To the Members of The FERTILISERS AND CHEMICALS TRAVANCORE LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements Qualified
1. We have audited the accompanying Standalone Ind AS financial statements of The FERTILISERSAND CHEMICALS TRAVANCORE LIMITED (the Company) which comprise the BalanceSheet as at March 31 2021 the Statement of Profit and Loss (including OtherComprehensive Income) the statement of Cash Flows and the Statement of Changes in Equityfor the year then ended and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as " the Standalone Ind AS FinancialStatements").
2. In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid Standalone Ind AS Financial Statements givethe information required by the Companies Act 2013 as amended (theAct") in the manner so required and give a true and fair view in conformity with theIndian Accounting Standards specified under section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended (Ind AS) and otheraccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2021 the profit and total comprehensive income its cash flows andchanges in equity for the year ended on that date.
Basis for Qualified Opinion
3. As explained in Note #1.2.2 and Note #35 regarding sale of land and conversion ofleasehold to freehold land to the Company though the Government of Kerala (GoK) hasaccorded freehold right to the Company over 143.22 acres of land during the financial year2019-20 the Company is yet to receive freehold title. According to the Company the fairvalue of the non-monetary asset of freehold title of the land converted as required underInd AS 16-Property Plant and Equipment and the consequent revenue cannot be recognized atthis stage not quantified. In view of this we are unable to comment on the compliance ofthe said Ind AS and the impact thereof on the financial statements.
4. We conducted our audit of the Standalone Ind AS Financial Statement in accordancewith the Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those standards are further described in the AuditorsResponsibilities for the Audit of the Standalone Ind AS Financial Statement section of ourreport. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the Financial Statements under theprovisions of the Act and the Rules there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our qualified opinion on the Standalone Ind AS Financial Statement.
5. We draw attention to Note #57 of standalone financial statements. The Company hasaccumulated loss amounting to D 90521.41 lakhs (previous year D 121401.85 lakhs) with anegative net worth of D 17498.37 lakhs (previous year D 49192.15 lakhs). The currentliabilities exceed its current assets by D 39461.42 Lakhs (Previous year: current assetsexceed its current liabilities by D 19727.66 lakhs). However the Company has reported netprofit of D 35198.07 lakhs during the year and in previous year of D 97550.23 lakhs. TheCompany has a balance under current assets of Cash and Cash Equivalents and Other Bankbalances of D 166686.81 Lakhs (previous year D 68471.73 lakhs) as at year end. Thecompany submitted proposal for restructuring of the loan received from Government ofIndia. After considering these conditions the standalone financial statements of theCompany have been prepared on going concern basis.
Our opinion is not modified in respect of this matter.
Key Audit Matters
6. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS Financial Statements of the currentperiod. These matters were addressed in the context of our audit of the Standalone Ind ASFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. In addition to the matter described in the Basis forQualified Opinion section we have determined the matters described below to be the keyaudit matters:
|Sl No Key Audit Matter ||Auditors Response |
|1 Accounting of subsidy income from Government of India under DBT Scheme: ||Our principal audit procedures included the following: |
|Under Direct Benefit Transfer (DBT) scheme of Government of India (GoI) the Company is entitled to receive subsidy only upon sale of fertilizer by the dealer to the ultimate beneficiary through Point of Sale (PoS) devices. However the Company continues to account subsidy as income at the time of sale to dealers as in the earlier scheme considering the reasonable certainty that the sale will take place and subsidy will be received based on the industry practice and past experience. Refer Note #27 to the standalone financial statements ||??Analyzed the scheme framed by the Department of Fertilizers (DoF) notified through Notification F. No. D(FA)/2016/DBT dated March 17 2017. |
| ||??Reviewed the agreement with dealers. |
| ||??Performed analytical review procedures on the subsidy claim lodged by the Company from the inception of the DBT scheme and subsidy accounted by the Company. |
| ||??Analyzed post Balance Sheet sales through PoS devices in Integrated Fertiliser Management System (iFMS) to assess the sales trend. |
| ||??Considered the ageing of the stock with the dealers for which sales not reported in the (iFMS) and assessed the conservative approach adopted by the Company. |
| ||??Compliance with Ind AS 20 on Accounting for Government Grants and Disclosure of Government Assistance |
| ||??Method consistently followed by the Company. |
|2 Property Plant & Equipment: || |
|Estimates of useful lives and residual value of Property Plant and Equipment is a significant area requiring Management judgment of estimates and application of accounting policies that have significant effect on the amounts recognized in the Standalone Ind AS Financial Statements. ||??We examined whether the Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets and our observations are shown in clause 1(a) to Annexure A to this report. |
