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Gujarat Narmada Valley Fertilizers & Chemicals Ltd.

BSE: 500670 Sector: Agri and agri inputs
NSE: GNFC ISIN Code: INE113A01013
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OPEN 516.05
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VOLUME 36896
52-Week high 912.00
52-Week low 499.60
P/E 4.10
Mkt Cap.(Rs cr) 8,144
Buy Price 523.95
Buy Qty 14.00
Sell Price 524.50
Sell Qty 33.00
OPEN 516.05
CLOSE 520.05
VOLUME 36896
52-Week high 912.00
52-Week low 499.60
P/E 4.10
Mkt Cap.(Rs cr) 8,144
Buy Price 523.95
Buy Qty 14.00
Sell Price 524.50
Sell Qty 33.00

Gujarat Narmada Valley Fertilizers & Chemicals Ltd. (GNFC) - Auditors Report

Company auditors report

To

The Members of

Gujarat Narmada Valley Fertilizers & Chemicals Limited Report onthe Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements ofGujarat Narmada Valley Fertilizers & Chemicals Limited (the "Company")which comprise the Balance Sheet as at March 31 2022 the Statement of Profit and Lossincluding Other Comprehensive Income the Statement of Changes in Equity and the Statementof Cash Flows for the year then ended 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").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 as amended (the "Act") in themanner so required and give a true and fair view in conformity with Indian AccountingStandard prescribed under Section 133 of the Act read with the Companies (IndianAccounting Standard) Rules 2015 as amended ("Ind AS") and the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2022 profit and total comprehensive income changes in equity and its cash flows forthe year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the‘Auditor's Responsibilities for the Audit of the standalone financialstatements' section of our report. We are independent of the Company in accordancewith the ‘Code of Ethics' issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.

Emphasis of Matter

We draw attention to note 43(B) to the standalone financial statementsregarding a matter relating to demand of Rs 16359.21 crores on the Company by Departmentof Telecommunications (DoT) towards Very Small Aperture Terminal (‘VSAT') andInternet Service Provider (‘ISP') Licenses fee relating to earlier years. Basedon the legal assessment in consultation with Senior Advocates of the said demand theCompany is of the view that no provision is required to be made at this point of time inrespect of above matter.

Our opinion is not modified in respect of the above matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for theFinancial Year ended March 31 2022. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context. We havedetermined the matters described below to be the key audit matters to be communicated inour report.

STANDALONE

We have fulfilled the responsibilities described in the Auditor'sresponsibilities for the audit of the standalone financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the standalone financial statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying standalone financial statements.

