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Madras Fertilizers Ltd.

BSE: 590134 Sector: Agri and agri inputs
NSE: MADRASFERT ISIN Code: INE414A01015
BSE LIVE 15:45 | 15 Dec 40.65 -0.05
(-0.12%)
OPEN

42.20

HIGH

42.20

LOW

38.60

NSE 15:44 | 15 Dec 40.95 0.35
(0.86%)
OPEN

42.50

HIGH

42.50

LOW

40.65

OPEN 42.20
PREVIOUS CLOSE 40.70
VOLUME 60808
52-Week high 46.40
52-Week low 13.27
P/E
Mkt Cap.(Rs cr) 655
Buy Price 40.65
Buy Qty 884.00
Sell Price 0.00
Sell Qty 0.00
OPEN 42.20
CLOSE 40.70
VOLUME 60808
52-Week high 46.40
52-Week low 13.27
P/E
Mkt Cap.(Rs cr) 655
Buy Price 40.65
Buy Qty 884.00
Sell Price 0.00
Sell Qty 0.00

Madras Fertilizers Ltd. (MADRASFERT) - Auditors Report

Company auditors report

To

The Members of Madras Fertilizers Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of Madras Fertilizers Limited("the Company") which comprise the Balance Sheet as at March 312016 and theStatement of Profit and Loss and Cash Flow Statement for the year then ended and thesummary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (‘the Act") with respect to preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and preventing anddeducting frauds and other irregularities; section and application of appropriateaccounting policies; making Judgement and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on these financial statements based onour audit. We have taken into account the provisions of the Act the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions of the act and the rules made thereunder.

4. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Those

Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement. An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal control relevant to the Company'spreparation of the financial statements that give true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by companies directors as well as evaluating the overallpresentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Basis for Qualified Opinion

6. Reference is invited to Note 24(A)7(vii) of the Significant Accounting Policies ofthe Company regarding valuation of inventories Ammonia is valued at cost which is not inaccordance with Accounting Standard 2 (Valuation of Inventories) which requires inventoryto be valued at lower of cost and Net Realisable Value (NRV);

7. Reference is invited to Note 24(B)(ii) regarding accounting of a sum of ' 882.63crores towards deescalation in input prices which has been considered as payable toFertilizer Industry Coordination Committee (FICC) for the year ended 31st March 2016 underNew Pricing Scheme (NPS) for Urea. Adjustments may arise in future in respect of the aboveon final payment;

8. Reference is invited to Note 29(g) regarding balances in Long term borrowings fromGOI Trade Receivable/ Payables Claim recoverable and loans and advances are subject toconfirmation and consequential adjustments;

The effect of Paragraphs 6 7 and 8 above on the profit of the Company for the yearended 31st March 2016 is not ascertainable.

Qualified Opinion

9. Subject to our comments in Para 6 to 8 above in our opinion and to the best of ourinformation and according to the explanations given to us the financial statements givethe information required by the Act in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India:

(a) i n the case of the Balance Sheet of the state of affairs of the Company as atMarch 312016;

(b) i n the case of the Statement of Profit and Loss of the LOSS for the year ended onthat date; and

(c) i n the case of the Cash Flow Statement of the cash flows for the year ended onthat date.

Report on Other Legal and Regulatory Requirements

10. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure ‘A' a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

11. As required by Section 143(5) of the Act we give in Annexure ‘B' a statementof matters specified by the Comptroller and Auditor-General of India for the Company.

12. 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 bestof our knowledge and belief were necessary for the purpose of our audit;

b. i n our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;

c. t he Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;

d. except for the effects of the matters described in the ‘Basis for QualifiedOpinion' paragraph in our opinion

the Balance Sheet Statement of Profit and Loss and Cash Flow Statement comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) rules 2014;

e. The Department of Company Affairs has clarified that the provisions of sub section(2) of Section 164 the Companies Act 2013 are not applicable to Government Companies.

f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure C"; and.

g. With respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to bestof our information and according to the explanation given to us:

a. The Company has disclosed the impact of pending litigation on its financial positionin its financial statement.

b. The Company has made provision as required under the applicable law or AccountingStandards for material foreseeable losses if any on long term contracts includingderivative contracts.

c. There has been no delay in transferring amounts required to be transferred to theinvestor's education and protection fund by the Company.