| ||??Reviewed the report of the committee that studied the Impairment of the assets. |
| ||??Reviewed the capitalisation made during the year under review |
| ||??Reviewed the valuation report of the assets held for sale regrouped during the year. |
| ||??We have tested the computation of depreciation on sample basis. |
| ||??Reviewed the report on the physical verification of Property Plant and Equipment carried out by the Management and comments of the branch auditors in their report regarding physical verification conducted at depots/ zonal offices. The deficiencies in the physical verification process are reported in clause 1(b) to Annexure A to this report |
| ||??The deficiencies in the reconciliation of land as per documents with the books of accounts and consequent effect on the verification of completeness and correctness of the land are reported in clause 1(c) to Annexure A to this report |
Emphasis of Matter
7. We draw attention to Note #18.1 of the standalone Ind AS financial statementsregarding the confirmation of the loan and interest due thereon on the Government of Indialoan of D 272655.07 Lakhs outstanding as on March 312021. However we report that theloan and interest due there on as on March 31 2020 is confirmed by the Government ofIndia during the year.
Our opinion is not modified in respect of this matter.
Managements Responsibility for the Standalone Ind AS Financial Statements
8. The Companys Board of Directors is responsible for the matters stated insection 134(5) of the Act with respect to the preparation of these Standalone Ind ASFinancial Statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone Ind AS FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
9. In preparing the Standalone Ind AS financial statements management is responsiblefor assessing the Companys ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
10. The Board of Directors are also responsible for overseeing the Companysfinancial reporting process.
Auditors Responsibilities for the Audit of the Standalone Ind AS FinancialStatements
11. Our objectives are to obtain reasonable assurance about whether the Standalone IndAS Financial Statements as a whole are free from material misstatement whether due tofraud or error and to issue an auditors report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Ind AS FinancialStatements.
12. 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 Standalone Ind ASFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
? Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls with reference to financial controlsystem in place and the operating effectiveness of such controls.
? Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
? Conclude on the appropriateness of managements use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompanys ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors report to therelated disclosures in the Standalone Ind AS Financial Statements or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidencesobtained up to the date of our auditors report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
? Evaluate the overall presentation structure and content of the Standalone Ind ASFinancial Statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
13. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
14. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the Standalone Ind ASFinancial Statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication
16. We did not audit the financial statements of five states comprising marketingoffices of the Company included in the Standalone Ind AS financial statements of theCompany whose financial statements reflect total revenue of Rs 216046.30 lakhs for theyear ended on that date as considered in the standalone Ind AS financial statements andtotal assets not quantifiable in the absence of certified trial balance of the areas as atMarch 31 2021. The Company has submitted certain "financial schedules" onlywhich have been audited by other auditors whose reports have been furnished to us by theManagement and our opinion on the standalone Ind As financial statements in so far as itrelates to the amounts and disclosures included in respect of these states and our reportin so far as it relates to the aforesaid states is based solely on the reports of otherauditors.
Our opinion on the standalone Ind AS financial statements and our report on OtherLegal and Regulatory Requirements below is not modified in respect of the above matterswith respect to our reliance on the work done and the reports of the other auditors andthe Standalone Ind AS financial statements / financial information certified by theManagement except on the scope limitation reported by other auditors due to non-provisionof the trial balance of the states audited by them and their inability to ensure thecorrectness of the financial schedules due to this.
17. The Standalone Ind AS financial statements of the Company for the year ended March31 2020 were audited by another auditor whose report dated June 25 2020 expressed aqualified opinion on those statements.
Report on other Legal and Regulatory Requirements
18. As required by the Companies (Auditors Report) Order 2016 (theOrder) issued by the Central Government of India in terms of sub-section 11 ofsection 143 of the Act we give in the "Annexure A" a statement on thematters specified in paragraph 3 and 4 of the Order to the extent applicable;
19. Based on verification of books of accounts of the company and according toinformation and explanations given to us we give in "Annexure B" areport on the directions issued by The Comptroller and Auditor General of India in termsof sub-section (5) of Section 143 of the Companies Act 2013.
