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Rashtriya Chemicals & Fertilizers Ltd.

BSE: 524230 Sector: Agri and agri inputs
NSE: RCF ISIN Code: INE027A01015
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VOLUME 460502
52-Week high 106.45
52-Week low 41.65
P/E 33.32
Mkt Cap.(Rs cr) 5,037
Buy Price 0.00
Buy Qty 0.00
Sell Price 91.30
Sell Qty 874.00
OPEN 93.00
CLOSE 92.50
VOLUME 460502
52-Week high 106.45
52-Week low 41.65
P/E 33.32
Mkt Cap.(Rs cr) 5,037
Buy Price 0.00
Buy Qty 0.00
Sell Price 91.30
Sell Qty 874.00

Rashtriya Chemicals & Fertilizers Ltd. (RCF) - Auditors Report

Company auditors report

TO THE MEMBERS OF RASHTRIYA CHEMICALS AND FERTILIZERS LIMITED

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of RashtriyaChemicals and Fertilizers Limited ("the Company") which comprise theBalance Sheet 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.

Management's Responsibility for the Standalone Ind AS 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 financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial 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 selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial 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 profit(financial performance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

Emphasis of Matters

a) Note No 46 (b): The matter relating to unintended benefits accruing to unitsusing domestic gas for manufacture of nutrient "N" has been referred to and ispending before an Inter-Ministerial Committee (IMC) of Government of India (GoI). Anamount of `198.94 Crore has been withheld as at March 31 2017 (` 198.94 Crore as at March31 2016) by Department of Fertilizers (DoF) towards the same matter.

Pending final decision on the said matter and in the Company view that no unintendedbenefits have accrued it has continued to recognize subsidy income on P&K fertilizersat the rates notified by DoF.

b) Note No 47: As per notification no L-120223/2015-GP-II dated May 20 2015 ofMinistry of Petroleum & Natural Gas (MoPNG) gas pooling has become applicable fromJune 1 2015 onwards for all Urea manufacturing units. Under this mechanism Gas for ureaproduction will be made available at a uniform price of pooled gas for production of urea.

Consequently it is expected that a differential pricing of gas may be made applicablefor non-urea usage also. Company has represented to DoF for maintaining supply of domesticgas for P&K fertilizers and chemicals.

MoPNG vide its letter no. L-13013/3/2012-GP-I dated: December 16 2015 has directedGAIL (India) Limited (GAIL) to levy a higher gas price (i.e. the highest rate of RLNG usedfor production of urea) for use of gas in non-urea operations. Company has representedthat any decision on the same be taken only upon the issue being settled by the IMC ofGoI. Effective from May 16 2016 Company has entered into a contract for procurement ofMarket Priced Gas for non-urea operations at Trombay unit. However pending finalizationof price payable as per the said letter of MoPNG a liability of ` 210.63 Crore as onMarch 31 2017 (`181.97 Crore as on March 31 2016) has been recognized based on thepooled price of gas / Market price of gas also for its non-urea operation as applicable.

In pursuant to said order GAIL has differential levy amounting to ` 1244.80 Crore forthe period commencing from July 1 2006 till March 31 2016 and has initiated arbitrationproceeding towards non-payment of the same. The Company has represented this matter toDepartment of Fertilizers for dispute resolution as the matter relating to the same ispending before the IMC of GoI.

Our opinion is not modified in respect of these matters.

Other Matter

The comparative financial information of the Company for the year ended March 31 2016and the transition date opening balance sheet as at April 1 2015 included in thesestandalone Ind AS financial statements are based on the previously issued statutoryfinancial statements prepared in accordance with the Companies (Accounting Standards)Rules 2006 audited by the predecessor auditor whose report for the year ended March 312016 and March 31 2015 dated May 26 2016 and May 21 2015 respectively expressed anunmodified opinion on those standalone financial statements as adjusted for thedifferences in the accounting principles adopted by the Company on transition to the IndAS which we have been audited by us on which we have issued separate auditor's reportsto the Board of Directors dated May 5 2017.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Order 2016 ("the Order") issuedby the Central Government in terms of Section 143(11) of the Act we give in "AnnexureA" 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 Auditor General of Indiathe action taken thereon and its impact on the accounts and financial statements of theCompany.

