You are here » Home » Companies » Company Overview » Fertilizers & Chemicals Travancore Ltd

Fertilizers & Chemicals Travancore Ltd.

BSE: 590024 Sector: Agri and agri inputs
NSE: FACT ISIN Code: INE188A01015
BSE 00:00 | 20 Feb 36.55 0
(0.00%)
OPEN

36.50

HIGH

37.45

LOW

35.85

NSE 00:00 | 20 Feb 36.60 0.25
(0.69%)
OPEN

36.35

HIGH

37.70

LOW

36.10

OPEN 36.50
PREVIOUS CLOSE 36.55
VOLUME 8714
52-Week high 54.00
52-Week low 30.00
P/E 2.75
Mkt Cap.(Rs cr) 2,365
Buy Price 35.85
Buy Qty 25.00
Sell Price 36.55
Sell Qty 600.00
OPEN 36.50
CLOSE 36.55
VOLUME 8714
52-Week high 54.00
52-Week low 30.00
P/E 2.75
Mkt Cap.(Rs cr) 2,365
Buy Price 35.85
Buy Qty 25.00
Sell Price 36.55
Sell Qty 600.00

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

Company auditors report

To the Members of the FERTILISERS AND CHEMICALS TRAVANCORE LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of theFERTILISERS AND CHEMICALS TRAVANCORE LIMITED ("the Company") which comprisethe Balance Sheet as at March 31 2019 the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended on that date and notes to the standalone financial statementsincluding a summary of significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements").

2. 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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 the profit and total comprehensiveincome its cash flows and changes in equity for the year ended on that date.

Basis for Opinion

3. We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the standalone financial statements.

Material uncertainty related to Going Concern

4. We draw attention to Note # 54 of standalone financial statements. The Company hasaccumulated loss amounting to Rs. 217077 lakhs (previous year Rs. 234212 lakhs) with anegative net worth of Rs. 145771 lakhs (previous year Rs. 163883 lakhs). However theCompany has reported net profit of Rs. 16314 lakhs during the year though it is net lossin the earlier years. These conditions indicate the existence of material uncertaintywhich may cast doubt as to the Company's ability to continue as a going concern. Howeverthe standalone financial statements of the Company have been prepared on going concernbasis.

Our opinion is not qualified in respect of this matter.

Emphasis of Matter

5. We draw attention to Note # 19.1 of the standalone financial statements regardingvariance in interest provision of Rs. 28178 lakhs on the Government of India (GoI) loansin the Company's books as at year-end which is higher as compared to the provisionalworking of the Department of Fertilisers (DoF) GoI which is pending for reconciliationand confirmation and consequent adjustments if any thereof.

Our opinion is not qualified 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 financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. In addition to the matters described in the MaterialUncertainty related to Going Concern section and Emphasis of Matter section we havedetermined the matters described below to be the key audit matters to be communicated inour report.

a. Accounting of subsidy income from Government of India under DBT Scheme

Under Direct Benefit Transfer (DBT) scheme of GoI the Company is entitled to receivesubsidy only upon sale of fertilizer by the dealer to the ultimate beneficiary throughPoint of Sale (PoS) devices. However the Company continues to account subsidy as incomeat the time of sale to dealers as in the earlier scheme considering the reasonableassurance that the sale will take place and subsidy will be received based on experience.Refer Note #27 to the standalone financial statements.

Auditors' Response

Our principal audit procedures included the following: Analysed the scheme framed bythe DoF notified through Notification F. No. D(FA)/2016/DBT dated March 17 2017. Reviewedthe agreement with dealers.

Performed analytical review procedures on the subsidy claim lodged by the Companyfrom the inception of the DBT scheme and subsidy accounted by the Company.

Analysed post Balance Sheet sales through PoS devices in Integrated FertiliserManagement System (iFMS) to assess the sales trend.

Verified industry practise for accounting of subsidy income in post-DBT period.

