay High Court

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

(ix) (a) The Company has not defaulted in repayment of loans or other borrowings or in payment of interest thereon to any lender during the year. (b) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority. (c) To the best of our knowledge and belief, in our opinion, term loans availed by the Company were, applied by the Company during the year for the purposes for which the loans were obtained.

(d) According to the information and explanations given to us, and the procedures performed by us, and on an overall examination of the standalone

Ind AS 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) According to the information and explanations given to us and on an overall examination of the standalone Ind AS 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) According to the information and explanations given to us and procedures performed by us, we report that the Company has not raised loans during the year on the pledge of securities held in its Joint Ventures. x) (a) The Company has not raised any moneys by way of Initial public offer or further Public offer

(Including debt instruments), during the year and hence reporting under Clause (x) (a) of Para 3 of the order is not applicable to the Company. (b) The Company has not made any preferential allotment or private placement of share or fully convertible debentures (fully, partially or optionally convertible) during the year and accordingly provisions of clause (x)(b) of Para 3 of the Order are not applicable to the Company. (xi) (a) During the course of our examination of the books and records of the Company and according to the information and explanations given to us, no material fraud by the Company or on the Company has been noticed or reported during the year. (b) To the best of our knowledge, 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.

(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 and accordingly provisions of clause (xii) of Para 3 of the order are not applicable to the Company.

(xiii) The Company has complied with sections 177 and 188 of the Act w.r.t. transactions with related parties, wherever applicable. Details of the transactions with the related parties have been disclosed in the Standalone Ind AS Financial Statements as required by the applicable Indian Accounting Standards. (xiv) (a) Based on information and explanation provided to us and our audit procedure, 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 any non-cash transactions with the directors or persons connected with him. Hence the provisions of Section 192 of the

Act are not applicable.

(xvi) (a) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934, hence the provisions of paragraph 3 (xvi)(a) of the Order are not applicable.

(b) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, clause 3(xvi) (b) of the order is not applicable.

(c) The Company is not a Core Investment Company

(CIC) as defined in the Regulations made by the Reserve Bank of India and accordingly the provisions of clause (xvi)(c) of Para 3 of the

Order is not applicable to the Company.

(d) According to the information and explanation provided to us during the course of audit, the group does not have any CIC as a part of the group and accordingly reporting under clause

(xvi)(d) of Para 3 of the Order is not applicable to the Company.

(xvii) The Company has not incurred cash losses during the Financial Year covered by our audit and in the immediately preceding Financial Year.

(xviii) There has been no resignation of the statutory auditors of the Company during the year. Accordingly, clause 3(viii) of the order is not applicable.

given to us and on the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the standalone Ind AS 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 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) The Company has during the year spent the amount of Corporate Social Responsibility as required under subsection (5) of Section 135 of the Act. Accordingly, reporting under clause 3(xx) of the Order is not applicable to the Company.

(xxi) The reporting under Clause 3(xxi) of the Order is not applicable in respect of audit of standalone Ind AS financial statements. Accordingly, no comment in respect of the said clause has been included in this report.

For K. GOPAL RAO & CO For RAJU & PRASAD

Chartered Accountants Chartered Accountants

FRN : 000956S FRN : 003475S

CA GOPAL KRISHNA RAJU CA M. SIVA RAM PRASAD

Partner Partner

M. No.: 205929 M. No.: 018943

UDIN: 26205929ATJGIH4375 UDIN: 26018943TDUDUD3235

Place: Mumbai Date: 21^st May, 2026

ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in Paragraph 2 ‘Report on Other Legal & Regulatory Requirements in our Independent Auditors Report to the members of the company on the Standalone Ind AS Financial Statements for the year ended March 31, 2026.)

Report on the Directions and Sub-directions issued by the Comptroller and Auditors General of India, the action taken thereon and its impact on the accounts and the standalone Ind AS financial statement of the Company under Section 143(5) of the Act:

A. 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 responsibility, and compliance with application regulations reporting any material deviation or misstatements.