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

a) We have sought and obtained all the information and explanations which to the 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. sought a c) The BalanceSheet the Statement of Profit and Loss the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian 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 aredisqualified as at March 31 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 C".

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 40 to thestandalone Ind AS financial statements

ii. 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.

iii. There is no delay in transferring amountsrequiredtobetransferred to the InvestorEducation and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes during the period from November 82016 to December 30 2016. Based on audit procedures and relying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company and as produced to us by the Management - Refer Note 72 to thefinancial statements.

For KALYANIWALLA & MISTRY LLP
Chartered Accountants
Firm Regn. No. 104607W / W100166
Sai Venkata Ramana Damarla
Partner
Membership. No. 107017
Place: Mumbai
Dated: May 19 2017
For CHHAJED & DOSHI
Chartered Accountants
Firm Regn. No 101794W
Nitesh Jain
Partner
Membership. No. 136169

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Para 1 ‘Report on Other Legal and Regulatory Requirements' in ourIndependent Auditors' Report to the members of the Company on the standalone financialstatements for the year ended March 31 2017.

Statement on Matters specified in paragraphs 3 & 4 of the Companies (Auditor'sReport) Order 2016:

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets with original cost and depreciationwritten off in respect of identifiable units of assets and where such information foridentifiable units of assets is not available the records show the cost and depreciationwritten off in respect thereof as a group or class. The items of assets in respect ofwhich quantitative details are not linked with the cost or book value are of small valueacquired prior to April 1978 and are fully depreciated particularly in respect of movableitems acquired from Fertilizers Corporation of India Limited.

(b) As explained to us the Plant & Machinery have been physical verified by themanagement at reasonable intervals during the year and all other fixed assets have beenphysical verified by the management with the help of an independent outside agency. Thediscrepancies reported on such verification were not material and have been properly dealtwith in the books of account.

(c) According to the information and explanations given to us and on the basis ofexamination of the records of the company the title deeds of immovable properties areheld in the name of the Company except:

Sr. No. Total No. Type of Assets Gross Block as at Net Block as at Remarks
of Cases March 31 2017 March 31 2017
(` Crore) (` Crore)
1 2 Free Hold Land – Thal 1.62 1.62 The Company is in the process of
(1848933 Sq. Mtr. of land) transferring the title deeds.
2 1 Free Hold Land- Trombay 0.24 0.24 The Company is in the process of
(378321 Sq. Mtr. of land) transferring the title deeds.

ii. In our opinion and according to the information and explanations given to usphysical verification of finished goods packing materials and raw materials inside thefactory premises has been carried out by the management at reasonable intervals and stockof stores and spare parts has been conducted by them with the help of an independentoutside agency in a phased programme so as to complete the verification of all items overa period. Finished goods and other inventory stored outside the factory premises are takenas per warehousing certificates and third party confirmation respectively. Thediscrepancies reported on such verification were not material and have been properly dealtwith in the books of account.

iii. The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Therefore the provisions of sub-clause (a) (b) and (c) ofparagraph 3(iii) of the Order are not applicable.

iv. In our opinion and according to the information and explanations given to us theCompany has not advanced any loans or made any investments or provided any guarantees orsecurity to the parties covered under section 185 of the Act. The Company has given loansmade investments in the securities of other body corporate and given guarantees within thelimit specified by section 186 of the Act and details of such transactions have beendisclosed in the standalone financial statements.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any Deposits from the public and hence the directives issued bythe Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and the Rules framed there under are not applicable.

vi. W e have broadly reviewed the books of maintained by the Company pursuant to therules 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 andrecords have been made and maintained.

vii. According to the information and explanations given to us and the records examinedby us the Company(a) is generally regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax Service TaxDuty of Customs Duty of Excise Value Added Tax Cess and other material statutory dueswith the appropriate authorities. According to the information and explanations given tous there are no arrears of outstanding statutory dues in respect of above as on the lastday of the financial year for a period of more than six months from the date they becamepayable.