For B THIAGARAJAN & CO.
Chartered Accountants
Firm Regn. No. 004371S
Ram Srinivasan
Chennai Partner
May 27 2016 M No. 220112

ANNEXURE ‘A’ TO INDEPENDENT

AUDITORS’ REPORT

(Referred to in paragraph 10 under ‘Report on Other legal and RegulatoryRequirements’ section of our report of even date to the members of MADRAS FERTILIZERSLIMITED on the financial statements of the company for the year ended 31 March 2016)

1. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As per the information and explanations given to us physical verification of fixedassets has been carried out in terms of the phased programme of verification adopted bythe company i.e. once in three years by an independent firm of Chartered Accountantswhich in our opinion is reasonable having regard to the size of the Company and nature ofits assets. We have been informed that discrepancies noticed on physical verification iffixed assets carried out in the past other than what has been subsequently located ascompared to the books and records were not material.

(c) According to the information and explanation given to us the title deeds ofimmovable properties of the Company are held in the name of the Company.

2. (a) Physical verification of inventories inside factory premises has been carriedout by the management at reasonable intervals and the physical verification of stocks ofstores and spare parts has been conducted by an independent firm of Chartered Accountantsin a phased manner so as to complete the verification of all items over a period of threeyears. Finished goods are taken as per warehousing certificates. In our opinion thefrequency of verification of inventory is reasonable. Warehousing certificates has notbeen received in a few cases which however is not significant in value.

(b) In our opinion and according to the information and explanations given to us theprocedures for physical verification of inventory followed by the management werereasonable and adequate in relation to the size of the company and the nature of itsbusiness.

(c) In our opinion the company has maintained proper records of inventory. We areinformed that no major discrepancies were noticed on verification between the physicalstock and book records.

3. (a) The Company has not granted any loans secured

or unsecured to companies firms Limited Liability Partnerships or other partiescovered in the Register maintained under Section 189 of the Companies Act 2013.Accordingly sub Clause (a) and (b) are not applicable.

4. In our opinion and according to the information and explanations given to us thereare no loans investments guarantees and securities in the nature covered under Section185 and 186 of the Companies Act 2013 and accordingly Clause (iv) of the Order is notapplicable.

5. In our opinion the Company has complied with the provisions of Section 73 to 76other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules2014 with regard to deposits accepted from public. During the year the Company has notaccepted any fixed deposits from public. We are also informed by the Management that noorder has been passed by the Company Law Board National Company Law Tribunal or ReserveBank of India or any Court or Tribunal and any other relevant authority.

6. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government under Section 148(1) of the Companies Act 2013for maintenance of cost records in respect of Chemical Fertilizers and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained. Wehave not however carried out a detailed examination of the same.

7. (a) According to the records provided to us the Company is regular in depositingwith the appropriate authorities undisputed statutory dues including provident fundemployees' state insurance income- tax sales tax customs duty excise duty value addedtax cess and other material statutory dues applicable to the Company.

According to the information and explanations given to us no undisputed amountspayable in respect of the aforesaid dues were in arrears as at 31st March 2016 for aperiod of more than six months from the date they become payable.

b) According to the information and explanations given to us there are no disputeddemands in respect of Income tax Service tax Sales tax Customs duty Excise duty SalesTax Income tax Provident Fund contribution and other material statutory dues asapplicable which have been deposited with the relevant statutory authority.

However according to information and explanations given to us disputed dues of exciseduty and Employees Provident Fund and Misc. Provisions Act which have been deposited bythe Company and disputed dues of Customs duty Kerala Value Added Taxes and EmployeesState Insurance Act which have not been deposited by the Company are given below:

S No Name of the statute Nature of dues/demand Period of dispute Amount (Rs lakhs) Forum where dispute is pending
1. Central excise act 1944 With regard to dispute on levy of excise duty for the period from 26.08.1995 to 16.11.2006 1995 542.25 CESTAT
2. Customs Act Differential customs duty claimed by Commissioner of Customs 1998 6586.00 Commissioner of Customs (Appeals)
3. Kerala Value Added Taxes Levy of VAT on subsidy 2009- 10 2010- 11 510.57 High Court of Kerala
4. Employees Provident Fund and Misc. Provisions Act 1952 Penalty for late remittance 1995-96 to 1996-97 10.97 High Court of Madras
5. Employees State Insurance Act 1948 Belated remittance of contribution and levy of interest Apr 92' to Sep 95' Jan 97' to Jul 99' 1999- 00 2000- 01 61.80 ESI Court

8. Based on our audit procedures and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans or borrowings to afinancial institution bank government or dues to debenture holders except in respect ofthe default of repayment of principal amount of the following Government of India (GOI)Loans:

Nature of Loan Year of default Amount (in Crores)
GOI Loans 2004-05 23.49
GOI Loans 2005-06 23.49
GOI Loans 2006-07 24.89
GOI Loans 2007-08 26.08
GOI Loans 2008-09 27.03
GOI Loans 2009-10 26.44
GOI Loans 2010-11 27.34
GOI Loans 2011-12 28.63
GOI Loans 2012-13 38.33
GOI Loans 2013-14 45.78
GOI Loans 2014-15 32.68
GOI Loans 2015-16 32.68
Total 356.86

There were no debenture holders at any time during the year.

9. I n our opinion and according to the information and explanations given to us theCompany has obtained term loans during the year are applied for the purposes for which ithas been sanctioned. During the year there were no money raised by way of initial publicoffer or further public offer.

10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

11. According to the information and explanations given to us and based on ourexamination of the records of the Company provisions of Section 197 read with Schedule Vto the Act are not applicable to the Company and accordingly Clause (xi) of the Order isnot applicable.

12. In our opinion the company is not a Nidhi Company. Therefore the provisions ofclause 3 (xii) of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.

13. In our opinion there are no transactions with the related parties and accordinglyClause (xiii) of the order is not applicable.

14. According to the information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review and therefore the provisions of clause 3(xiv) ofthe Companies (Auditor's Report) Order 2016 are not applicable to the Company.

15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

16. In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.

For B THIAGARAJAN & CO.
Chartered Accountants
Firm Regn. No. 004371S
Ram Srinivasan
Chennai Partner
May 27 2016 M No. 220112

ANNEXURE ‘B’ TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 11 of the Auditors’ Report of even date to the membersof MADRAS FERTILIZERS LIMITED

on the financial statements for the year ended March 31 2016)

General Directions under section 143(5) of The Companies Act 2013 (Applicable from theaccounts of 2015-16)

1. Whether the Company has clear title/ lease deeds for freehold and leashold landrespectively? If not please state the area of freehold and leasehold land for whichtitle/lease deeds are not available.

The Company has a clear title in respect of all freehold land held by it.

2. Whether there are any cases of waiver/write off of debts/ loans/interest etc. Ifyes the reasons therefore and the amount involved.

As informed to us by the Management no waiver of debt/loan/ interest has beensanctioned to the Company by Government of India or any third party against debts due bythe Company.

3. Whether proper records are maintained for inventories lying with third parties &assets received as gift/grant(s) from Govt. or other authorities.

As informed to us by the Management there are no amounts of inventories lying withthird parties. Further no assets have been received as gift from Government or otherauthorities.

For B THIAGARAJAN & CO.
Chartered Accountants
Firm Regn. No. 004371S
Ram Srinivasan
Chennai Partner
May 27 2016 M No. 220112

ANNEXURE ‘C’ TO INDEPENDENT

AUDITORS’ REPORT

(Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") referred to in paragraph 12(f) of theAuditors’ Report of even date to the members of MADRAS FERTILIZERS LIMITED on thefinancial statements for the year ended March 31 2016)

1. We have audited the internal financial controls over financial reporting of MADRASFERTILIZERS LIMITED ("the Company") as of 31 March 2016 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management’s Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

4. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

5. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls

Over Financial Reporting

6. Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

7. I n our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For B THIAGARAJAN & CO.
Chartered Accountants
Firm Regn. No. 004371S
Ram Srinivasan
Chennai Partner
May 27 2016 M No. 220112