Compliance with Ind AS 20 on ‘Accounting for Government Grants and Disclosure ofGovernment Assistance'.

b. Sale of 170 acres of land to BPCL

During the year the Company has sold 170 acres of land to Bharat Petroleum CorporationLimited (BPCL) for Rs. 42979 lakhs. The sale is part of the financial re-structuring ofthe Company considered in a meeting chaired by the Principal Secretary to the PrimeMinister besides it is between two Central Public Sector Undertakings. The sale price wasmutually agreed based on the value determined by the District Collector. The sale has theapproval of the administrative ministry of the Company and no objection of the Governmentof Kerala. However value of the said land as per approved valuer of the Company in 2016was Rs. 72100 lakhs resulting in an apparent lower realisation of Rs. 29121 lakhs.

Auditors' Response

Our principal audit procedures on the transaction included the following: Valuation bythe District Collector.

Administrative approval of the Ministry of Chemicals and Fertilisers for transfer ofland and its price.

Minutes of the meeting held on June 6 2017 regarding the sale of 170 acres of land toBPCL held under the chairmanship of Secretary (Fertilisers) GoI attended by JointSecretary Ministry of Petroleum and Natural Gas GoI and representatives of both theCompanies.

Verified sale deed for 151 acres of land (the sale deed for balance land is yet to bereceived though executed). Receipt of entire sale consideration.

No objection certificate from Government of Kerala for transfer of land to BPCL.

Memorandum of Understanding between the Companies for sale of 170 acres of land.

Valuation report of approved valuer in 2016.

c. Purchase of raw material from single vendor without tender

The Company has been importing raw materials from a single vendor without invitingtender. During the year the Company has purchased Rock Phosphate for Rs. 16906 lakhs(previous year Rs. 6926 lakhs) and Phosphoric Acid for Rs. 53692 lakhs (previous year Rs.34175 lakhs). There is no inter-governmental agreement or memorandum of understanding bythe Company with the supplier. According to the Company the party is providing thematerials of required quality at the price for the Indian Market and the Company canprocure entire quantity only from the present supplier.

Auditors' Response

Our principal audit procedures on the transaction included the following: Evaluated theinternal controls relating to import of raw materials.

Verified the purchase documents receipt of material and consumption thereof on theselected sample.

Ensured there is no major rejection of material.

Compared the import price with indigenous price during the previous year in the absenceof any indigenous purchase during the year.

Compared the price in the international market with that of Company's purchase price.

Import purchase is from a Government owned Company. Verified the pattern of purchase inearlier years.

Company's efforts to enter into a government to government agreement for sourcing thematerial.

Brought to the notice of those charged with governance.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

7. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income cash flows and changes in equity of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. 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 financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

8. In preparing the standalone financial statements the Management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Management either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

9. Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also: Identify and assess therisks of material misstatement of the standalone financial statements whether due tofraud or error design and perform audit procedures responsive to those risks and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations 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 theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls. Evaluate the appropriateness of accounting policies used and thereasonableness of accounting 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

10. 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.

11. 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.

12. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters.

We describe these matters in our auditor's 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.

Other Matter

13. We did not audit the financial statements of four areas comprising marketingoffices of the Company included in the standalone financial statements of the Companywhose financial statements reflect total fixed assets of Rs. 105 lakhs (previous year Rs.150 lakhs) as at March 31 2019 and total sales of Rs. 137953 lakhs (previous year Rs.137953 lakhs) for the year ended on that date as considered in the standalone financialstatements. The Company has submitted certain "financial schedules" only whichhave been audited by other auditors whose reports have been furnished to us by theManagement and our opinion on the standalone financial statements in so far as it relatesto the amounts and disclosures included in respect of these areas and our report in sofar as it relates to the aforesaid areas is based solely on the reports of otherauditors.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

14. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in "Annexure A" astatement on the matters specified in paragraphs 3 and 4 of the Order.

15. Based on the verification of books of account of the Company and according toinformation and explanations given to us we give in "Annexure B" areport on the directions/ additional sub-directions issued by the Comptroller and AuditorGeneral of India in terms of section 143(5) of the Act.