(b) According to the information and explanation given to us and the records examinedby us there are no material dues of Income Tax Sales Tax Service Tax Duty of CustomsDuty of Excise and Value added tax outstanding on account of any dispute except:

Sr.

Name of the Statute

Nature of Dues

Amount

Period to which

Forum where dispute is
No.

(` in Crore)

the amount relates

pending
1

Customs Act 1962

Demand of Customs duty

25.62

2004-05

Central Excise Service Tax
and penalty (Trombay Unit) Appellate Tribunal
2

Customs Act 1962

Demand of Differential

80.77

2009-10

Assistant Commissioner of
Customs Duty on import Customs DharamtarAlibaug
of Urea MOP & DAP
(Marketing)
3

Customs Act 1962

Demand of Differential

0.16

2012-13

Commissioner of Customs
customs duty on import of Mangalore
Potash (Marketing)
4

Income Tax Act 1961

Disallowance of additional

5.08

A.Y 2010-11

Income Tax Appellate Tribunal
depreciation claimed
5

Income Tax Act 1961

Disallowance of additional

6.40

A.Y 2011-12

Income Tax Appellate Tribunal
depreciation claimed
6

Income Tax Act 1961

Disallowance of additional

6.55

A.Y 2014-15

Commissioner of Income Tax
depreciation claimed (Appeals)
7

Income Tax Act 1961

Disallowance of additional

0.31

A.Y 2013-14

Income Tax Appellate Tribunal
depreciation claimed &
other additions erroneously
done
8

Income Tax Act 1961

Demand of Tax for Short

2.73

A.Y 2008-09 to

Commissioner of Income Tax
Deduction / non deduction

2017-18

(Appeals)
of TDS
9

Sales Tax

Disallowance / errors in

18.24

2006-07

Joint Commissioner of Sales

Maharashtra

calculation of set off etc. Tax (Appeals)

3.01

2008-09

in the Assessment Order
Passed

6.58

2009-10

2.77

2010-11

1.23

2011-12

6.43

2012-13

10 Central Excise Act

Demand of Central Excise

2.67

1996-2001

Supreme Court
1944

duty Interest & Penalty in

respect of Naphtha procured

at concessional rates used

1.77

March 2005 to

Central Excise Tax Appellate

for products which are not

October 2005

Tribunal

exempted (Thal Unit)

18.61

November 1996

Supreme Court

to February 2005

(Interest)

Demand of Excise Duty on

4.11

2015-16

Commissioner of Central Excise

account of Diversion of urea

for industrial usages (Thal

Unit)

11 Central Excise Act

Demand of Central Excise

3.03

September 1989 to

Commissioner of Central Excise
1944

duty in respect of Low

December 2015

(Appeals)

Sulphur High Stock /

Furnace Oil procured at

concessional rates used for

other than fertilizer products

and molten Sulphur and

captive consumption of

ammonia (Trombay Unit)

Rapid Wall Plaster cleared

2.83

July 2010 to

Dy. Commissioner /

with Nil Rate of duty

March 2016

Commissioner of Central Excise
(Appeals)

Wrong availment of

0.10

April 2007 to

Dy. Commissioner Central

CENVAT Credit on Angles

August 2011

Excise (Appeals)

Channels TMT Bars. Etc.

