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Nagarjuna Fertilizers & Chemicals Ltd.

BSE: 539917 Sector: Agri and agri inputs
NSE: NAGAFERT ISIN Code: INE454M01024
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NSE 15:44 | 20 Nov 15.80 -0.10
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OPEN 15.75
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VOLUME 53898
52-Week high 20.45
52-Week low 8.61
P/E
Mkt Cap.(Rs cr) 948
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 15.75
CLOSE 15.90
VOLUME 53898
52-Week high 20.45
52-Week low 8.61
P/E
Mkt Cap.(Rs cr) 948
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Nagarjuna Fertilizers & Chemicals Ltd. (NAGAFERT) - Auditors Report

Company auditors report

To

The Members of

Nagarjuna Fertilizers and Chemicals Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying Standalone Ind AS Financial Statements of NagarjunaFertilizers and Chemicals Limited ("the Company") which comprise the BalanceSheet as at March 31 2017 and the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and a summary of the significant accounting policies and otherexplanatory information (herein referred to as "the Standalone Ind AS FinancialStatements").

Management's responsibility for the Standalone Financial Statements

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 the preparation ofthese Standalone Ind AS Financial Statements that give a true and fair view of the stateof affairs(financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities selection and application ofappropriate accounting policies making judgments and estimates that are reasonable andprudent and design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the Standalone Ind ASFinancial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Standalone Ind AS FinancialStatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit of the Standalone Ind AS Financial Statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Standalone Ind AS Financial Statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Ind AS

Financial Statements. The procedures selected depend on the auditor's judgmentincluding the assessment of the risks of material misstatement of the Standalone Ind ASFinancial Statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of theStandalone Ind AS Financial Statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the Standalone Ind AS Financial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone Ind AS Financial Statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS Financial Statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thestate of affairs (financial position) of the Company as at March 31 2017 and its loss(financial performance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

Emphasis of Matter

Attention is invited to following notes to the Standalone Ind AS Financial Statements:

a) Note 5.1 regarding provision for diminution in the value of investments made for thevalue of investment in Jaiprakash Engineering and Steel Company Limited (JESCO) asubsidiary and its adequacy based on Management assessment for the reasons stated in thesaid note.

b) Note 25.1 regarding recognizing Income from urea operations including reimbursementclaims for additional fixed cost input escalation/de-escalation and for productionbeyond reassessed capacity based on prices and provisions applicable under NPS IIIModified NPS III pending notification of final prices under New Urea Policy 2015 andconsequential adjustments if any that may arise.

c) Note 35.1.1 regarding Arbitration awards passed against the Company for USD14398188 and GBP 690630 the impact of which has not been recognised in the FinancialStatements for reasons stated in the said note;

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

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 bestof 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 theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss the Cash Flow Statement andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account.

(d) In our opinion the aforesaid Standalone Ind AS Financial Statements comply withthe Indian Accounting Standards prescribed under section 133 of the Act.

(e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164(2) of the Act.

(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 A".

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its Standalone Ind AS Financial Statements;- Refer Note 35.1 to the StandaloneInd AS Financial Statements.

ii. The Company did not as at March 31 2017 have any material foreseeable lossesrelating to long-term contracts including derivative contracts.

iii. There were no amounts as at 31st March 2017 which are required to be transferredto the Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in the Standalone Ind AS FinancialStatements as regards its holding and dealings in Specified Bank Notes as defined in theNotification S.O. 3407(E) dated the November 8 2016 of the Ministry of Finance duringthe period from November 8 2016 to December 30 2016. Based on audit procedures performedand the representations provided to us by the management we report that the disclosuresare in accordance with the books of account maintained by the Company and as produced tous -Refer Note 12.1 to the Standalone Ind AS Financial Statements.

for M. Bhaskara Rao & Co Chartered Accountants Firm Registration No. 000459S

D. Bapu Raghavendra
Hyderabad Partner
May 26 2017 Membership No. 213274

Re: Nagarjuna Fertilizers and Chemicals Limited

Annexure A to the 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")