16. As required by Section 143(3) of the Act we report that: a. We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. b. In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books and returns generally adequate for the purpose of our audithave been received from the units/ marketing offices not audited by us. c. The reports onthe accounts of the four areas of the Company audited under Section 143(8) of the Act byother auditors have been given to us and have been appropriately dealt with by us inpreparing this report. d. The Balance Sheet the Statement of Profit and Loss includingother comprehensive income the Cash Flow Statement and the Statement of Changes in Equitydealt with by this Report are in agreement with the books of account and with the returnsreceived from four areas not audited by us. e. In our opinion the aforesaid standalonefinancial statements comply with the Indian Accounting Standards specified under Section133 of the Act read with Companies (Indian Accounting Standards) Rules 2015. f. Being agovernment company the provisions of sub section (2) of Section 164 of the Companies Act2013 is not applicable. g. With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure C". h. With respect to theother matters to be included in the Auditor's Report in accordance with Rule 11 of theCompanies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us: i. The Company has disclosedthe impact of pending litigations on its financial position in its standalone financialstatements (Refer Notes #46 to #49) ii. The Company has made provision as required underthe applicable law or accounting standards for material foreseeable losses if any onlong-term contracts including derivative contracts. iii. There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company where applicable.

17. 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 Babu A Kallivayalil & Co.
Chartered Accountants
Firm Registration No. 05374S
Sd/-
N K Alexander
Kochi Partner
May 29 2019 Membership No. 7448

Annexure A to the Independent Auditors' Report

(Referred to in paragraph 14 under ‘Report on Other Legal and RegulatoryRequirements' section of our report) i. In respect of the Company's fixed assets:

(a) The Company has maintained generally proper records showing the particularsincluding quantitative details except situation of fixed assets and impairment losses.

(b) The fixed assets have been stated to be physically verified by the Managementduring the year and are not observed by us. However the physical verification procedureneeds to be strengthened. As explained to us no material discrepancies were noticed onsuch physical verification.

(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 the1980 acres of land held by the Company we have been informed that the original titledeeds of immovable properties of 1179 acres of land are submitted to District CourtErnakulam pledging 80 acres of land as a security against claim of a contractor (ReferNote number 1.2 to the standalone financial statements) title deeds of 553 acres of landis pledged with Banks as security against credit facilities sanctioned (Refer Note number22 to the standalone financial statements) and 145 acres of land is under lease (ReferNote number 1.2 to the standalone financial statements). We have not verified thedocuments in this regard as is not made available for our verification.

We have verified the original title deeds of 41 acres of freehold land and are in thename of the Company. Further title deeds in respect of the following freehold andleasehold immovable properties are not held in the name of the Company.

Particulars Extent of land Gross Block as at March 31 Net block as at March 31
(in acres) 2019 2018 2019 2018
(Rs. in lakhs)
Freehold land 48.49 513* 513* 513* 513*
Leasehold land 14.26 -** -** -** -**

*As provided by Management (Refer Note number 1.3 to the standalone financialstatements).

**The Company has executed a deed of indemnity with the Lessor in respect of theproperty on February 26 2016 wherein it was agreed that the Company is interested tocontinue the lease for a further period of 30 years from April 01 2014 to March 31 2044on execution of fresh lease deed incorporating mutually agreed terms and conditions.However no fresh deed is executed till date though the Company continues to occupy theland and pay the lease rentals (Refer Note number 1.2 to the standalone financialstatements).

ii. In respect of the Company's inventories: (a) The inventories have generally beenphysically verified by the Management as at year-end. In our opinion the frequency ofverification needs to be improved.

(b) In our opinion and according to the information and explanations given to us theprocedure of physical verification of inventories followed by the Management is reasonableand adequate in relation to the size of the Company and the nature of its business.

(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 gypsum and have been properly dealt with in the books of account.

