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Fertilizers & Chemicals Travancore Ltd.

BSE: 590024 Sector: Agri and agri inputs
NSE: FACT ISIN Code: INE188A01015
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OPEN 40.00
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VOLUME 33885
52-Week high 65.65
52-Week low 33.15
P/E
Mkt Cap.(Rs cr) 2,469
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 40.00
CLOSE 39.95
VOLUME 33885
52-Week high 65.65
52-Week low 33.15
P/E
Mkt Cap.(Rs cr) 2,469
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Fertilizers & Chemicals Travancore Ltd. (FACT) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR'S REPORT

To The Members of The Fertilisers And Chemicals Travancore Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of The FertilisersAnd Chemicals Travancore Limited ("the Company") which comprise the BalanceSheet as at 31st March 2017 the Statement of Profit and Loss and the Cash Flow Statementfor the year then ended and a summary of significant accounting policies and otherexplanatory information.

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 financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe 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 financial statementsbased 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 there under.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31st 2017 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

a) We draw attention to Note No. 33 to the standalone financial statement. The Companyhas accumulated loss amounting to Rs. 214356.50 Lakhs and its net worth has been fullyeroded the Company has incurred a net loss during the current and previous years. Thiscondition indicates the existence of material uncertainty which may cast significant doubtas to the Company's ability to continue as a going concern. However the financialstatements of the Company have been prepared on a going concern basis for the reasonsstated in the said note. b) We draw attention to Note No. 28.1 to the standalone financialstatement. The Company has written back the interest provision amounting to Rs. 6834.22Lakhs during the year and shown under exceptional item.

Confirmation in this regard is expected from the Government of India. The Company hasreceived communication dated 26th May 2017 from Department of Fertilizers address to Payand Accounts Officer Department of Fertilizers advising to confirm. c) We draw attentionto Note No.19.1 to the standalone financial statement. The Company has shown under othercurrent assets amount of Rs. 3046.41 Lakhs as receivable from Government of Kerala towardsreimbursement of KVAT paid on purchase of RLNG during the period from 18th July 2016 to31st March 2017. The Company has considered the pronouncement made in State Assemblyduring the budget session.

Our opinion is not modified in respect of this matter

Other Matter

We did not audit the financial statements of 4 areas of marketing division included inthe standalone financial statements of the company whose financial information reflecttotal asset of Rs. 201.02 Lakhs as at 31st March 2017 and total revenue of Rs. 128813.15Lakhs for the year ended on that date as considered in the standalone financialstatements. The financial information of these branches have been audited by the branchauditors whose report have been furnished to us and our opinion in so far as it relatesto the amounts and disclosures included in respect of these branches is based solely onthe report of such branch auditors.

Our opinion is not qualified in respect of this 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 of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in the paragraph 3 and 4 of the Order.

2. As required by Section 143 (5) of the Act we give in Annexure C on the basis ofsuch checks of the books and the records of the Company as we considered appropriate andaccording to the informations and explanations given to us in the annexure on thedirections issued by the Comptroller and Auditor- General of India.

3. As required by section 143(3) of the Companies 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. In 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. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;

d. In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e. On the basis of written representation received from the Directors as on 31st March2017 and taken on record by the Board of Directors We report that none of the Directorsis disqualified as on 31st March 2017 from being appointed as director in terms ofSection 164(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 B" our report express an unmodified opinion on theadequacy and the operating effectiveness of the Company's internal financial control overfinancial reporting; and

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 29 to the 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 has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosure in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8 November2016 to 30 December 2016 and these are in accordance with the books of accountsmaintained by the Company. Refer Note 17.2 to the financial statements.

For K. VARGHESE & Co.
Chartered Accountants
(Firm Registration No. 004525S)
Sd/-
Sam Varghese
New Delhi Partner
30th May 2017 (Membership No. 216979)

ANNEXURE ‘A' TO THE INDEPENDENT AUDITORS' REPORT

Referred to in Paragraph (1) under the heading of "Report on Other Legal andRegulatory Requirements"of our report to the members of The Fertilisers And ChemicalsTravancore Limited on the accounts for the year ended 31st March 2017

1. In respect of its fixed assets:

(a) The Company is generally maintaining proper records showing full particularsincluding the quantitative details and situation of fixed assets. (b) The company has aregular programme of physical verification of its fixed assets by which fixed assets wereverified in a phased manner over a period of three years. In our Opinion the periodicityof physical verification is reasonable having regard to the size of the Company and natureof its business. To the best of our knowledge no material discrepancies were noticed onverification conducted during the year as compared with book records.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except for 48.49 Acres of land amounting to Rs. 510.77Lakhs for which Patta/ Title Deed is to be issued.