20. 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 and returns generallyadequate for the purpose of our audit have been received from the units/ marketing officesnot audited by us.
c. The reports on the accounts of the five states of the Company audited under Section143(8) of the Act by other auditors have been given to us and have been properly dealtwith by us in preparing this report.
d. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flows Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account and with the returns received from fivestates not audited by us subject to the scope limitation by other auditors.
e. In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 subject to the matter specified in paragraph 3above.
f. In view of exemption given vide notification no.
G.S.R. 463(E) dated June 5 2015 issued by Ministry of Corporate Affairs provisionsof Section 164(2) of the Act regarding disqualification of directors are not applicableto the Company.
g. With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to the Standalone Ind AS Financial Statements andthe operating effectiveness of such controls refer to our separate report in "AnnexureC".
h. With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in the Standalone Ind AS financial statements.
(Refer Note #46 of the Standalone 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 has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company where applicable.
21. Being a Government Company the provisions of section 197 of the Act with respectto the matters to be included in the Auditors Report is not applicable
For K Venkatachalam Aiyer & Co.
CA P S Harikrishnan
Membership No 207560
UDIN : 21207560AAAADM1648
Date: June 18 2021
Annexure A to the Independent Auditors Report of even date to the members of
The Fertilisers and Chemicals Travancore Limited on the Standalone Ind AS financialstatements for the year ended March 31 2021
[Referred to in paragraph 21 under Report on Other Legal and RegulatoryRequirements in the Independent Auditors Report of even date to the members ofthe Fertilisers and Chemicals Travancore Limited ("the Company") on theStandalone Ind AS Financial Statements as of and for the year ended 31st March 2021]:
1. In respect of the Companys fixed assets:
a. The Company has maintained generally proper records showing the particularsincluding quantitative details except situation of fixed assets.
b. Major portion of the fixed assets have been stated to be physically verified by theManagement during the year and are not observed by us. However we report that thephysical verification to be done on a systematical order and the procedure needs to bestrengthened. As explained to us no material discrepancies were noticed on such physicalverification.
c. In our opinion and according to information and explanations given to us therecords examined by us and based on the examination of the conveyance deeds/ registeredsale deeds of immovable properties included in fixed assets we report that out of the1498.97 acres of land held by the Company we have been informed that the original titledeeds of immovable properties of 768.34 acres of land are submitted to District CourtErnakulam pledging 80.50 acres of land as a security against claim of a contractor (ReferNote #1.2.1 and Note #48 to the standalone Ind AS financial statements) title deeds of374.65 acres of land submitted to a Bank for pledging 36.08 acres as security againstcredit facilities sanctioned (Refer Note #1.7 to the standalone financial statements) and143.22 acres of land is under lease pending for conversion in to freehold land (Refer Note#1.2.2 to the standalone financial statements). We have not verified the documents inrespect of the above parcels of lands as the title deeds are not made available for ourverification. We have verified the original title deeds of 41 parcels of freehold landhaving an aggregate area of 156.24 acres and are in the name of the Company. Furthertitle deeds in respect of the following freehold and leasehold immovable properties arenot held in the name of the Company.
|Particulars ||Extent of land(in acres) |
|Freehold land ||*42.26 |
|Leasehold land(Right of use asset) ||**14.26 |
*As provided by the management (Refer Note #1.3 to the standalone Ind AS financialstatements)
**The lease deed executed by the Company was expired and no fresh deed is executed tilldate though the Company continues to occupy the land and pay lease rentals (Refer Note#1.2.1 and Note #1A to the standalone financial statements) The Company has not reconciledthe value of the land as per the financial statements with the cost of acquisition of theland as per the title deeds and the additional compensation paid for the acquisition ofland hence we could not verify the completeness and correctness of the amount disclosedin the financial statements with respect to these title deeds. However the managementconfirms that the said non reconciliation will not affect the financial position andfinancial performance of the Company for the year ended March 31 2021
2 In respect of the Companys inventories:
(a) The inventories have generally been physically verified by the Management as atyear-end. In our opinion the frequency of verification needs to be improved.