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered under register maintained under section 189 of theCompanies Act 2013 ("the Act") except the interest free advances in the natureof loans doubtful of recovery of Rs. 3819 lakhs (previous year Rs. 3803 lakhs) to ajoint venture company (Refer Note number 6). Being an interest free advance doubtful ofrecovery given to a joint venture company we are unable to comment whether the terms andconditions of the loan is prejudicial to the interest of the Company or not.

iv. 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.

v. 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. vi. We have broadly reviewed the costrecords maintained by the Company pursuant to the Companies (Cost Records and Audit)Rules 2014 prescribed by the Central Government under section 148(1) of the Act and areof the opinion that prima facie the prescribed cost records have been made andmaintained by the Company. We have however not made a detailed examination of therecords with a view to determining whether they are accurate or complete.

vii. According to the information and explanations given to us and records of theCompany examined by us in respect of statutory dues: a. In our opinion the Company hasgenerally been regular in depositing undisputed statutory dues including provident fundemployees state insurance income tax goods and services tax customs duty cess andother material statutory dues applicable to it with the appropriate authorities during theyear.

There were no undisputed amounts payable in respect of provident fund employees stateinsurance income tax goods and services tax customs duty cess and other materialstatutory dues in arrears as at March 31 2019 for a period of more than six months fromthe date they became payable. b. The details of dues towards income tax sales taxservice tax customs duty excise duty value added tax and goods and services tax whichhave not been deposited as at March 31 2019 on account of disputes are given below:

Name of statute Nature of dues Demand– net of payment Period to which dispute relates Forum where dispute pending
(Rs. in lakhs)
Central Excise Act 1944 Excise duty interest and penalty against utilization of CENVAT credit against duty payable. 7236 2006-07 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. 93 2003-04 Commissioner of Central Excise Kochi
Finance Act 1994 Service tax and interest thereon on training fee upfront premium on shares issued and maintenance charges. 293 2003-04 to 2009-10 Customs Excise and Service Tax Appellate Tribunal Bengaluru
Finance Act 1994 Service tax and interest thereon on training fee. 151 2006-07 to 2015-16 Commissioner of Central Excise Kochi
Madhya Pradesh Entry Tax Entry tax 4 1980-84 Board of Revenue (Commercial Tax Tribunal) Gwalior
Sales Tax Act Punjab Sales tax 51 1999 -00 to 2000-01 High Court of Haryana and Punjab
Sales Tax Act Orissa Sales tax 63 1985-1992 High Court of Orissa
Sales Tax Kerala Sales tax 12252 2011-12 High Court of Kerala (Stay order granted) Commercial Taxes Ernakulam
Sales Tax Kerala Sales tax 164 2003-04 to 2012-13
Income Tax Act 1961 Interest on income tax 3 2001-02 Commissioner of Income Tax (Appeals) Kochi
Income Tax Act 1961 Income tax and interest thereon on certain disallowances in assessment. 10 1997-98 High Court of Kerala

viii. 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 Balance Sheet date. The Company has not defaulted in repaymentof loans or borrowings to banks and government except the repayment of interest on loan toGovernment of India.

The details of defaulted interest on loan as on reporting date:
Name of lender and nature Period of default Defaulted amount
(Rs. in lakhs)
Interest accrued and due on loans from 366 days 23902
Government of India 1 day 23902

(Refer Note number 24 to standalone financial statements).

ix. 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 except the inter-corporate loan which has beenapplied by the company for the purpose for which it was raised

(Refer Note number 19.2 of standalone financial statements).

x. 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.

xi. Being a government Company the provisions of Section 197 read with Schedule V ofthe Act regarding managerial remuneration are not applicable to the Company and hencereporting under clause

(xi) of paragraph 3 of the Order is not applicable.

xii. The Company is not a Nidhi Company as prescribed under Section 406 of the Act andhence reporting under clause

(xii) of paragraph 3 of the Order is not applicable. xiii. In our opinion and accordingto the information and explanations given to us the Company is in compliance with Section177 and 188 of the Act where applicable for all transactions with the related partiesand the details of related party transactions have been disclosed in the standalonefinancial statements as required by the applicable Accounting Standards.

xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company during the year the Company has not made anypreferential allotment or private placement of shares or fully or partly paid convertibledebentures and hence reporting under clause (xiv) of paragraph 3 of the Order is notapplicable.

xv. In our opinion and according to the information and explanations given to us andbased on our examination of records of the Company during the year the Company has notentered into any non-cash transactions with its directors or persons connected to itsdirectors and hence provisions of section 192 of the Act are not applicable to theCompany.

xvi. 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 Babu A Kallivayalil & Co.

