zuari agro chemicals ltd share price Auditors report

To the Members of Zuari Agro Chemicals Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Zuari Agro Chemicals Limited ("the Company"), which comprise the Balance Sheet as at 31 March, 2023, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.

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, as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March, 2023, its profit including other comprehensive income, its cash flows and the changes in equity 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), as specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the 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 Matters

a. We draw attention to Note 30 of the accompanying standalone

financial statements, regarding sale and transfer of Goa fertilizer plant and associated business to PPL which has been

consummated on 01 June, 2022 and recognized the pre-tax gain of INR 1,14,239.04 lakhs for the year ended 31 March, 2023 as exceptional item in the financial statement of the Company.

b. We draw attention to Note 6(b) of the accompanying standalone financial statements, Zuari Farmhub Limited (ZFL), a subsidiary of the Company, had issued 78,55,60,000 equity shares of INR 10 each by way of conversion of unsecured compulsory convertible debentures (CCDs).

And further during the quarter ended 30 June , 2022, ZFL had filed before NCLT, Scheme for Reduction of its Share Capital ("Scheme") which has been approved by NCLT, Mumbai Bench, vide its order dated 04 May , 2023, and the Scheme has become effective from the appointed date i.e. 01 July , 2022.

To give effect to the capital reduction, ZFL has cancelled and extinguished 69,89,67,400 number of shares with face value of INR 10 each in their books. Accordingly, the Company has reduced its carrying value of investment in ZFL by INR 69,896.74 lakhs and loss arising on the same has been disclosed under exceptional items in profit and loss statement by the Company.

c. We draw attention to Note 6(a) of the accompanying standalone financial statements, Adventz Trading DMCC, a foreign subsidiary of the Company, wherein the Board of Directors of the Company at its meeting held on 31 March, 2023 had approved the liquidation and winding up of operations of such subsidiary company. Hence, during the year ended 31 March, 2023 the Company has written off the investment made in such subsidiary and recognized impairment loss in the statement of Profit and Loss.

We also draw attention to Note 44 of the accompanying standalone financial statements wherein the company has written off the Loans and advances outstanding including Interest Receivable from the subsidiary in the statement of Profit and Loss.

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 for the financial year ended 31 March, 2023. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit

included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.

Key audit matters	How our audit addressed the key audit matter
Discontinued Operations and Asset held for sale in relation to Sale of its Fertilizer plant at Goa to Paradeep Phosphates Ltd (PPL), subsidiary of Companys Joint Venture (as described in Note 31 of the standalone financial statements)	Our audit procedures included the following:
The Company had entered into a Business Transfer Agreement (BTA) for the sale of Companys fertilizer plant at Goa and associated businesses of the Company to PPL as a going concern, on a slump sale basis for an agreed enterprise value of INR 205,225.44 lakhs and for entering into necessary Business Transfer Agreement with PPL.	Evaluated the design and tested the operating effectiveness of the controls over the accounting of this transaction.
The sale and transfer of Goa fertilizer plant and associated business to PPL had been consummated on 01 June , 2022	Obtained the managements valuation report for the sale consideration and compared the same with the carrying value of the underlying assets.
The Company has presented the operations of its Fertilizer plant as "Discontinued Operations" for the period ended 31 May, 2022 and its related assets as "Assets held for sale" and liabilities as "Liabilities directly associated with the assets held for sale" in accordance with Ind AS 105 (Non-current Assets held for Sale and Discontinued. Operations) as at 31 May, 2022.	We gained an understanding of the BTA. Our focus was on understanding the contractual terms associated with the sale of Fertilizer plant at Goa and its associated businesses, which define the assets and liabilities to be transferred and, in particular, any liabilities or obligations retained or created.
We focused on this area considering that this was a significant event during the year. Accordingly, this matter has been determined to be a key audit matter in our audit of the standalone financial statements.	Reviewed the accounting treatment for the said transaction.
	Checked the related computation for disclosures of discontinued operation and held for sale and evaluated that they have been appropriately separated from continuing operations.
	Assessed the adequacy of the related disclosures in the standalone financial statements.
Estimates with respect to recognition of deferred tax assets on unused tax losses (as described in Note 19 of the standalone financial statements)
For the year ended 31 March, 2023, the Company has recognized deferred tax expense of INR 6,741.16 lakhs in the standalone financial statements.	Our audit procedures included the following:
Deferred tax assets are recognized on unabsorbed tax losses when it is probable that taxable profit will be available against which such tax losses can be utilized.	Gained an understanding of the deferred tax assessment process and assessed the design and tested the operating effectiveness of controls over recognition of deferred tax.
The Companys ability to recognize deferred tax assets on unabsorbed tax losses is assessed by the management at the end of each reporting period, taking into account forecasts of future taxable profits and the assumptions on which such projections are determined by the management.	Discussed and evaluated managements assumptions and estimates like projected revenue growth, margins, etc. in relation to the probability of generating future taxable income to support the utilization of deferred tax on unabsorbed tax losses with reference to forecast taxable income and performed sensitivity analysis.
Given the degree of estimation based on the projection of future taxable profits, managements decision to create deferred tax assets on unabsorbed tax losses has been identified to be a key audit matter.	Tested the arithmetical accuracy of the model.
	Assessed the related disclosures in respect of the deferred tax assets in the standalone financial statements
Impairment assessment of Investment in subsidiaries (as described in Note 6(a) & 6(b) of the standalone financial statements)
During the current year, impairment indicators were identified by the management on its investment in its subsidiaries-	Our audit procedures included the following:
As there are no business operations of Adventz Trading DMCC, foreign subsidiary of the Company since May 2021, the management of the Company has decided to liquidate the subsidiary and hence the impairment loss amounting to INR 8.72 lakhs has been recognised.	Read the Companys accounting policies with respect to impairment in accordance with Ind AS 36 "Impairment of Assets".
The investment in Zuari Farmhub Limited(ZFL), the Subsidiary of the Company, was reduced by way of cancellation of shares due to the Capital Reduction Scheme as approved by the Honble NCLT .	Performing test of controls over key financial controls related to accounting, valuation, and recoverability of Investments through inspection of evidence.
According 69,89,67,400 equity shares of face value INR 10 each amounting to 698,96,74,000 has been recognised as Impairment loss .	Gained an understanding of the impairment assessment process and evaluated the design and tested the operating effectiveness of controls in respect of process of comparing the carrying value of the investments to their recoverable amount to determine whether an impairment was required to be recognized.
Impairment of assets is a key audit matter considering the carrying value, estimations and the significant judgements involved in the impairment assessment.	Assessing the disclosures in accordance with requirement of Ind AS 36 "Impairment of Assets".