(b) In our opinion and according to the information and explanations given to us theinternal control system procedure and process of physical verification of inventoriesfollowed by the Management to be improved in relation to the size of the Company and thenature of its business. Proper instructions are not seen given to the stock takingpersonnel to verify the quality of the stock at various locations.
(c) In our opinion and according to the information and explanations given to us theCompany has maintained proper records of inventories. As explained to us no materialdiscrepancies were noticed on such physical verification except in the case of sulphurrock phosphate benzene which have been properly dealt with in the books of account.
3 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 under register maintained under section 189 of theCompanies Act 2013 ("the Act") except the interest free advances in the natureof loans doubtful of recovery and advance against equity pending allotment for which fullprovision made to D 3850.48 lakhs (previous year D 3840.73 lakhs) to a joint venturecompany (Refer Note #5). Being an interest free advance and advance for equity pendingallotment doubtful of recovery given to a joint venture company we are unable to commentwhether the terms and conditions of the loan is prejudicial to the interest of the Companyor not.
4 According to the information and explanations given to us there are no loansinvestments guarantees and securities given in respect of which provisions of section 185and 186 of the Act are applicable including the amount due from the joint venture company.
5 According to the information and explanations given to us the Company has notaccepted any deposits from public. Therefore the provisions of clause (v) of paragraph 3of the Order are not applicable to the Company. However we report advance from customersincludes an amount of D 422.32 Lakhs outstanding for more than 365 days as on the balancesheet date. As per the information given by the Company the goods/services are not madeagainst these advances due to non placement of orders disputes and other reasons.
6 We have broadly reviewed the cost records maintained by the Company pursuant to theCompanies (Cost Records and Audit) Rules 2014 prescribed by the Central Government undersection 148(1) of the Act and are of the opinion that prima facie the prescribed costrecords have been made and maintained by the Company. We have however not made adetailed examination of the records with a view to determining whether they are accurateor complete
7 According to the information and explanations given to us and records of the Companyexamined by us in respect of statutory dues:
(a) In our opinion the Company has generally been regular in depositing undisputedstatutory dues including Provident Fund Employees State Insurance Income TaxGoods and Services Tax Customs Duty Cess and other material statutory dues applicable toit with the appropriate authorities during the year. As per the information andexplanation given to us and based on our verification of documents produced before usthere were no undisputed amounts payable in respect of Provident Fund EmployeesState Insurance Income Tax Goods and Services Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 31 2021 for a period of more than six months fromthe date they became payable except the following:
|SL No Name of the statute ||Nature of dues ||Amount (D in Lakhs)* ||Period to which amount relates |
|1 Income Tax Act 1961 ||Income Tax and interest due thereon ||129.19 ||1995-96 to 1998-99 |
|2 Income Tax Act 1961 ||Income Tax and interest due thereon ||13.26 ||1997-98 |
|3 Income Tax Act 1961 ||Income Tax and interest due thereon ||79.03 ||1995-96 |
*These are the amounts outstanding as per books as per the information given to us bythe Company; these amounts are not paid due to non receipt of the order giving effect tothe order of the Honorable High court of Kerala.
(b) The details of dues towards Income Tax Sales Tax Service Tax Customs DutyExcise Duty Value Added Tax and goods and services tax which have not been deposited asat March 31 2021 on account of disputes are given below:
|Name of the statute ||Nature of dues ||Demand-net of payment (Rs in lakhs) ||Period to which dispute relates ||Forum where dispute pending |
|Customs Act 1962 ||Customs duty and interest due thereon ||36.77 ||1990-92 ||Rectification application filed by the Department before CESTAT |