Chartered Accountants Firm Registration No. 05374S

Sd/-N K Alexander Partner Membership No. 7448

Kochi May 29 2019

Annexure B to the Independent Auditors' Report

(Referred to in paragraph 15 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

AUDIT REPORT ON THE ACCOUNTS FOR THE YEAR ENDED MARCH 31 2019 AS PER DIRECTIONS OFCOMPTROLLER AND

AUDITOR GENERAL OF INDIA (C&AG) UNDER SECTION 143(5) OF THE COMPANIES ACT 2013

Comments of Statutory Auditor
C & AG Directions
1. 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.
2. 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 company's inability to repay the loan If yes the financial impact may be stated. 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 Company's inability to repay the loan.
3.Whether funds received/receivable for specific schemes from central/ state 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 has not received any funds received/ receivable for specific schemes of central/ state 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. Costs 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. NPK
2. Ammonium sulphate
3. Imported MoP.
The closing stock of items transferred under non-Direct Benefit Transfer scheme is valued at cost less subsidies received for the same. Hence during the year the impact of revision of subsidies for fertilizers products viz. NPK Ammonium Sulphate and imported MoP is reflected in valuation of its closing stock.

For Babu A Kallivayalil & Co.

Chartered Accountants Firm Registration No. 05374S

Sd/-N K Alexander Partner Membership No. 7448

Kochi May 29 2019

Annexure C to the Independent Auditors' Report

(Referred to in paragraph 16 (g) under ‘Report on Other Legal and RegulatoryRequirements' section of our report)

REPORT ON THE INTERNAL FINANCIAL CONTROLS

under Clause (i) of sub-section 3 of Section 143 of the Companies Act 2013

We have audited the internal financial controls over financial reporting of FERTILISERSAND CHEMICALS TRAVANCORE LIMITED (‘the Company') as of March 31 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 the Company's policies the safeguardingof its 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 (‘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 the ICAI and deemed tobe prescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wereestablished and maintained and if such controls operated effectively in all materialrespects. Our audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk.

The procedures selected depend on the auditors' judgment including the assessment ofthe risks of material misstatement of the standalone financial statements whether due tofraud or error. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

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

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion 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 2019 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 we areunable to comment on the adequacy of internal financial controls over financial reportingon two out of four marketing areas in the absence of any specific reporting by theauditors of these areas.

For Babu A Kallivayalil & Co.

Chartered Accountants

Firm Registration No. 05374S

Sd/-

N K Alexander

Partner

Membership No. 7448

Kochi May 29 2019

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA

(Indian Audit and Accounts Department Office of the Director General of CommercialAudit and ex-officio Member Audit Board Chennai)

Dated : 31.07.2019

CONFIDENTIAL

DGCA/G-2/4-12/2019-20/46 To

The Chairman and Managing Director

The Fertilisers and Chemicals Travancore Limited Eloor Udyogamandal Kochi-683 501

Sir

Sub: Comments of the Comptroller and Auditor General of India under Section 143(6)(b)of the Companies Act 2013 on the Consolidated and Standalone Financial Statements of TheFertilisers and Chemicals Travancore Limited for the year ended 31 March 2019 ******* Iam to forward herewith the Comments of the Comptroller and Auditor General of India underSection 143(6)(b) of the Companies Act 2013 on the Consolidated and Standalone financialstatements of The Fertilisers and Chemicals Travancore Limited for the year ended 31March 2019. Five copies of Annual Report of your Company may kindly be arranged to beforwarded to this office Receipt of this letter may be acknowledged.