We have determined that there are no other key audit matters to communicate in our report.

Other Information

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Companys annual report, but does not include the standalone financial statements and our auditors report thereon which we obtained prior to the date of this auditors report, and Extract of Annual Return and Secretarial Audit Report, which is expected to be made available to us after that date.

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 and, in doing so, consider whether such other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and the 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 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.

Those Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities 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 judgement 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 control 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 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.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements (refer paragraph on Material Uncertainty Related to Going Concern above) 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 achieves 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 for the financial year ended March 31,2023 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 sub-section (11) of Section 143 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and 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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) On the basis of the written representations received from the directors as on 31 March ,2023 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March ,2023 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(g) In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be commented upon by us.

Further, as explained in Note 50 of the standalone financial statements, managerial remuneration for the year ended 31 March, 2020 in relation to the Managing Director of the Company was paid in excess of the limits provided in provisions of Section 197 read with Schedule V to the Act by INR 81.00 lakhs without obtaining requisite approvals from the banks/financial institutions and which was subject to shareholders approval by a special resolution and pending which the Company recognised a recoverable of INR 81.00 lakhs from the Managing Director as at 31 March, 2020.

The Company proposes to obtain the shareholders resolution for waiver of recovery of remuneration paid to the then Managing Director without obtaining the lenders consent.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 36 to the standalone financial statements;

ii. The Company did not have any long-term contracts 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 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 reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under subclause (iv) (a) and

(iv) (b) contain any material mis-statement.

v. The Company has neither declared nor paid any interim dividend or final dividend during the year. Therefore reporting under Rule 11(f) of Companies (Audit and Auditors) Rules, 2014 is not applicable.

vi. As Proviso to rule 3(1) of Companies (Accounts) Rules 2014 is applicable for the company w.e.f 01 April 2023, the reporting under this clause is not applicable.

(i) a. A. The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, plant & equipment(PPE).

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

b. According to the information and explanations given to us and on the basis of our examination of the records of the Company, PPE has been physically verified by the management during the year. And no material discrepancies were noticed on such verification.

c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties, included in property, plant and equipment are held in the name of the Company, except below mentioned for which title deeds are not in the name of the Company and conveyance deeds in respect of the same are yet to be executed in the name of the Company.

Particulars	Description	Gross Carrying Value (INR in Lakhs)	Title Deed in the name of	Whether title deed holder is promoter, director or relative	Date of Property held	Reason for not held in the name of the company
Freehold Land	Land	2.97	Jose Robello	No	2011-12	Mutation is in Process
Freehold Land	Land	0.17	Communi- dade of Goa	No	2011-12	Mutation is in Process

d. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not revalued its Property, plant and equipment (including 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, there are no proceedings initiated or pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.

(ii) a. The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable and

procedures and coverage as followed by management were appropriate. No discrepancies were noticed on verification between the physical stocks and the book records that were 10% or more in the aggregate for each class of inventory.

b. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company had not availed any working capital limits in excess of five crore rupees, during the year. Hence, the quarterly returns or statements have been not been filed by the Company with banks Hence reporting under this clause is not applicable.