We have audited the internal financial controls over financial reporting of NagarjunaFertilizers and Chemicals Limited ("the Company") as of March 31 2017 inconjunction with our audit of the Standalone Ind AS Financial Statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

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 FinancialReporting" issued 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

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 FinancialReporting" (the "Guidance Note") and the Standards on Auditing issued byICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk whether a material weakness exists and testing and evaluating thedesign and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditors' judgement including the assessment of therisks 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 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

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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

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

In 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 March 31 2017 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 M. Bhaskara Rao & Co
Chartered Accountants
Firm Registration No. 000459S
D. Bapu Raghavendra
Hyderabad Partner
May 26 2017 Membership No.213274

Re: Nagarjuna Fertilizers and Chemicals Limited

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)

(i) In respect of its fixed assets:

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

(b) A major portion of the fixed assets have been physically verified during the yearby the Management in accordance with a programme of verification which in our opinionprovides for physical verification of all the fixed assets at reasonable intervals havingregard to the size of the Company and the nature of its assets. According to theinformation and explanations given to us the discrepancies noticed on such verificationwere not material and have been properly dealt with in the books of account.

(c) According to the information and explanations furnished to us and based on ourreview title deeds of its immovable properties are not held in the name of the Company inrespect of land to the extent of 340.11 acres in 104 cases situated in Nellore DistrictAndhra Pradesh in the possession of the Company pending registration of the titlesthereto in its name.

(ii) According to the information and explanations furnished to us in respect of theCompany's inventoriesphysical verification of inventories at plants and warehouses hasbeen conducted by the management at reasonable intervals during the year. In our opinionhaving regard to the nature of its business and location of its stocks the frequency ofverification is reasonable. Further the discrepancies noticed on such verificationbetween the physical stocks and the respective records were not material in relation tothe size of operations of the Company and the same have been properly dealt with in thebooks of account.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the Register maintained under Section 189 of theCompanies Act 2013. Accordingly reporting under clauses (a) (b) and (c) of paragraph3(iii) of the Order does not arise.

(iv) According to the information and explanations furnished to us the Company has notgranted any loans nor made any investments or given any guarantees or securities duringthe year to any of the parties specified in Sections 185 and 186 of the Companies Act2013 except Moneys advances to Nagarjuna Oil Refinery Limited pursuant to the CompositeScheme of Arrangement and Amalgamation which the Company has been legally advised doesnot come under the purview of the aforesaid sections.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits. Accordingly reporting under provisions ofparagraph 3(v) of the Order does not arise.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Rules in force made by the Central Government under sub-section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Sales Tax Wealth TaxService Tax Customs Duty Excise Duty Value Added Tax Cess and other material statutorydues applicable to it with the appropriate authorities and there were no amounts payablein respect of the aforesaid undisputed statutory dues in arrears as at March 31 2017for a period of more than six months from the date they became payable.

(b) Details of dues of Income Tax Sales Tax Service Tax Customs Duty Excise DutyValue added Tax which have not been deposited as on March 31 2017 on account of disputeare as below:

Name of the Statute Nature of Dues Amount (Rs. in Lakhs) Period to which the amount relates Forum where the dispute is pending
Income Tax Tax 99.08 2012-13 ITAT-Hyd (Appeals)
Income Tax Tax 764.00 2013-14 DRP - Bangalore
VAT Tax / Penalty 463.72 2014-15 High Court - Madras

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to financial institutions banks governmentor from debenture holders.

(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion and according to the information andexplanations given to us the term loans have been applied by the Company during the yearfor the purposes for which they were raised.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theCARO 2016 is not applicable.

(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the Standalone Ind AS Financial Statements as requiredby the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of CARO 2016 is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of section 192 of the Companies Act 2013 are notapplicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

for M. Bhaskara Rao & Co
Chartered Accountants
Firm Registration No. 000459S
D. Bapu Raghavendra
Hyderabad Partner
May 26 2017 Membership No. 213274