Key audit matters How our audit addressed the key audit matter
Recognition and measurement of Urea Subsidy Income
The Urea Subsidy Income is recognized and measured by the Company in accordance with notification/ circular/ policies issued by the Department of Fertilizers Government of India. During the year ended March 31 2022 the Company has recognized Urea Subsidy Income of Rs 1658.90 crores and has outstanding Urea subsidy receivables of Rs 460.13 crores. Our audit procedures included the following:
• We assessed the Company's revenue recognition policy for Urea Subsidy Income.
The measurement of Urea Subsidy Income involves application of relevant regulatory pronouncements and notifications understanding of applicable energy norms and management estimates / judgments including in respect of escalation / de-escalation in the price of the inputs etc. for the year. The recognised subsidy income may deviate on account of revision / changes in such interpretation estimates and judgments arising from notification by the Department of Fertilizers. • We understood evaluated and tested on a sample basis the design and operating effectiveness of key internal controls over recognition and measurement of Urea Subsidy Income.
• We reviewed the relevant regulatory pronouncement in respect of Urea Subsidy Income and verified on a sample basis the claims filed by the Company along-with underlying accounting evidence in respect of such income.
Accordingly recognition and measurement of subsidy income is determined to be a key audit matter for our audit of standalone financial statements. • We tested calculations for Urea Subsidy Income and reviewed estimates for escalation / de-escalation by comparing with actual production cost relevant for measurement of subsidy amount.
• We reviewed follow-ups made by the Company with the Department of Fertilizers Government of India and management assessment of recoverability of aged balances.
• We tested the collections made during the year as well as subsequent period against such subsidy income recognized by the Company.
• We assessed the appropriateness of disclosures in the Standalone financial statements in respect of Urea Subsidy Income.
Valuation of Inventories including Stores and Spares
The Company has total inventory of Rs 976.97 crores which comprises of raw material inventory Rs 362.44 crores work- in-progress inventory Rs 38.58 crores finished goods inventory Rs 80.04 crores trading inventory Rs14.82 crores and stores and spares inventory (including coal inventory of Rs 96.28 crores) Rs 481.09 crores (net of provision for excess inventory) as at March 31 2022. Our audit procedures included the following:
• We reviewed the management policy for physical verification and the documents related to management's physical count procedure actually followed during the year.
• We understood the management process for assessment of value in use/ net realisable value of various class of inventories and making provision for excess inventory.
The Company has created a provision of Rs 21.06 crores against inventory of stores and spares based on evaluation of its usability including for aged items. • We reviewed the management's judgment applied in estimating the value of excess inventory for stores & spares taking into consideration management assessment of the present and future condition of the inventory.
Accordingly appropriateness of the estimates used to identify the valuation of inventories including stores and spares is determined to be a key audit matter for our audit of standalone financial statements. • We performed substantive audit procedures that included review of working prepared by the management for valuation of inventories and observed that appropriate allocation of fixed cost and variable cost is done in respect of Finished Goods and Work in Progress which is in lines with prevailing accounting standards.
• We have performed Physical verification of inventories as at March 31 2022. Our procedures did not identify any material exceptions.
Evaluation of uncertain tax demand positions and other legal litigations
The Company has material uncertain tax demand positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes and significant open legal proceedings under arbitration and courts for various matters with its contractors / vendors and in Government departments continuing from earlier years which are part of Contingent Liability. Our audit procedures included the following:
• We have obtained details of completed tax assessments and demands as at 31 March 2022 from the management.
• We have inquired with the management including in- house legal experts.
Due to complexity involved in these litigation matters management's judgment regarding recognition and measurement of provisions for these legal proceedings is inherently uncertain and might change over time as the outcomes of the legal cases are determined. • We have reviewed the minutes of the meetings and those charged with governance and correspondences between the Company and the external legal experts and other evidences to corroborate management assessment in respect of disputed tax matters.
• We have assessed the management's position through discussions with the in-house legal expert and external legal opinions obtained by the Company (where considered necessary) on both the probability of success in the aforesaid cases and the magnitude of any potential loss.
• We have discussed with the management on the development in the litigations during the year ended 31 March 2022 and provision for contingencies of Rs 55.70 crores made during the FY 2021-22.

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annual report(i.e. Directors' Report Corporate Governance and Management Discussion andAnalysis) but does not include the standalone financial statements and our auditor'sreport thereon.

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whethersuch other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Other Information if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance as required under SA 720 (Revised) ‘The Auditor'sresponsibilities Relating to Other Information'.

Responsibilities of Management for the Standalone Financial Statements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income changes in equity and cash flows 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 the Companies (Indian Accounting Standards) Rules 2015 as amended includingthe Companies (Indian Accounting Standards) Amendment Rules 2020. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error. In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. The Board of Directors are alsoresponsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's 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 financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to thesefinancial statements in place and the operating effectiveness of such 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 thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern. Evaluate the overallpresentation structure and content of the standalone financial statements including thedisclosures and whether the standalone financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements. We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. 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.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the Financial Year ended March 31 2022 and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Other Matter

The standalone financial statements of the Company for the year ended31 March 2021 have been audited by the predecessor auditors. The report of the predecessorauditors dated 17 May 2021 expressed an unmodified opinion. Our opinion is not modified inrespect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

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

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit; (b) In our opinion proper books of account as required by law have been kept bythe Company so far as it appears from our examination of those books; (c) The BalanceSheet the Statement of Profit and Loss including the Statement of Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash flows dealt with by thisReport are in agreement with the books of account; (d) In our opinion the aforesaidstandalone financial statements comply with the Accounting Standards specified underSection 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015 asamended including the Companies (Indian Accounting Standards) Amendment Rules 2020; (e)On the basis of the written representations received from the directors as on March 312022 taken on record by the

Board of Directors none of the directors is disqualified as on March31 2022 from being appointed as a director in terms of Section 164 (2) of the Act; (f)With respect to the adequacy of the internal financial controls over financial reportingof the Company with reference to these standalone financial statements and the operatingeffectiveness of such controls refer to our separate Report in "Annexure 2" tothis report;

(g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of Section 197(16) of the Actas amended: In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid/ provided by the Company to its directorsduring the year is in accordance with the provisions of section 197 read with Schedule Vto the Act; (h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies

(Audit and Auditors) Rules 2014 as amended in our opinion and to thebest of our information and according to the explanations given to us: i. The Company hasdisclosed the impact of pending litigations on its financial position in its standalonefinancial statements – Refer Note 36(A) to the standalone 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 – Refer Note 21 to the standalone financial statements; iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company. iv. (a) The Management hasrepresented that to the best of its knowledge and belief no funds (which are materialeither individually or in the aggregate) have been advanced or loaned or invested (eitherfrom borrowed funds or share premium or any other sources or kind of funds) by the Companyto or in any other person or entity including foreign entity("Intermediaries") with the understanding whether recorded in writing orotherwise that the Intermediary shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theCompany ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries; (b) The management has represented that tothe best of its knowledge and belief no funds (which are material either individually orin the aggregate) have been received by the Company from any person or entity includingforeign entity ("Funding Parties") with the understanding whether recorded inwriting or otherwise that the Company shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party ("Ultimate Beneficiaries") or provide any guarantee securityor the like on behalf of the Ultimate Beneficiaries; (c) Based on the audit proceduresthat has been considered reasonable and appropriate in the circumstances nothing has cometo our notice that has caused us to believe that the representations under sub-clause (i)and (ii) of Rule 11(e) as provided under (a) and (b) above contain any materialmisstatement. v. (a) The final dividend proposed in the previous year declared and paidby the Company during the year is in accordance with Section 123 of the Act asapplicable.

(b) The Board of Directors of the Company have proposed final dividendfor the year which is subject to the approval of the members at the ensuing Annual GeneralMeeting. The amount of dividend proposed is in accordance with section 123 of the Act asapplicable.

For Suresh Surana & Associates LLP
Chartered Accountants
Firm's Reg. No. 121750W/W-100010
Ramesh Gupta
Partner
Place of Signature: Mumbai Membership No.: 102306
Date: May 9 2022 UDIN: 22102306AIQTVQ5045

ANNEXURE ‘1' TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under the heading ‘Report on OtherLegal and Regulatory Requirements' of our report of even date)

(i) In respect of the Company's Property Plant and Equipment andIntangible Assets :

(a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of its Property Plant andEquipment and relevant details of Right of Use Assets.

(B) The Company has maintained proper records showing full particularsof its Intangible assets.

(b) The Company has a regular program of physical verification ofProperty Plant and Equipment in a phased manner so as to cover all the assets once everythree years which in our opinion is reasonable having regard to size of the Company andnature of its assets. Pursuant to the program a portion of the Property Plant andEquipment have been physically verified by the management during the year. Thediscrepancies noticed on physical verification of Property Plant and Equipment were notmaterial and the same have been properly dealt with in the books of account. (c) Accordingto the information and explanations given to us by the management the title deeds ofimmovable properties included in property plant and equipment are held in the name of theCompany. In respect of immovable properties of land that have been taken on lease anddisclosed as property plant and equipment (Note 4) in the financial statements the leaseagreement for two parcels of the leasehold land are yet to be entered in the name of theCompany although the Company is the lessee as per the arrangement as mentioned below.

Description of property Gross carrying value Held in name of Whether promoter director or their relative or employee Period held - indicate range where appropriate Reason for not being held in the name of the Company*
Land leasehold 43.05 GIDC Bharuch No September 4 2012 The lease deed for plots allotted are not executed in favour of Company because some of the portion of the lands are Gaucher and Government Land are falling in the plot allotted to the Company and lease will be executed after allotment of Gaucher and Government Land to GNFC.*not in dispute

(d) The Company has not revalued its Property Plant and Equipment(including Right of Use Assets) and Intangible assets during the year.

(e) According to information and explanations given to us noproceedings have been initiated or are pending against the Company as of March 31 2022for holding any benami property under the Benami Transactions (Prohibition) Act 1988 (asamended in 2016) and rules made thereunder.

(ii) In respect of the Inventories according to the information andexplanations given to us and on the basis of our examination of the records of theCompany: (a) Physical verification of inventory (i.e. stores and spares including capitalstores) has been conducted by the management at reasonable intervals during the year andno material discrepancies were noticed on such physical verification. In our opinion thefrequency of verification is reasonable. The discrepancies noticed on physicalverification of stock as compared to book records were not material and the same have beenproperly dealt with in the books of account.

(b) The Company has been sanctioned working capital limits in excess offive crores rupees in aggregate from a bank on the basis of security of current assets.According to information and explanations given to us and the records examined by us thequarterly returns filed by the Company during the year with such bank are in agreementwith books of account except as under.