2. In respect of inventories a. The inventory has been physically verified during theyear by the management. In our opinion the frequency of verification is reasonable. Thediscrepancies noticed on verification between the physical stock and the book records werenot material and have been properly dealt with in the books of accounts.

3. The Company has not granted any loans secured or unsecured to companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder Section 189 of the Companies Act 2013.

4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans investments guarantees and security made.

5. According to the information and explanation given to us the Company hasnot accepted any deposits from the public during the year.

6. We have broadly reviewed the books of accounts maintained by the Companypursuant to the Companies (Cost Records and Audit) Rules 2014 as prescribed by theCentral Government under section 148(1) of the Companies Act 2013 and are of the opinionthat prima facie the prescribed records have been made and maintained. However we havenot made a detailed examination of the cost records with a view to determine whether theyare accurate or complete.

7. a) According to the information and explanations given to us and on thebasis of our examination of the records of the Company amounts deducted/ accrued in thebooks of account in respect of undisputed statutory dues including Provident FundEmployees State Insurance Fund Income Tax Wealth Tax Sales Tax Value Added TaxService Tax Customs Duty Excise Duty Cess and other material statutory dues have beenregularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanation given to us no material undisputedamounts payable in respect of Provident Fund Employees State Insurance Fund Income TaxWealth Tax Sales Tax Service Tax Customs Duty Excise Duty Cess and any other materialstatutory dues were in arrears as at 31st March 2017 for a period of more than six monthsfrom the date they became payable.

b) According to the information and explanation given to us the following disputeddues of Sales Tax Income Tax Customs Duty Excise Duty Service Tax Cess etc. whichhave not been deposited as on 31st March 2017 are given below.

Natureof Statute Nature of Dues Forum where Dispute pending Financial Year Amount involved ( Rs. in lakhs) Amount unpaid ( Rs. in lakhs)
Central Excise Act 1944 Duty penanlty with interest demand disputed by company. Cenvat utilised for fertilizer clearances Customs Excise and Service Tax Appellate Tribunal Bangalore 2010 to 2013-14 8742.53 6512.75
Central Excise Duty with interest and penalty Commissioner of
2003-04 86.77 86.77
Act 1944 on shortages written off Central Excise Kochi
Central Excise Act 1944 Duty with interest and penalty on Cenvat availment Customs Excise and Service Tax Appellate Tribunal Bangalore 2006-07 to 2010-11 0.49 0.44
Finance Act 1944 Tax Penalty and interest demand on service tax Customs Excise and Service Tax Appellate Tribunal Bangalore 2003-04 to 2009-10 290.46 278.05
Finance Act 1944 Tax Penalty and interest demand on service tax Commissioner of Central Excise Kochi 2006-07 to 2012-13 98.99 98.99
Madhya Pradesh Entry Tax Entry tax demand Board of Revenue (Commercial Tax Tribunal) Gwalior Madhya Pradesh) 1980-84 3.67 3.67
Sales Tax Act Punjab Sales tax demand High Court of Haiana & Punjab 1999-2000 2000-2001 119.00 46.03
Sales Tax Act Orissa Sales tax demand High Court of Orissa 1985-1992 63.00 63.00
Sales Tax Act Kerala Sales tax demand Commercial Taxes Ernakulam 2011-2012 7.68 7.68
IncomeTax Act 1961 Tax demand due to disallowances High Court of Kerala 1987-88 11.77 -
IncomeTax Act 1961 Tax demand due to disallowances High Court of Kerala 1989-90 32.40 -
IncomeTax Act 1961 Interest demand u/s 234B(3) CIT (Appeals) Kochi 2001-02 2.94 -
IncomeTax Act 1961 Tax demand due to disallowance CIT (Appeals) Kochi 2005-06 1.32 -
IncomeTax Act 1961 Additional Tax and Interest demanded on payments to foreign technicians High Court of Kerala 1994-95 to 1997-98 103.05 78.21
IncomeTax Act 1961 Tax demand due to disallowance High Court of Kerala 1997-98 10.49 10.49

8. In our opinion and according to the information and explanations given to us andbased on the documents and records produced before us the Company has not defaulted inrepayment of loans or borrowings to Financial Institutions Banks Government or dues todebenture holders.

9. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments). The term loans raised during the year wereapplied for the purpose for which those are raised.