|Kerala Value Added Tax Act 2003 ||Kerala Value Added Tax ||83.40 ||2006-07 ||Special leave petition before Supreme Court by Commercial taxes Department Govt. of Kerala |
|Central Excise Act 1944 ||Excise duty interest and penalty against utilization of CENVAT credit against duty payable. ||10253.63 ||2010-11 to 2013-14 ||Customs Excise and Service Tax Appellate Tribunal Bengaluru |
|Central Excise Act 1944 ||Excise duty interest and penalty on shortage of raw material written off. ||99.60 ||2003-04 ||High Court of Kerala (Stay order granted) |
|Finance Act 1994 ||Service tax and interest thereon upfront premium on shares ||311.36 ||2003-04 ||Customs Excise and Service Tax Appellate Tribunal Bengaluru |
|Finance Act 1994 ||Service tax and interest thereon on training fee. ||13.16 ||2012-13 ||Customs Excise and Service Tax Appellate Tribunal Bengaluru |
|Madhya Pradesh Entry Tax ||Entry Tax ||3.67 ||1980-84 ||Board of Revenue (Commercial Tax Tribunal) Gwalior |
|Sales Tax Act Punjab ||Sales Tax ||75.62 ||1999-00 and 2000-01 ||Deputy Excise and Taxation Commissioner (Appeals) Patiala |
|Sales Tax Act Orissa ||Sales Tax ||63.00 ||1985-1992 ||Sales Tax Tribunal Orissa Cuttack |
|Kerala Value Added Tax Act 2003 ||Value Added Tax ||14479.41 ||2011-12 ||High Court of Kerala (Stay order granted) |
|Kerala Value Added Tax Act 2003 ||Penalty u/s 47(6) of the Kerala Value Added Tax Act 2003 ||7.68 ||2011-12 ||Kerala Value added Tax Appellate Tribunal Ernakulam |
|The Central Sales Tax Act1956 ||Central Sales Tax and interest due thereon ||25.45 ||2013-14 ||Deputy Commissioner (Appeals) Commercial Taxes Ernakulam |
|The Central Sales Tax Act1956 ||Central Sales Tax and interest due thereon ||46.22 ||2014-15 ||Deputy Commissioner (Appeals) Commercial Taxes Ernakulam |
|The Central Sales Tax Act1956 ||Central Sales Tax and interest due thereon ||27.15 ||2015-16 ||Deputy Commissioner (Appeals) Commercial Taxes Ernakulam |
|Income Tax Act 1961 ||Tax demand due to disallowance ||1.32 ||2005-06 ||Commissioner of Income Tax (Appeals) Kochi |
|Income Tax Act 1961 ||Interest on Income Tax ||2.94 ||2001-02 ||Commissioner of Income Tax (Appeals) Kochi |
8. Based on our examination of the records of the Company and according to theinformation and explanations given to us the Company has no dues to financial institutionor debenture holders as at the Balance Sheet date. The Company has not defaulted inrepayment of loans or borrowings to banks. However we report that the Company has not paidthe interest on loan taken from Government of India for an amount of D 95606.32 lakhs(Previous year D 71704.74 Lakhs) based on the repayment clause in the loan agreementdated March 3 2016 which stipulates the repayment of the loan and interest in three ormore equated installments within five years (by 2022) after an initial moratorium of oneyear from the loan sanction date.
(Refer Note number 18 (1) to Standalone Ind AS financial statements)
9. According to the information and explanations given to us the Company has notraised money by way of initial public offer or further public offer (including debtinstruments) and term loans during the year. (Refer Note number 18.2 of standalone Ind ASfinancial statements).
10. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
11. In view of exemption given vide notification no. G.S.R. 463(E) dated June 5 2015issued by Ministry of Corporate Affairs provisions of Section 197 read with Schedule V ofthe Act regarding managerial remuneration are not applicable to the Company. Accordinglyparagraph 3(xi) of the Order is not applicable.
12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions entered into by the Companywith the related parties are in compliance with Sections 177 and 188 of the Act whereapplicable and details of such transactions have been disclosed in the Standalone Ind ASFinancial Statements as required by the applicable Indian Accounting Standards.
14. According to the information and explanations given to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.Accordingly paragraph 3(xiv) of the Order is not applicable;
15. According to the information and explanations given to us and based on ourexamination of the records the Company has not entered during the year into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.
16. According to the information and explanations given to us the Company is notrequired to be registered under section 45 IA of the Reserve Bank of India Act 1934 andhence reporting under clause (xvi) of paragraph 3 of the Order is not applicable.
For K Venkatachalam Aiyer & Co.