(Rs Crores)
Quarter ended Nature of current Assets / Liabilities where differences were observed Amount disclosed as per quarterly return / statement Amount as per books of Amount of Difference Reasons for material difference
Q1 Inventory - Finished goods 238.37 237.65 0.72 Immaterial
Trade receivables 599.37 591.63 7.74 Note – 1
Advances to suppliers 36.85 35.20 1.65 Note – 2
Trade payable 440.93 471.80 (30.87) Note – 3
Q2 Trade receivables 658.33 652.13 6.20 Note – 1
Advances to suppliers 59.25 57.60 1.65 Note – 2
Trade payable 452.18 461.09 (8.91) Note – 3
Q3 Advances to suppliers 43.99 42.35 1.64 Note – 2
Trade payable 409.99 449.20 (39.21) Note – 3
Q4 Inventory - raw material 346.81 362.44 (15.63) Note – 4
Inventory - stores & spares 503.97 495.91 8.06 Note – 5
Inventory - finished goods 77.53 80.04 2.51 Note – 6
Trade receivables 610.20 625.10 (14.90) Note – 7
Advances to suppliers 64.33 62.59 1.64 Note – 2
Trade payable 612.38 631.20 (18.82) Note – 8

Notes:

1) Reclassification adjustments with advances from customers notconsidered in returns / statements submitted to bank.

2) The amount disclosed as per quarterly returns / statementsreconciles with gross book balance without adjustment of provision

3) Accrued expenses / reclassification adjustments not considered inreturns / statements submitted to bank.

4) In transit inventory related to oil was not considered in returns /statements submitted to bank.

5) Provision for excess inventory was recognised as a subsequent eventhence not considered in returns / statements submitted to bank.

6) Inventory valuation impact was recognised subsequent to submissionof return / statement to bank hence not considered in returns / statements submitted tobank.

7) Differential freight subsidy recognised as a subsequent event hencenot considered in returns / statements submitted to bank.

8) Accrued expenses / reclassification adjustments and liability for intransit inventory related to oil not considered in returns / statements submitted to bank.

STANDALONE

(iii) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not providedguarantees security or granted advances in the nature of loans secured or unsecured tocompanies firms limited liability partnership or any other parties during the year. TheCompany has made investments granted loans to companies and other parties in respect ofwhich the requisite information is provided in clause (a) to (f) as below to the extentapplicable. The Company has not made any investments in or provided any guarantee orsecurity to firms or limited liability partnership.

(a) Based on the audit procedures carried out by us and as per theinformation and explanations given to us the Company has provided loans as below:

(Rs Crores)
Particulars Loans
Aggregate amount of loan given during the year
- Other than the related parties
Employees 35.93
Company 2400.00
Balance outstanding as at balance sheet date
- Other than the related parties
Employees 174.29
Company 2400.00

(b) According to the information and explanations given to us and basedon the audit procedures carried out by us in our opinion the investments made during theyear and the terms and conditions of the grant of loans provided during the year are primafacie not prejudicial to the interest of the Company. The Company has not provided anyguarantee during the year.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company in the case of loans given inour opinion the repayment of principal and payment of interest has been stipulated andthe repayments or receipts have been regular. Further the Company has not given anyadvances in the nature of loans to any party during the year.

(d) According to the information and explanations given to us and onthe basis of our examination of the records of the Company there is no overdue amount formore than ninety days in respect of loans given. Further the Company has not given anyadvances in the nature of loans to any party during the year.

(e) According to the information and explanations given to us and onthe basis of our examination of the records of the Company there is no loan or advance inthe nature of loan granted falling due during the year which has been renewed or extendedor fresh loans granted to settle the overdues of existing loans given to same parties. (f)According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not granted any loans oradvances in the nature of loans either repayable on demand or without specifying any termsor period of repayment.

(iv) According to information and explanations given to us the Companyhas not granted any loan or made investment in or provided any guarantee or security tothe parties covered under Section 185 and 186 of the Act during the year. Accordingly theprovisions of clause 3(iv) of the Order are not applicable to the Company.