Reply: Yes.

The company has made certain investments through Provident Fund (PF) Trust for Post-retirement benefits of the employees. Investments include

Special deposits with Banks, Fixed Income Security and Mutual funds.

The valuation of fixed income securities is performed in accordance with the methodology prescribed by Association of Mutual Funds in India (AMFI), which is widely accepted as a benchmark for valuation of debt instruments in India.

Mutual funds are valued based on the applicable market rates as on 31st March 2026. Principal amount of Special deposits is considered as Fair value as return on such deposits is received as interest at the regular intervals.

For the above, we have reviewed the supporting documentation and relevant records, on a test-check basis. The valuation methodology adopted are consistent with generally accepted valuation principles and the requirement of Ind AS 113, subject to the reasonableness of key assumptions and availability of supporting market evidence. Based on the audit procedures performed, no material inconsistencies or deviations have come to our notice in respect of the valuation of such investments.

2. WhethertheCompanyhasasysteminplacetoprocess all the accounting transactions through IT system? If yes, whether review of this system and controls that are significant to reporting process as well as cyber security has been done by Information Security Auditing organizations empaneled 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 accounts along with the financial implications may also be reported.

Reply: Yes.

Company has a robust IT-enabled system in place for processing accounting transactions. Most of the important functional areas of the organization like Financial Accounting, Sales Accounting, Human Resources Information, Payroll, and Material/ Inventory Management etc. have been processed through IT enabled system (SAP HANA), ensuring standardized processing, control and monitoring of transactions.

Certain specialized and finance-driven transactions, including recognition of subsidy income, accounting of borrowings and related interest, corporate tax provisions, valuation of finished goods inventory in line with Ind AS principles, and certain year-end provisions are processed directly within the Finance module of the SAP system, as these transactions are standalone to finance. Such transactions and balances are duly supported by relevant documentation and detailed workings, including computations maintained in Excel workbooks. A maker-checker control mechanism is in place to validate the accuracy of these calculations prior to posting the entries in SAP.

Information Security audits to covering the review of system and controls that are significant Companies financial reporting process was carried out during the year 2022. Further, a Cyber Security

Audit was completed in month of December 2024 by

Software Technology Parks of India. Based on the audit reports, no material discrepancies impacting financial reporting have been observed.

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 utilized as per its terms and conditions? Whether accounting of interest earned on grants received has been done as per terms and conditions of the Grants. List the cases of deviation.

Reply: N.A.

Based on the information and explanations provided, the Company has not received or had any funds receivable in the nature of grants or subsidies for specific schemes from the Central/State Government the Companies or their agenciesfinancial during the year. Accordingly, the requirements relating to accounting, utilization, and treatment of interest on such funds do not arise.

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?

Reply: Yes.

The Company has identified key risks relating to its operations, financial reporting and regulatory compliance. The Company has in place a Board-approved Risk Management Policy for identification, assessment, monitoring, and mitigation of risks. The policy lays down a structured framework for risk assessment and minimization procedures with the objective of ensuring a balanced approach towards achievement of business objectives and management of associated risks.

The Risk Management Policy, in our opinion, is commensurate with the size and nature of the Companys operations and broadly aligns with generally accepted risk management frameworks and global best practices, including structured risk identification, impact assessment, mitigation planning and continuous monitoring.

Further, the Company has identified its critical data assets as part of its enterprise risk management and information systems framework. Such data assets are not separately valued or recognized in the books of account in line with applicable accounting standards as they do not meet the criteria for recognition as distinct intangible assets.

Based on our audit of the above, no material weaknesses have come to our notice in the Companys risk identification, risk management framework, or control over data assets.

5. Whether the Company is Complying with the Securities and Exchange Board of India (SEBI) (Listing Obligation and Disclosure Requirement)

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.

Reply: Yes.