CA P S Harikrishnan
Membership No 207560
Date: June 18 2021
Annexure B to the Independent Auditors Report of even date to the members of TheFertilisers and Chemicals Travancore Limited on the Standalone Ind AS financial statementsfor the year ended March 31 2021
(Referred to in Paragraph 23 under Report on Other Legal and RegulatoryRequirements section of our report of even date)
|SL No C & AG Directions ||Observations/findings |
|1 State of impact of revision of subsidies for fertilizers products viz. NPK Ammonium Sulphate and imported MoP in valuation of its closing stock. ||The closing stock of NPK Ammonium Sulphate and imported MoP as on 31st March 2021 has been valued at cost. There is no impact of revision of subsidy in valuation of closing stock. |
|2 Whether subsidy was recognised as per the provisions of Direct Benefit Transfer scheme of GoI? ||According to information and explanations given to us and based on the examination of records of the Company the subsidy income is recognised at the time of sales to the dealers. However the subsidy claim is made by the Company with GoI at the time of ultimate sales made to the beneficiary. |
|3 State the area of land under encroachment and briefly explain the steps taken by the Company to remove encroachments ||As per the information and representation given to us no area of land of the company is under encroachment [Refer Annexure A(1)(c)] |
|4 Whether subsidy received/recoverable from Government of India has been properly accounted for and reconciled as per claims admitted? ||Based on Audit Procedure performed by us and as per the information and explanation given to us Price and Freight Subsidy receivable is measured and raised based on policy issued by DoF /principle/ notifications received from Fertilizer Industry Coordination Committee (FICC) an office of the Government of India which regulates such subsidy. Escalation/ De-escalation in notified rates is considered for accounting the subsidy received/recoverable from Government of India. The claim made by the Company and the claim admitted by GoI are reconciled. |
|5 Whether the company has system in place to process all the accounting transactions through IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated ||According to information and explanations given to us and based on the examination of records of the Company all the accounting transactions of the Company are processed through IT system. As explained to us there is no accounting transaction being processed outside the IT system except valuation of inventories. However this has no financial implication on the accompanying financial statements. |
|6 Whether there is any restructuring of an existing loan or cases of waiver/write off of debts /loans/interest etc. made by a lender to the company due to the companys inability to repay the loan? If yes the financial impact may be stated Whether such cases are properly accounted for? (In case lender is a Government Company then this direction is also applicable for statutory auditors of lender company) ||According to information and explanations given to us during the year there was no restructuring of existing loans of the Company or cases of waiver/write off of debts /loans/interest etc. made by a lender to the Company due to Companys inability to repay the loan. However we report that the company submitted a financial restructuring proposal to Department of Fertilizers Government of India and no decision was taken by the Government on this proposal as on the balance sheet date. |
|7 Whether funds (grants/subsidy etc) received/receivable for specific schemes from Central/ State Government or its agencies were properly accounted for/ utilized as per its term and conditions? List the cases of deviation. ||According to information and explanations given to us during the year the Company received freight subsidy against the freight expenses incurred for the transportation of the fertilizers from plant/ port to the depots and DBT subsidy against the ultimate sale of fertilizers to the beneficiaries. These funds are properly accounted/utilized. The company has not received / receivable any other fund for specific schemes of central/ state agencies during the year. |
| ||For K Venkatachalam Aiyer & Co. |
| ||Chartered Accountants |
| ||FRN 004610S |
| ||Sd/- |
| ||CA P S Harikrishnan |
| ||Partner |
|Place: Kochi ||Membership No 207560 |
|Date: June 18 2021 ||UDIN : 21207560AAAADM1648 |
Annexure C to the Independent Auditors Report of even date to the members of TheFertilisers and Chemicals Travancore Limited on the Standalone Ind AS financial statementsfor the year ended March 31 2021
Independent Auditors Report on the Internal Financial Controls under Clause (i)of Sub-section 3 of Section 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 March2021 in conjunction with our audit of the Standalone Ind AS financial statements of theCompany for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting"criteria established by the Company considering the essential components of internalcontrols stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to thecompanys policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys 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 the ICAI anddeemed to be prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the ICAI. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about 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 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 procedures selected depend on the auditors judgment including the assessmentof the risks of material misstatement of the standalone financial statements whether dueto 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 Companys internal financial controlssystem over financial reporting
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting 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 authorizations of the management and directors of the Company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Companys assets that could havea 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
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects reasonably adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting need to be strengthened as at March 31 2021 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 ofInternal Financial Controls Over Financial Reporting issued by the ICAI. However weare unable to comment on the adequacy of internal financial controls over financialreporting on two out of five states in the absence of any specific reporting by the otherauditors of these states.
For K Venkatachalam Aiyer & Co.
CA P S Harikrishnan
Membership No 207560
Date: June 18 2021