Yours faithfully

Sd/-

(R AMBALAVANAN)

Director General of Commercial Audit and

Ex-officio Member Audit Board Chennai

Encl: Audit comments

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) READWITH SECTION 129(4) OF THE COMPANIES ACT 2013 ON THE CONSOLIDATED FINANCIAL STATEMENTS OFTHE FERTILISERS AND CHEMICALS

TRAVANCORE LIMITED FOR THE YEAR ENDED 31 MARCH 2019

The preparation of Consolidated financial statements of The Fertilisers and ChemicalsTravancore Limited for the year ended 31 March 2019 in accordance with the financialreporting framework prescribed under the Companies Act 2013 (Act) is the responsibilityof the management of the Company. The Statutory Auditor appointed by the Comptroller andAuditor General of India under Section 139(5) read with section 129(4) of the Act isresponsible for expressing opinion on the financial statements under Section 143 read withsection 129(4) of the Act based on independent audit in accordance with the standards onauditing prescribed under section 143(10) of the Act. This is stated to have been done bythem vide their Audit Report dated 29 May 2019.

I on behalf of the Comptroller and Auditor General of India have conducted asupplementary audit of the consolidated financial statements of The Fertilisers andChemicals Travancore Limited for the year ended 31 March 2019 under section 143(6) (a)read with section 129(4) of the act. We conducted a supplementary audit of the financialstatements of The Fertilisers and Chemicals Travancore Limited but did not conductsupplementary audit of the financial statements of FACT-RCF Building Products Limited forthe year ended on that date. .Further section 139(5) and 143(6)(a) of the Act are notapplicable to Kerala Enviro Infrastructure Limited being private entity for appointment oftheir Statutory Auditor and for conduct of Supplementary Audit. Accordingly Comptrollerand Auditor General of India has neither appointed the Statutory Auditor nor conducted thesupplementary audit of the Company. This supplementary audit has been carried outindependently without access to the working papers of the Statutory Auditors and islimited primarily to inquiries of the Statutory Auditors and company personnel and aselective examination of some of the accounting records.

On the basis of my supplementary audit nothing significant has come to my knowledgewhich would give rise to any comment upon or supplement to Statutory Auditor's reportunder section 143(6)(b) of the Act.

For and on the behalf of the Comptroller & Auditor General of India

Sd/- (R. AMBALAVANAN) Director General of Commercial Audit and Ex-officio Member AuditBoardChennai

Place: Chennai Date: 31 July 2019

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THECOMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF

THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED

FOR THE YEAR ENDED 31 MARCH 2019

The preparation of financial statements of The Fertilisers and Chemicals TravancoreLimited for the year ended 31 March 2019 in accordance with the financial reportingframework prescribed under the Companies Act 2013 (Act) is the responsibility of themanagement of the Company. The Statutory Auditor appointed by the Comptroller and AuditorGeneral of India under Section 139(5) of the Act is responsible for expressing opinion onthe financial statements under Section 143 of the Act based on independent audit inaccordance with the Standards on auditing prescribed under section 143(10) of the Act.This is stated to have been done by them vide their Audit Report dated 29 May 2019.

I on behalf of the Comptroller and Auditor General of India have conducted asupplementary audit of the financial statements of The Fertilisers and ChemicalsTravancore Limited for the year ended 31 March 2019 under section 143(6)(a) of the Act.This supplementary audit has been carried out independently without access to the workingpapers of the Statutory Auditors and is limited primarily to inquiries of the StatutoryAuditors and company personnel and a selective examination of some of the accountingrecords.

On the basis of my supplementary audit nothing significant has come to my knowledgewhich would give rise to any comment upon or supplement to Statutory Auditor's reportunder section 143(6) (b) of the Act.

For and on the behalf of the

Comptroller & Auditor General of India

Sd/-

(R. AMBALAVANAN)

Director General of Commercial Audit and

Ex-officio Member Audit BoardChennai

Place: Chennai

Date: 31 July 2019