(Trombay Unit)

Demand of Excise Duty

0.72

2015-16

Commissioner of Central Excise

on account of Diversion of

urea for industrial usages

(Trombay Unit)

12 Service Tax

Demand of Service Tax on

1.89

April 2008 to

Commissioner of Central

supply of wagons to Central

December 2015

Excise Customs & Service Tax

Railway (Thal Unit)

13 Service Tax

Demand of Service Tax on

10.61

October 2006 to

Additional Commissioner

fees received for Operations

December 2015

Central Excise & Service Tax

and maintenance of HWP

Mumbai

(Thal Unit)

14 Service Tax

Penalty on account of non-

0.20

October 2011 to

Additional Commissioner

deduction of Service Tax on

March 2012

Central Excise & Service Tax

gross assessable value

Mumbai

(Thal Unit)

15 Service Tax

Wrong availment of Cenvat

0.09

March 2012 to

Additional Commissioner

Credit on Imported goods

September 2013

Central Excise & Service Tax

(Thal Unit)

Mumbai
16 Service Tax

Wrong availment of

8.37

FY 2011-12 to

Commissioner Central Excise

Cenvat credit in respect of

2014-15

& Service Tax Mumbai

input service used in the

manufacture of exempted

goods (Thal Unit)

17 Service Tax

Service Tax on rent on

0.14

2008-09 to

Additional Commissioner

BTAL Wagons (Mktg. Unit)

June 2011

Central Excise & Service Tax

Mumbai

18 Service Tax

Demand of Service Tax on

0.01

2006-07 &

Superintendent (S.T Special

Handling by Transporter

2007-08

Cell) Aurangabad

Service (Mktg. Unit)

viii. According to information and explanation given to us and based on examination ofthe records the Company has not defaulted in repayment of loans or borrowings to bank.The Company does not have any dues to financial institution government or debentureholders. ix. The Company has not raised money through initial public offer or furtherpublic offer (including debt instruments). In our opinion and according to the informationand explanations given to us and based on the documents and records examined by us on anoverall basis the term loans obtained by the Company were applied for the purpose forwhich the loans were obtained. x. During the course of our examination of the books ofaccount and records of the Company and according to the information and explanation givento us and representations made by the Management no material fraud by or on the Companyby its officers or employees has been noticed or reported during the year. xi. Accordingto the information and explanation given to us and based on our examination of the recordsof the Company the Company has paid/provided for managerial remuneration in accordancewith requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Act.

xii. In our opinion and according to the information and explanation given to us theCompany is not a Nidhi Company. Accordingly provisions of paragraph 3(xii) of the Orderare not applicable. xiii. According to the information and explanation given to us andbased on our examination of the records of the Company transactions with related partiesare in compliance with sections 177 and 188 of the Act where applicable and details ofsuch transactions have been disclosed in the financial statements as required by theapplicable accounting standards. xiv. According to the information and explanation givento us and based on our examination of the records of the Company the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year. xv. According to the information and explanation given to usand based on our examination of the records of the Company the Company has not enteredinto non-cash transactions with the directors or persons connected with him. Hence theprovisions of Section 192 of the Act are not applicable. xvi. The Company is not requiredto be registered under Section 45-IA of the Reserve Bank of India Act 1934 hence theprovisions of paragraph 3 (xvi) of the Order are not applicable.

For KALYANIWALLA & MISTRY LLP
Chartered Accountants
Firm Regn. No. 104607W / W100166
Sai Venkata Ramana Damarla
Partner
Membership. No. 107017
Place: Mumbai
Dated: May 19 2017
For CHHAJED & DOSHI
Chartered Accountants
Firm Regn. No 101794W
Nitesh Jain
Partner
Membership. No. 136169

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Para 2 ‘Report on Other Legal and Regulatory Requirements' in ourIndependent Auditor's Report to the members of the Company on the standalone financialstatements for the year ended 31st March 2017.

Report on the Directions and Sub-directions issued by the Comptroller and AuditorGeneral of India the action taken thereon and its impact on the accounts and financialstatement of the Company under Section 143(5) of the Act: A. Dir ections

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

Based on the audit procedures performed by us and as per the information andexplanations given to us the details of freehold land and title deeds available/notavailable with the company are as under:-

