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Asian Fertilizers Ltd.

BSE: 524695 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE01OY01018
BSE 05:30 | 01 Jan Asian Fertilizers Ltd
NSE 05:30 | 01 Jan Asian Fertilizers Ltd

Asian Fertilizers Ltd. (ASIANFERTILIZER) - Auditors Report

Company auditors report

To

The Members of Asian Fertilizers Limited

Report on the Audit of Financial Statements Opinion

We have audited the financial statements of Asian Fertilizers Limited ("theCompany") which comprise the balance sheet as at March 31 2021 and the Statementof Profit and Loss (including other comprehensive income) and statement of cash flows andthe statement of change in equity for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (the Act) in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2021 and its profit (including other comprehensiveincome) its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Description of Key Audit Matter

Revenue recognition (refer notes 1-B-27 and 22 to the Financial Statements)

Revenue is measured net of volume discounts price concessions incentives andreturns if any. Due to the Company's presence across different marketing regions withinthe country and the competitive business environment the estimation of the various typesof discounts rebates and incentives to be recognized based on sales made during the yearis material and considered to be judgmental.

Therefore there is a risk of revenue being misstated as a result of error inestimations of discounts incentives and rebates.

Revenue is recognized when the control of the underlying products has been transferredto the customer. There is a risk of revenue being overstated due to fraud resulting fromthe pressure on management to achieve performance targets at the reporting period end.

How the matter was addressed in our audit

Our audit procedures included:

• Assessing the appropriateness of the revenue recognition accounting policiesincluding those relating to discounts rebates and incentives.

• Comparing the historical discounts rebates and incentives. We also consideredthe historical accuracy of the Company's estimates in previous year(s).

• Checking of completeness and accuracy of the data used by the management for thepurpose of calculation of the provision discounts rebates and incentives and for salesreturns and checking of its arithmetical accuracy.

• Comparison between the estimates in the past with subsequent actuals andanalysis of the nature of any deviations to corroborate the effectiveness of themanagement estimation process.

• Considered the adequacy of the Company's disclosures in respect of revenue.

Information Other than the Financial Statements and Auditors' Report Thereon

The Company's Board of Directors are responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditors' report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Responsibility of Management for 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 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. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate implementation and maintenance of accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

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

Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

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

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

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 of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 and on the basis of such checks of the books and records of thecompany as we considered appropriate and according to information and explanations givento us we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under Section 197 read with Schedule V to the Act.

3. Further to our comments in Annexure A as required by Section 143(3) of the Act wereport 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 (including other comprehensiveincome) the statement of Cash Flows and statement of change in equity dealt with by thisReport are in agreement with the books of account;

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;

(e) On the basis of the written representations received from the directors as of March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct.

(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 B".

(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 financial statements Refer Note no. 33 to the financial statements;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and

iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from November 08 2016 to December 30 2016which are not relevant to these financial statements. Hence reporting under this clauseis not applicable.

For Rajeev Prem & Associates
Chartered Accountants
Firm Registration No. 008905C
Sd/-
(Rajeev Kapoor)
Partner
M. No. 077827
UDIN: 21077827AAAAFM8502
Place: Kanpur
Date: June 26 2021

Annexure A to the Independent Auditors' Report

(Referred to in paragraph 1 of our report of even date on the Ind AS financialstatements for the financial year ended March 31 2021 of Asian Fertilizers Limited)

In terms of the information and explanations given to us and also on the basis of suchchecks as we considered appropriate we state that:

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

(b) All the fixed assets have not been physically verified by the management during theyear but there is regular program of physical verification which in our opinion isreasonable having regard to the size of the Company and the nature of fixed assets. Nomaterial discrepancies have been noticed in respect of the assets physically verifiedduring the year.

(c) Title Deeds of immoveable properties are held in the name of the company.

(ii) The inventories of the Company have been physically verified by the management atregular interval during the year. In our opinion the frequency of verification isreasonable. As explained to us the discrepancies noticed on verification were notmaterial in relation to the operations of the Company.