Based on the information and explanations provided to us and the procedures performed, the Company is generally in compliance with the applicable provisions of the Securities and Exchange Board of India

(Listing Obligations and Disclosure Requirements)

Regulations, 2015 (SEBI LODR Regulations) and other relevant rules and guidelines issued by the Securities and Exchange Board of India (SEBI), Department of Investment and Public Asset Management (DIPAM), Ministry of Corporate Affairs (MCA), Department of Public Enterprises (DPE), Reserve Bank of India

(RBI), Telecom Regulatory Authority of India (TRAI), CERT-In, Ministry of Electronics and Information

Technology and National Payments Corporation of India (NPCI), wherever applicable to the Company except following : i. As per 17(1) (b) of the SEBI LODR Regulations, where the Chairman of the Board is an Executive

Director, at least half of the Board shall comprise Independent Directors. Based on the information and explanations provided and as disclosed in Note 42.4 to the Standalone Ind

AS Financial Statements, the Company does not presently have the requisite number of

Independent Directors on its Board, resulting in non-compliance with the said provision. ii. As per Guidelines on Capital Restructuring of Central Public Sector Enterprises (CPSEs) vide new OM No F.No. 5/2/2016-Policy dated 18th November 2024, CPSEs are required to pay a minimum annual dividend of 30% of PAT or 4% of the net worth, whichever is higher. Considering Companys projected capital expenditure requirements and relatively low profitability, it is presently not in a position to comply with the aforesaid DIPAM guidelines relating to dividend payout. Accordingly, the Company had approached Department of Fertilizers, after declaration of its half yearly results, to recommend RCFs case for exemption from payment of dividend as per DIPAM guidelines.

Further, subsequent to the declaration of results for March 2026, the Company will once again approach to the Department of Fertilizers for recommending its case to DIPAM for exemption from compliance with the said dividend guidelines for the year. iii. Company sought exemption for partial non-compliance with the Public Procurement Policy for MSEs, 2012, primarily due to the nature of its operations. A significant portion of procurement relates to critical inputs, utilities, bulk raw materials, and proprietary items, and specialized spares sourced from OEMs, which are not amenable to participation by MSEs. Further, there is limited availability and participation of SC/ST and women-owned MSEs in technically complex procurements categories, as their presence is largely in non-technical and general supplies. Although RCF has exceeded the overall MSE procurement target for eligible items, it has not met the prescribed sub-targets for women and SC/ST MSEs.

Accordingly, the management has represented that appropriate measures are being undertaken, including seeking necessary exemptions/waivers from the respective Ministry/stock exchanges, to ensure compliance with the applicable provisions and regulatory requirements.

Except for the matter stated above, no other material instances of non-compliance with the aforesaid regulations and guidelines have come to our notice during the course of our audit.

B. SUB-DIRECTIONS

Not applicable as there are no sub directions issued for the year ended 31st March 2026.

C. COMPLIANCE:

The Compliance/Action taken by management on last years management letter is as follows:

Sr. No. Para	Compliance/ Action Taken
1. The pending VAT refund balances of Rs. 4.79 crore (2001-02 to 2004-05), Rs. 1.84 crore (FY 2013-14), Rs. 0.74 crore (FY 2016-17), and Rs. 1.69 lakh (FY 2010- 11) should be reconciled and necessary accounting treatment should be made in the books. (PC 7)	The company has made necessary provision.
2. The TDS receivable of Rs. 7.18 crore for AY 1997-98 to 2022-23 should be reconciled and necessary accounting treatment should be made in the books. (PC 8)	The company has made necessary provision.
3. The Management should adjust the short settlement of Rs. 0.63 crore in FY 2025-26 and pending subsidy claims of Rs. 4.86 crore shall be reviewed and settled. (PC 10)	Short settlement of Rs. 0.63 crore has been written off. W.r.t pending subsidy claims necessary efforts and measures are taken.
4. The Management shall obtain clarification from the Department of Fertilizers on the computation of sale price of Neem Coated Urea and revise the revenue recognition methodology accordingly. (PC 11)	On the said matter, the company had sought clarification in the FY 2022-23, further taken up with Department of Fertilizers (DoF) during FY2025-26. However, clarification is still awaited from the DoF. Hence accounting treatment as given in the previous years is continued.
5. Additional disclosure should be made in the financial statements for FY 2025-26 regarding the non-renewal of the lease with Indian Railways since FY 2019-20 and the uncertainty in realization of outstanding lease rentals amounting to Rs. 2.94 crore. (PC 15)	Necessary disclosures are given
6. The contingent liability of Rs. 55.09 crore towards Income Tax demands should be reviewed and reconciled with the Income Tax Portal and Statutory Auditors report. Necessary accounting treatment should be made in the books. (PC 17)	Contingent liabilities towards Income Tax, representing disputed additions and disallowances for various assessment years, which are pending at different appellate levels.
	Since the matters are under dispute and the outflow is not considered probable at this stage, the amounts have been disclosed as contingent liabilities. The balances have also been reconciled with records, including the amounts reported in the statutory auditors report.
7. The treatment of interest on delayed settlement of balance two per cent claims should be appropriately evaluated and necessary disclosures incorporated in the financial statements for FY 2025-26 by suitably reviewing and modifying Significant Accounting Policy no. 1.2.10. (PC 14, PC 16 & PC 19)	The Companys accounting policy on recognition of interest income from the Department of Fertilizer provides for recognition of interest on delayed settlement of dues where recovery is reasonably certain and can be reliably measured. Based on past experience, interest relating to 98% of claims has been consistently accepted and settled by the Department, and is therefore recognized as income.
8. The accounting policy on recognition of subsidy on city compost has no relevance and applicability as it has become redundant after September 2021 and the same needs to be reviewed in line with the SA 700 and Ind AS 1. (PC 20)	In respect of the remaining 2% of claims, recognition of interest is subject to submission of multiple supporting documents and detailed scrutiny by the Department, with no established basis for determination or settlement. Accordingly, the related interest, though claimed, has not been recognized as income due to uncertainty in measurement and realization, and has been disclosed as a contingent asset in accordance with applicable Indian Accounting Standards.
9. Recognize all PoS devices and related finger scanners procured for retailers as Property, Plant and Equipment in the financial statements and compute depreciation for the same in line with ICAI EAC guidance. The Company should review past accounting treatment and align future reporting with industry practice to ensure compliance with applicable accounting standards, (PC 2)	The Company has complied with the audit observation.
10. Reclassify Fixed Deposits maturing beyond 12 months and pledged against Bank Guarantees in line with Schedule III of the Companies Act, 2013. (PC 9)	The Company has expensed the cost of PoS devices and related equipment procured under the Direct Benefit Subsidy Scheme, instead of recognizing them as Property, Plant and Equipment.
11. Disclose the interest liability accrued on the court ordered deposit (M/s Thermax Limited) amounting to Rs. 19.25 crore in the financial statements. (PC 1)	These devices, are handed over to State Governments for deployment at retailers premises and are operated and controlled by third parties. The devices are not exclusively used for the Companys products and do not provide identifiable or exclusive future economic benefits to the Company. Further, the Company does not have effective control over their usage and physical verification is not practicable.
12. Disclose in the notes to accounts that the PF Trust accounts for FY 2024-25 are yet to be finalized and accordingly no loss in value of investments or shortfall has been recognized, which shall be assessed upon finalization of the Trust accounts. (PC 3)	Considering the absence of control and lack of exclusive economic benefits, the Company has adopted a conservative approach of expensing such costs. Necessary reclassification has been done.
13. Review the accounting treatment of Retailer Margin in line with peer and industry practice, follow up with the Department of Fertilizers for clarification on the treatment and appropriately disclose the matter in the notes to accounts in the FY 2025-26 financial statements. (PC 2)	During the year, the company has accounted the interest.
14. The treatment of income of Other Income of Rs. 0.35 crore from custody of wagons should be reviewed and the requirement of any provision should be assessed in FY 2025-26. (PC 12)	Necessary disclosure has been given.
15. Necessary adjustment for the excess provision of Performance Related Pay (PRP) may be carried out in the financial year 2025-26. (PC 13)	The Company has replied that accounting is in order and further the matter was already taken with DOF to seek clarification on this matter. However, clarification is still awaited from the DOF.
16. Proper disclosure should be made in the Statement of changes in Equity in the prescribed format of Schedule III. (Additional PC-2)	The lease agreement with Railways expired in FY 2019 20. As per communication from Railways, the wagons are to be disposed of, with recovery limited to scrap value upon disposal, while lease charges are payable by Railways till completion of the disposal process. The Company believes that the same is recoverable in view of ongoing correspondence with Railways. Thus, CompanyRs.s accounting treatment is in order.
	Necessary adjustment has been carried out in the FY 2025- 26.
	During the year, the Company has disclosed the line items "Changes in accounting policy / prior period errors" and "Restated balance at the beginning of the reporting period" under Equity, in accordance with the format prescribed in Schedule III.