(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits or amounts which are deemed to bedeposits within the meaning of Sections 73 to 76 of the Act and the rules made thereunder.Accordingly reporting under clause 3(v) of the Order are not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section 148(1) of the Companies Act 2013 related to the manufacture offertilizer and industrial products and for the services provided by the Company. In ouropinion prima facie the specified accounts and records have been made and maintained. Wehave not however made a detailed examination of the same. (vii) In respect of statutorydues : (a) According to the information and explanations given to us the Company has beenregular in depositing the undisputed statutory dues including provident fundemployees' state insurance income tax goods and service tax duty of customs cessand any other statutory dues as applicable to the appropriate authorities. There are noundisputed amounts payable in respect of aforesaid statutory dues which were outstandingas on the last day of the Financial Year for a period of more than six months from thedate they became payable.

(b) According to the information and explanations given to us and therecords of the Company examined by us the dues of income-tax sales-tax duty of excisevalue added tax and cess as at 31 March 2022 which have not been deposited on account ofany dispute are as follows:

Name of Statute Nature of dues Forum where dispute is pending Period to which the amount related Amount involved (Rs Crores) Amount Unpaid* (Rs Crores)
Central Excise Act 1944 Excise Duty Principal Commissioner Custom House Kandla FY 2015-16 0.05 0.05
Commissioner Appeals Baroda FY 2009-13 131.09 131.09
Central Sales Tax Value Added Gujarat Value FY 2006-07 15.48 14.98
Act 1994/Gujarat Value Added Tax Act 2004 Tax/Central Sales tax added Tax tribunal FY 2007-08 20.93 20.43
Commercial Tax Department Government of Madhya Pradesh FY 2015-16 0.01 0.01
The Income Tax Income Tax Commissioner of Income-tax (Appeals) AY 2008-09 1.07 1.07
Act 1961 AY 2015-16 0.14 0.14
AY 2016-17 0.11 0.11
AY 2017-18 19.86 19.86
AY 2018-19 84.69 84.69
Income-tax AY 2012-13 0.40 0.40
AppellateTribunal AY 2013-14 27.39 27.39
High Court AY 2009-10 2.07 2.07
Supreme Court AY 2010-11 3.54 3.54
AY 2011-12 3.83 3.83

* Net of amount paid under protest

(viii) According to the information and explanations given to us therewere no unrecorded transactions that have been surrendered or disclosed as income duringthe year in the tax assessments under the Income Tax Act 1961 (43 of 1961).

(ix) (a) According to information and explanations given to us theCompany has not defaulted in repayment of dues to any lender. Accordingly reporting underclause 3(ix)(a) of the Order is not applicable to the Company.

(b) According to information and explanations given to us the Companyhas not been declared willful defaulter by any bank or financial institution or otherlender. Accordingly reporting under clause 3(ix)(b) of the Order is not applicable to theCompany.

(c) According to information and explanations given to us the Companyhas not obtained any term loan. Accordingly reporting under clause 3(ix)(c) of the Orderis not applicable to the Company.

(d) According to information and explanations given to us and on thebasis of our examination of the records of the Company funds raised on short term basishave prima facie not been utilised for long term purposes by the Company.

Accordingly reporting under clause 3(ix)(d) of the Order is notapplicable to the Company.

(e) According to information and explanations given to us the Companydid not have any subsidiary or joint venture during the year. Further the Company has nottaken any funds to meet the obligations of its associate Company.

Accordingly reporting under clause 3(ix)(e) of the Order is notapplicable to the Company.

(f) According to information and explanations given to us the Companydid not have any subsidiary or joint venture during the year. Further the Company has notraised any loans on the pledge of securities held in its associate Company. Accordinglyreporting under clause 3(ix)(f) of the Order is not applicable to the Company.

(x) (a) According to the information and explanations given to us theCompany has not raised moneys by way of public offer (including debt instruments) duringthe year. Accordingly reporting under clause 3(x)(a) of the Order is not applicable tothe Company.

(b) According to information and explanations given to us the Companyhas not made any preferential allotment or private placement of shares or convertibledebentures (fully partially or optionally convertible) during the year.

Accordingly reporting under clause 3(x)(b) of the Order is notapplicable to the Company.

(xi) (a) Based upon the audit procedures performed and according to theinformation and explanations given to us we report that no fraud by the Company or on theCompany has been noticed or reported during the year.

(b) According to information and explanations given to us no reportunder sub-section (12) of Section 143 of the Act has been filed in Form ADT-4 asprescribed under Rule 13 of Companies (Audit and Auditors) Rules 2014 with the CentralGovernment during the year and up to the date of this report.