(iii) The company has not granted any loan guarantee or security where provisions ofsection 185 of the Act are applicable. The company has complied with the provisions ofSection 186 of the Act in respect of Investments made during the year and demand Loansgranted in earlier years.

(iv) The Company has complied with the provisions of Sections 185 and 186 of the Act inrespect of grant of loans making investments and providing guarantees and securities asapplicable.

(v) In our opinion the Company has not accepted any deposit during the year within themeaning of Section 73 to Section 76 of the Companies Act 2013 (the Act) read with theRules framed there under. Hence paragraph 3(v) of the Order is not applicable.

(vi) We have broadly reviewed the books of account and records maintained by theCompany pursuant to the Rules framed by the Central Government for the maintenance of costrecords under sub-section (1) of Section 148 of the Companies Act 2013 and are of theopinion that prima facie the prescribed records have been made and maintained. We havenot however made a detailed examination of the said accounts and records with a view todetermine whether they are accurate or complete.

Name of the Statute Nature of the dues Amount (Rs. in Lacs) Year(s) to which relates Forum where pending
The Central Excise Act 1944 Penalty 5.00 2003-04 CESTAT New Delhi
The UP Tax on Entry of Goods in Local Entry Tax 2.48 2005-06 Allahabad High Court
Areas Act 2001 (amended in 2007) Entry Tax 3.07 2006-07 Allahabad High Court

(vii) (a) According to the books and records produced and examined by us the Companyis generally regular in depositing undisputed Statutory dues including Provident FundEmployees' State Insurance Income Tax Sales Tax Service Tax Duty of Customs Duty ofExcise Value Added Tax Goods and Services Tax (GST) Cess and other material statutorydues as applicable with the appropriate authorities and no undisputed amount payable inrespect of aforesaid statutory dues were outstanding as at March 31 2021 for a period ofmore than six months from the date they become payable.

(b) According to the information and explanations given to us there are no dues ofIncome Tax Sales Tax Service Tax Duty of Customs Duty of Excise Value Added Tax andGST which have not been deposited on account of any dispute except mentioned as below:

(viii) The company has not defaulted in repayment of loans or borrowings to a financialinstitution bank government or dues to debenture holders during the year.

(ix) The company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. In our opinion the term loanshave been applied for the purposes for which they were raised.

(xi) Based on the audit procedures performed and according to the information andexplanations given to us no material fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.

(xii) In our opinion the managerial remuneration paid or provided by the company is inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.

(xii) The company is not a "Nidhi Company"; hence paragraph 3(xii) the Orderis not applicable.

(xiii) In our opinion transactions with the related parties are in compliance withsection 177 and 188 of Act where applicable and the details of such transactions have beendisclosed in the Ind AS Financial Statements as required by the applicable accountingstandards.

(xiv) The company has not made preferential allotment or private placement of shares orfully or partly convertible debentures during the year under review. Hence paragraph3(xiv) the Order is not applicable.

(xv) In our opinion the company has not entered into any non cash transactions withdirectors or persons connected with him. Hence paragraph 3(xv) the Order is notapplicable.

(xvi) In our opinion the company is not required to be registered under Section 45 IAof the Reserve Bank of India Act 1934.

For Rajeev Prem & Associates
Chartered Accountants
Firm Registration No. 008905C
Sd/-
(Rajeev Kapoor)
Partner
M. No. 077827
UDIN: 21077827AAAAFM8502
Place: Kanpur
Date: June 26 2021

Annexure B to the Auditors' Report

(Referred to in paragraph 3(f) of our report of even date on the Ind AS financialstatements for the financial year ended March 31 2021 of Asian Fertilizers Limited)

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

Opinion

We have audited the internal financial controls with reference to financial statementsof Asian Fertilizers Limited ("the Company") as of March 31 2021 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.

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 2021 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.

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 Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 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 ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial 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 that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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.

For Rajeev Prem & Associates
Chartered Accountants
Firm Registration No. 008905C
S/d-
(Rajeev Kapoor)
Partner
M. No. 077827
UDIN: 21077827AAAAFM8502
Place: Kanpur
Date: June 26 2021

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