For K. GOPAL RAO & CO For RAJU & PRASAD

Chartered Accountants Chartered Accountants

FRN : 000956S FRN : 003475S

CA GOPAL KRISHNA RAJU CA M. SIVA RAM PRASAD

Partner Partner

M. No.: 205929 M. No.: 018943

UDIN: 26205929ATJGIH4375 UDIN: 26018943TDUDUD3235

Place: Mumbai Date: 21^st May, 2026

ANNEXURE "C" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in Paragraph 4(f) of the section ‘Report on Other Legal & Regulatory Requirements in our Independent Auditors Report to the members of the company on the Standalone Ind AS Financial Statements for the year ended March 31, 2026.)

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 with reference to the Standalone Ind AS Financial Statements of RASHTRIYA CHEMICALS AND FERTILIZERS LIMITED ("the Company") as of March 31, 2026 in conjunction withand appropriate to provide a basis for our audit sufficient our audit of the Standalone Ind AS Financial Statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to the Standalone Ind AS Financial Statements criteria established by the Company considering the essential components of internal control stated in the ‘Guidance

Note 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 with reference to the Standalone Ind AS Financial Statement based on our audit. We conducted our audit in accordance with 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 ICAI.

Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to the Standalone Ind AS financial statement 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 with reference to the Standalone Ind AS

Financial Statement and their operating effectiveness.

Our audit of internal financial controls with reference to the Standalone Ind AS Financial Statement included obtaining an understanding of internal financial controls with reference to the Standalone Ind AS Financial Statement, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is opinion on the Companys internal financial controls system with reference to the Standalone Ind AS Financial Statement.

Meaning of Internal Financial Controls with reference to Financial Statements

A Companys internal financial controls with reference to the Standalone Ind AS Financial Statement is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Standalone Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial controls with reference to the Standalone Ind AS Financial Statement 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 Ind AS financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on the Standalone Ind AS financial statements.

Inherent Limitations of Internal Financial Controls With reference to the Standalone Ind AS Financial Statements

Because of the inherent limitations of internal financial controls with reference to the Standalone Ind AS 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 the Standalone Ind AS

Financial Statements to future periods are subject to the risk that the internal financial controls with reference to the Standalone Ind AS 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, the Company has, in all material respects, an adequate internal financial controls with reference to the standalone Ind AS financial statements and such internal financial controls were operating effectively at March 31, 2026, based on the internal control with reference to the standalone Ind AS financial statements 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 (the "Guidance Note") issued by as the Institute of Chartered Accountants of India.

For K. GOPAL RAO & CO For RAJU & PRASAD

Chartered Accountants Chartered Accountants

FRN : 000956S FRN : 003475S

CA GOPAL KRISHNA RAJU CA M. SIVA RAM PRASAD

Partner Partner

M. No.: 205929 M. No.: 018943

UDIN: 26205929ATJGIH4375

UDIN: 26018943TDUDUD3235

Place: Mumbai

Date: 21^st May, 2026