(iii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not made any investments, provided guarantee or security or granted any advances in the nature of loans, secured or unsecured, to companies, firms, limited liability partnerships or any other parties during the year. The Company had held Investments in one of its Subsidairy by way of Compulsorily Convertible Debentures (CCDs) which were converted in to 78,55,60,000 Equity shares of INR 10 during the year and subsequently upon scheme of Capital Reduction they have been cancelled to the extent of 69,89,67,400 Equity shares of INR 10 each. The Company has not granted any loans, secured or unsecured, to firms, limited liability partnerships or any other parties during the year.

a. According to the information and explanations given to us and on the basis of our examination of the records of the Company. During the year the company has not provided loans or provided advances in the nature of loans, or stood guarantee, or provided security to any other entity

A. Based on the audit procedures carried on by us and as per the information and explanations given to us, the Company has granted loan to one of its subsidiaries.

Particulars	Amount (In lakhs)
Aggregate amount during the year	13.37
Balance outstanding as at balance sheet date	Nil

B. Based on the audit procedures carried on by us and as per the information and explanations given to us, the Company has not granted loans to a party other than subsidiaries

b. According to the information and explanations given to us and based on the audit procedures conducted by us, we are of the opinion that the terms and conditions of the loans given are prima facie, not prejudicial to the interest of the Company.

c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, in case of loans given, the Company has written off the loans & interest dues during the year.

d. According to the information and explanations given to us and on the basis of our examination of the records of the Company, since the company has written off, there is no overdue amount for more than ninety days in respect of loans given.

e. According to the information and explanations given to us and on the basis of our examination of the records of the Company, there is no loan given falling due during the year, which has been renewed or extended or fresh loans given to settle the overdues of existing loans given to the same party.

f. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not given any loans either repayable on demand or without specifying any terms or period of repayment.

(iv) According to the information and explanations given to us and on the basis of our examination of the records, the Company has not given any loans, or provided any guarantee or security as specified under Section 185 of the Companies Act, 2013 and the Company has not provided any guarantee or security as specified under Section 186 of the Companies Act, 2013. Further, the Company has complied with the provisions of Section 186 of the Companies Act, 2013 in relation to loans given and investments made.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account 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 Companies Act, 2013, related to the manufacture of fertilisers and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) a. The Company is regular in depositing with appropriate

authorities undisputed statutory dues including provident fund, employees state insurance, income tax, duty of custom, goods and service tax, cess and other statutory dues applicable to it.

b. According to the information and explanations given to us and audit procedures performed by us, no undisputed amounts payable in respect of provident fund, employees state insurance, income tax, duty of custom, goods and service tax, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

c. According to the records of the Company, the dues of income-tax, sales-tax, service tax, duty of custom, duty of excise, goods and service tax and cess on account of any dispute, are as follows:

Name of the Statute	Name of the Dues	Contingent Liability as on 31 March 2023	Amount - deposits	Amount	Period to which amount relates	Forum Where Dispute is pending.
Income Tax Act,1961	Disallowance on account of - section 14A - loss on sale of fertiliser bond - Interest free advances to group concerns	1,519.66		1,519.66	2011-12	Income Tax Appellate Tribunal
Income Tax Act,1961	Disallowance on account of - section 14A - Interest free advances to group concerns	320.88	-	320.88	2012-13	Income Tax Appellate Tribunal
Income Tax Act,1961	Disallowance under section 14A	292.20	-	292.20	2013-14	Income Tax Appellate Tribunal
Income Tax Act,1961	Disallowance of claim under section 115JB(2C) and disallowance of depreciation on Goodwill.	12.95	12.95	-	2017-18	Commissioner of Income Tax (Appeals)
UP Vaue Added Tax 2008.	Demand due to tax on subsidy	2.78	2.78	-	2009-10	Additional Commissioner (Appeals)
UP Vaue Added Tax 2008.	Difference in Tax rate on DAP	16.40	16.40	-	2013-14	Joint Commissioner Appeals
UP Vaue Added Tax 2008.	Difference in Tax rate on DAP	29.76	-	29.76	2014-15	Deputy Commissioner
MVAT Act 2002	Demand on suppression of sale and disallowance of ITC on purchases	290.36	36.85	253.51	2016-17	Maharashtra Sales Tax Tribunal
CST Act 1956	Demand on non submission of supporting documents for F Form	7.62	0.70	6.93	2017-18	Maharashtra Sales Tax Tribunal
MVAT Act 2002	Demand on suppression of sale and disallowance of ITC on purchases	7.65	1.00	6.65	2017-18	Maharashtra Sales Tax Tribunal
		2,500.27	70.68	2,429.59

(viii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not surrendered or disclosed any transactions, previously unrecorded as income in the books of account, in the tax assessments under the Income-tax Act, 1961 as income during the year.