(c) The Company is having whistle blower mechanism and as per theinformation provided to us no whistle blower complaints received by the Company duringthe year (and upto the date of this report) while determining the nature timing andextent of our audit procedures.

(xii) According to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly reporting under clause 3(xii) of the Order isnot applicable to the Company.

(xiii) According to the information and explanations given to us inour opinion transactions with related parties are in compliance with Sections 177 and 188of the Act. The details of such related party transactions have been disclosed in thefinancial statements as required by the applicable accounting standards.

(xiv) (a) According to the information and explanations given to us inour opinion and based on our examination the Company has an adequate internal auditsystem commensurate with the size and nature of its business.

(b) We have considered the internal audit reports for the year underaudit and covering the period upto March 31 2022. (xv) According to the information andexplanations given to us and based on our examination of the records of the Company theCompany has not entered into any non-cash transactions with directors or persons connectedwith them during the year.

Accordingly provisions of Section 192 of the Companies Act 2013 arenot applicable to the Company.

(xvi) In respect of the Reserve Bank of India Act 1934:

(a) In our opinion the Company is not required to be registered underSection 45-IA of the Reserve Bank of India Act 1934. Hence reporting under clause3(xvi)(a) (b) and (c) of the Order is not applicable to the Company.

(b) In our opinion there is no core investment company within theGroup (as defined in the Core Investment Companies (Reserve Bank) Directions 2016) andaccordingly reporting under clause 3(xvi)(d) of the Order is not applicable to theCompany.

(xvii) According to the information and explanations given to us theCompany has not incurred any cash losses during the Financial Year covered by our auditand in the immediately preceding Financial Year.

(xviii)There has been no resignation of the statutory auditors duringthe year. Accordingly Clause 3(xviii) of the Order is not applicable to the Company.

(xix) According to the information and explanations given to us and onthe basis of the financial ratios ageing and expected dates of realization of financialassets and payment of financial liabilities other information accompanying the financialstatements our knowledge of the Board of Directors and management plans and based on ourexamination of the evidence supporting the assumptions nothing has come to our attentionwhich causes us to believe that any material uncertainty exists as on the date of theaudit report that the Company is not capable of meeting its liabilities existing at thedate of balance sheet as and when they fall due within a period of one year from thebalance sheet date. We however state that this is not an assurance as to the futureviability of the Company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the Company as and when they fall due.

(xx) The Company has fully spent the required amount towards CorporateSocial Responsibility (CSR) and there is no unspent amounts towards Corporate SocialResponsibility (CSR) requiring a transfer to a Fund specified in Schedule VII to theCompanies Act or Special Account in compliance with provision of sub-section (6) ofSection 135 of the said Act. Accordingly reporting under clause 3(xx) of the Order is notapplicable for the year to the Company.

For Suresh Surana & Associates LLP

Chartered Accountants
Firm's Reg. No. 121750W/W-100010
Ramesh Gupta
Partner
Place of Signature: Mumbai Membership No.: 102306
Date: May 9 2022 UDIN: 22102306AIQTVQ5045

STANDALONE

Annexure ‘2' to the Independent Auditor's Report

(Referred to in paragraph 2(f) under the heading ‘Report on OtherLegal and Regulatory Requirements' of our report of even date)

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (the "Act")

We have audited the internal financial controls over financialreporting of Gujarat Narmada Valley Fertilizers & Chemicals

Limited (the "Company") as of March 31 2022 in conjunctionwith our audit of the standalone financial statements of the

Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India(‘ICAI'). 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 theCompany's 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.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting with reference to these standalonefinancial statements based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 as amended to the extent applicable to an audit ofinternal financial controls and issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting with reference to these standalone financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls over financial reporting with reference tothese standalone financial statements and their operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting with reference to these standalonefinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlsover financial reporting with reference to these standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting

A Company's internal financial controls over financial reportingis a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A Company's internalfinancial controls over financial 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) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorisations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on thefinancial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting With Reference to these Standalone Financial Statements

Because of the inherent limitations of internal financial controls overfinancial reporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls over financial reporting with reference to these standalonefinancial statements and such internal financial controls over financial reporting withreference to these standalone financial statements were operating effectively as at March31 2022 based on the internal control over financial reporting criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.

For Suresh Surana & Associates LLP
Chartered Accountants
Firm's Reg. No. 121750W/W-100010
Ramesh Gupta
Partner
Place of Signature: Mumbai Membership No.: 102306
Date: May 9 2022 UDIN: 22102306AIQTVQ5045

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