10. According to the information and explanations given to us no material fraud bythe Company or on the Company by its officers or employees has been noticed or reportedduring the course of our audit. However on initiation of vigilance enquiry it is observedthat a tender for sale of gypsum awarded to a contractor enabled certain beneficiary togain undue benefits. Based on the intervention of GOI the Company have cancelled the saleof gypsum to the said contractor. Since the data relating to undue benefits is notavailable with the Company we are not in a position to quantify the amount involved.

11. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

12. In our opinion and according to the information and explanations given to usthe Company is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

14. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

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

For K. VARGHESE & Co.
Chartered Accountants
(Firm Registration No. 004525S)
Sd/-
Sam Varghese
New Delhi Partner
30th May 2017 (Membership No. 216979)

ANNEXURE ‘B' TO THE INDEPENDENT AUDITORS' REPORT

Referred to in Paragraph (f) under the heading of "Report on Other Legal andRegulatory Requirements"of our report to the members of The Fertilisers And ChemicalsTravancore Limited on the accounts for the year ended 31st March 2017 Report on theInternal Financial Controls over financial reporting under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of TheFertilisers And Chemicals Travancore Limited ("the Company") as of 31 March 2017in conjunction with our audit of the standalone financial statements of the Company forthe 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 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

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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively 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 judgment 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 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 and to the best our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2017 based on "the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India".

For K. VARGHESE & Co.
Chartered Accountants
(Firm Registration No. 004525S)
Sd/-
Sam Varghese
New Delhi Partner
30th May 2017 (Membership No. 216979)

ANNEXURE ‘C' TO THE INDEPENDENT AUDITORS' REPORT

Referred to in Paragraph 2 under the heading of "Report on Other Legal andRegulatory Requirements"of our report to the members of The Fertilisers And ChemicalsTravancore Limited on the accounts for the year ended 31st March 2017

AUDIT REPORT ON THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2017 AS PER

DIRECTIONS OF C&AG UNDER SECTION 143(5) OF THE COMPANIES ACT 2013

C&AG Directions Comments of Statutory Auditor
1. Whether the company has clear title/lease deeds for freehold and leasehold land respectively? If not please state the area of freehold and leasehold land for which title/ lease deeds are not available FACT is having title deed in respect of freehold/leasehold land. However Govt of Kerala is yet to issue Title deed/patta in respect of 48.49 Acres of land amounting to Rs. 510.77 Lacs. Lease agreement for 14.26 acres of land need to be executed by the Company for the property laying at Willing Island Kochi.
2. Please report whether there are any cases of waiver/write off of debts/loans/interest etc. if yes the reasons therefore and the amount involved". During the year the Company has not waived / written off any of debts / loans/interest etc.
3 Whether proper records are maintained for inventories lying with third parties and assets received as gift from Government or other authorities. As a policy company does not part with the inventory of the Company with others except in specific cases required under extreme exigencies though such cases are few and far between. However there could be cases in which some machinery or part thereof though under "Plant and Machinery" and not under "Inventory" may have to be sent to third parties for repair retrofitting etc. These cases are monitored by the respective department which causes such transaction. Normally company is insisting security for the material by way of DD Bank Guarantee etc. However in cases were the other party refuses to provide such securities and company necessarily has to get the work done through such parties the equipment is sent to such third parties without such formalities. However such cases are strictly monitored by the respective user department which shall be responsible for making timely return of such inventory. Registers/Records/files are maintained in Stores as per Board approved Stores Management Manual for such transaction done by Stores Department.
During 2016-17 company has renewed the agreement until 7th August 2017 for hiring tanks from IOC Ltd for storage of imported furnace oil. Proper records of the Furnace Oil imported transported and balances in the tanks have been maintained. During the year 2016-17 no gift of assets was received from Government of other agencies.
4 State of impact of revision of subsidies for fertilizers products viz. NPK Ammonium Sulphate and imported MoP in valuation of its closing stock. As per company policy for inventory valuation "Finished / Trading products are valued at lower of cost or net realizable value in the aggregate product-wise. Intermediate products are valued at lower of cost or net realizable value derived from finished products and saleable by-product at realizable value. Cost of finished / semi-finished / intermediate products are determined based on annual average cost excluding interest and head office and administrative overheads. Cost of finished goods in warehouse includes freight and handling charges". During the year following items are valued at cost since it is lower than Net realizable value.
1. Ammonium sulphate
2. Imported MoP
3. NPK
Hence during the year there is no impact of revision of subsidies for fertilizers products viz. NPK Ammonium Sulphate and imported MoP in valuation of its closing stock.

 

For K. VARGHESE & Co.
Chartered Accountants
(Firm Registration No. 004525S)
Sd/-
Sam Varghese
New Delhi Partner
30th May 2017 (Membership No. 216979)