A) Information of Freehold Land i. TROMBAY

Location Particulars Total Area Area in the

Remarks

(in Sq. Mt.) name of RCF
(in Sq. Mt.)
RCF Trombay Freehold Land 3089013 2710692 As informed to us matter is being

taken up with concerned authorities for

reconciliation of area

ii. THAL

Location Particulars Total Area (in Sq. Area in the name of Remarks*
feet/ Sq meter/ RCF (in Sq. feet/ Sq
Acre/hectares meter/ Acre/hectares)
RCF Factory Freehold Land 313-52.12 hectares 241-49.52 hectares As per 7/12 extract the
& Roads area in the name of the
Company is 253-73.70
Hectares.
Township Freehold Land 7-10.10 hectares - The land is in possession
Kihim of RCF. As informed
Transfer of title deeds is in
process.
Township Freehold Land 83-23.71 hectares 78-85.91 hectares Balance 4-37.8 Hectares
- Kurul of land is not in name of
- Veshvi – RCF. As informed steps
Chendhare are being taken for the
transfer of title deeds.
Railway Land Freehold Land 101-38.83 - As informed request letter
Hectares has been sent to concerned
authorities for providing
7/12 extract for the said
area.
Total Thal Freehold Land 505-24.76 320-35.43 Hectares
Hectares

* The matter is being taken up with the concerned authorities for reconciliation ofarea.

iii. MARKETING/AREA OFFICES/CORPORATE

Location Particulars Area (in Sq. feet/ Whether company has
Sq meter/ Acre clear title deed to the land
AHMEDNAGAR
Survey No.20 II Lines Karachi wala Freehold Land 840 Sq meters YES
Nagar Near Mahesh Talkies
Ahmednagar Maharashtra-414001.
LUCKNOW
TC/10 V Vibutikhand Gomtinagar Freehold Land 1000 Sq meters YES
Lucknow U.P.
DELHI OFFICE
H-9 Green Park Extension New Freehold Land 387.06 Sq meters YES
Delhi -110016

B) Information on Leasehold land

The leased deeds and other details of leased hold land are separately available withthe Company. As regards disclosure of the same in the books of accounts / financialstatements of the Company under IND-AS the carrying value of the same amounts to ` 2.90Crore which has been reported as leased premium prepaid under Note no.8 & Note no. 15to the consolidated Ind AS financial statements respectively.

2. Please report whether there are any cases of waiver/ write off ofdebts/loans/interest etc. if yes the reasons there for and the amount involved

Based on the records examined by us during the year an amount of ` 0.93 crore has beenwritten off towards bad debts. This is in line with the Company's accounting policy onprovision for bad and doubtful debts and write off of the same.

3. Whether proper records are maintained for inventories lying with thirdparties & assets received as gift from Govt. or other authorities

Based on the audit procedures performed by us and as per the information andexplanations given to us proper records are maintained for inventories lying with thirdparties and are confirmed on the basis of warehousing certificates and confirmations.Based on the records examined by us during the year the Company has not received anyassets as gift from Government or other authorities.

B. Sub-directions

1. State the area of land under encroachment and briefly explain the steps takenby the Company to remove encroachments.

T o the best of our knowledge and belief according to the information and explanationsgiven to us instances of encroachment of land have been observed at Trombay unit whichare as under:-

i. Approx. 5 acres of land which is in the name of RCF has been encroached since thetime of FCI. The value of the land cannot be determined exactly. RCF has approached theagencies like MMRDA for development of this land.

ii. Approx. 15 Acres is under slum/encroached since 1980.Slums from other pockets wereshifted on this land and is without clear title in favour of RCF. The matter is taken upwith appropriate authorities for obtaining clear title in favour of RCF.

Both the matters are pending in Mumbai High Court for resolution. As explained to usother than the above there are no cases of encroachment of land at other locations.

2. Whether subsidy received/recoverable from Government of India has beenproperly accounted for as per claims admitted.

Based on the audit procedures performed by us and as per the information andexplanations given to us subsidy received/recoverable from Government of India has beenproperly accounted for as per claims admitted. In addition to the same for the rates yetto be notified due to escalations/de-escalations in the cost of inputs and other costssubsidy has been accounted on estimated basis which is in line with its stated accountingpolicy of revenue recognition given in notes to the standalone financial statements forthe year 2016-17.