(ix) a. According to the information and explanations given to us

and on the basis of our examination of the records of the Company, the company has not defaulted in repayment of dues to banks, financial institutions and debenture holders.

b. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the company has not been declared wilful defaulter by any bank or financial institution or other lender.

c. According to the information and explanations given to us by the management, term loans were applied for the purpose 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 financial statements of the company, we report that no funds raised on short-term basis have been used for long-term purposes by the company.

e. According to the information and explanations given to us and procedures performed by us, the company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.

f. According to the information and explanations given to us and procedures performed by us, the company has raised loans during the year on the pledge of securities held in its subsidiary.

Nature of Loan taken	Amount of loan (In Lakhs)	Name of Subsidiary	Details of Security pledged	Outstanding balance (In Lakhs)
Non-Convertible debentures	3,500	Mangalore Chemicals & Fertilisers Limited	1,05,62,207 Equity Shares	3,500
Inter Corporate Deposit	2,250	Mangalore Chemicals & Fertilisers Limited	58,77,000 Equity Shares	2,250
Short term loan	2,500	Mangalore Chemicals & Fertilisers Limited	50,00,000 Equity Shares	0

(x) a. The Company has not raised any money by way of initial

public offer or further public offer (including debt instruments). Accordingly, clause 3 (x)(a) of the Order is not applicable.

b. The Company has not made any preferential allotment or private placement of shares or fully or convertible debentures (fully, partially or optionally convertible) during the year under review and hence, reporting requirements under clause 3(x) (b) is not applicable.

(xi) a. Based on examination of the books and records of the

Company and according to the information and explanations given to us, considering the principles of materiality outlined in Standards on Auditing, we report that no fraud by the Company or on the Company has been noticed or reported during the course of the audit.

b. According to the information and explanations given to us, no report under sub-section (12) of Section 143 of the Companies Act, 2013 has been filed by the auditors in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government.

c. As represented to us by the Management, there are no whistle-blower complaints received by the company during the year.

(xii) According to the information and explanations given to us, the company is not a Nidhi Company and therefore the provisions of Para 3(xii) of the Companies (Auditors Report), 2020 are not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

(xiv) a. The company has an internal audit system commensurate

with the size and nature of its business.

b. We have considered the internal audit reports of the company for the period under audit.

(xv) In our opinion and according to the information and explanation given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, clause 3(xv) of the Order is not applicable.

(xvi) a. The company is not required to be registered under

section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi)(a) of the Order is not applicable.

b. The Company is not a Non-Banking Financial or Housing Finance activities as defined in regulations made by the Reserve Bank of India. Accordingly, paragraph 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. Accordingly the provisions of Para 3(xvi)(c) is not applicable.

d. As per the information and explanations given to us, there are not more than one Core Investment Companies as part of the Group. Accordingly the provisions of Para 3(xvi)(d) is not applicable.

(xvii) The company has not incurred any cash losses in the current financial year, however the company had incurred cash losses in the immediately preceding financial year.

Details of Cash losses for immediately preceding financial year-

Particulars	FY 2021-22
Loss after tax	-8,345.08
Depreciation and Amortisation	353.05
Interest charges as per Ind AS 116	147.63
Impairment of investment	-
Cash losses	-7,844.40

(xviii) There was no resignation of statutory auditors during the year.

(xix) According to the information and explanations 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 financial statements, 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 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) In our opinion and according to the information and explanations given to us, the Company is not required to transfer any amount towards CSR. Accordingly, the provisions of Para 3(xx) is not applicable.

ANNEXURE 2 TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF ZUARI AGRO CHEMICALS LIMITED

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

Opinion

We have audited the internal financial controls with reference to standalone financial statements of Zuari Agro Chemicals Limited ("the Company") as of March 31,2023 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

In our opinion, the Company has maintained, 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 2023, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. However, the existing policies, systems, procedures and internal controls followed by the Company have to be completely and appropriately documented.

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 the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to these standalone financial statements 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, as specified under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by 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 these standalone financial statements 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 with reference to these standalone financial statements and their operating effectiveness. Our audit of internal financial controls with reference

to standalone financial statements included obtaining an understanding of internal financial controls with reference to these standalone financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls with reference to these standalone financial statements.

Meaning of Internal Financial Controls with Reference to these Standalone Financial Statements

A companys internal financial controls with reference to standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial controls with reference to standalone financial statements 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with Reference to these Standalone Financial Statements

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

For K.P. Rao & Co

Chartered Accountants

Firms Registration No. 003135S

Prashanth S

Partner

Membership Number : 228407

UDIN : 23228407BGXGRH8439

Place : Bengaluru

Date: May 20, 2023