3. Whether subsidy received during the year has been reconciled with subsidydisbursed by the Government of India.

Subsidy received during the year amounting to `. 4633.34 crore is in agreement with theamount disbursed by the Government of India.

4. Independent verification may be made of information/inputs furnished toActuary viz. number of employees average salary retirement age etc. and assumptionsmade by the Actuary regarding the discount rate future cost increase mortality rateetc. for arriving at the provision for liability of retirement benefits viz. gratuityleave encashment post-retirement medical benefit etc.

Based on the audit procedures performed on test check basis for the purpose ofverification of information/inputs furnished by the company to Actuary viz. number ofemployees average salary retirement age etc. and no material discrepancies were noticed.

Following are the assumptions used by the Actuary:-

Sr Particulars Rate
No.
1 Discount Rate 7.12%
2 Attrition Rate 2.00%
3 Salary Escalation Rate 8.00%
4 Mortality Rate IALM (2006-08)
Ultimate
Assumptions made by Actuary regarding Salary
Escalation Rate & Attrition Rate is as advised
by the Company. Based on the audit procedure
performed on test check basis on the data given
by the management and according to information
and explanation given by the management the said
assumptions appear to be reasonable.

For KALYANIWALLA & MISTRY LLP

Chartered Accountants

Firm Regn. No. 104607W / W100166

Sai Venkata Ramana Damarla

Partner

Membership. No. 107017

Place: Mumbai Dated: May 19 2017

For CHHAJED & DOSHI

Chartered Accountants Firm Regn. No 101794W

Nitesh Jain

Partner

Membership. No. 136169

ANNEXURE C TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Para 4 (f) ‘Report on Other Legal and Regulatory Requirements' inour Independent Auditor's Report to the members of the Company on the standalone financialstatements for the year ended March 31 2017.

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 RASHTRIYACHEMICALS AND FERTILIZERS LIMITED ("the Company") as of March 31 2017 inconjunction with our audit of the financial statements of the Company for the year endedon 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 Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 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.

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 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

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 KALYANIWALLA & MISTRY LLP
Chartered Accountants
Firm Regn. No. 104607W / W100166
Sai Venkata Ramana Damarla
Partner
Membership. No. 107017
Place: Mumbai
Dated: May 19 2017
For CHHAJED & DOSHI
Chartered Accountants
Firm Regn. No 101794W
Nitesh Jain
Partner
Membership. No. 136169

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6) (b) OFTHE COMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF RASHTRIYA CHEMICALS AND FERTILIZERSLIMITED MUMBAI FOR THE YEAR ENDED 31 MARCH 2017

The preparation of Financial Statements of Rashtriya Chemicals and Fertilizers LimitedMumbai for the year ended 31 March 2017 in accordance with the financial reportingframework prescribed under the Companies Act 2013 (the Act) is the responsibility of themanagement of the Company. The Statutory Auditors appointed by the Comptroller and AuditorGeneral of India under Section 139(5) of the Act are responsible for expressing opinion onthe Financial Statements under section 143 of the Act based on independent audit inaccordance with the standards on auditing prescribed under Section 143(10) of the Act.This is stated to have been done by them vide their Audit Report dated 19 May 2017.

I on behalf of the Comptroller and Auditor General of India have conducted aSupplementary Audit under Section 143 (6) (a) of the Act of the Financial Statements ofRashtriya Chemicals and Fertilizers Limited Mumbai for the year ended 31 March 2017. ThisSupplementary Audit has been carried out independently without access to the workingpapers of the Statutory Auditors and is limited primarily to inquiries of the StatutoryAuditors and Company personnel and a selective examination of some of the accountingrecords. On the basis of my audit nothing significant has come to my knowledge which wouldgive rise to any comment upon or supplement to Statutory Auditor's report.

For and on behalf of the
Comptroller and Auditor General of India
(Tanuja Mittal)
Principal Director of Commercial Audit and
Ex-officio Member Audit Board-I Mumbai.
Place: Mumbai
Date : 10 August 2017