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Nagarjuna Fertilizers & Chemicals Ltd.

BSE: 539917 Sector: Agri and agri inputs
NSE: NAGAFERT ISIN Code: INE454M01024
BSE 00:00 | 16 Nov 8.18 -0.19
(-2.27%)
OPEN

8.33

HIGH

8.60

LOW

8.07

NSE 00:00 | 16 Nov 8.10 -0.30
(-3.57%)
OPEN

8.40

HIGH

8.60

LOW

8.00

OPEN 8.33
PREVIOUS CLOSE 8.37
VOLUME 49703
52-Week high 28.60
52-Week low 8.07
P/E
Mkt Cap.(Rs cr) 489
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 8.33
CLOSE 8.37
VOLUME 49703
52-Week high 28.60
52-Week low 8.07
P/E
Mkt Cap.(Rs cr) 489
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Nagarjuna Fertilizers & Chemicals Ltd. (NAGAFERT) - Auditors Report

Company auditors report

To

The Members of

Nagarjuna Fertilizers and Chemicals Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying Standalone Ind AS Financial Statements of NagarjunaFertilizers and Chemicals Limited ("the Company") which comprise the BalanceSheet as at March 31 2018 and the Statement of Profit and Loss

(including Other Comprehensive Income) the Cash Flow Statement and the Statement ofChanges in Equity for the year then ended and a summary of the significant policies andother explanatory information (herein referred to as "the Standalone Ind AS FinancialStatements").

ManagementRs s responsibility for the Standalone Financial

Statements

The CompanyRs s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Standalone Ind AS Financial Statements that give a true and fair view of the stateof affairs(financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities selection and application of appropriate accounting policiesmaking judgments and estimates that are reasonable and prudent and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Standalone Ind AS Financial Statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these Standalone Ind AS FinancialStatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder. We conductedour audit of the Standalone Ind AS Financial Statements in accordance with the Standardson Auditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the Standalone Ind AS Financial Statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Ind AS Financial Statements. The procedures selecteddepend on the auditorRs s judgment including the assessment of the risks of materialmisstatement of the Standalone Ind AS Financial Statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the

CompanyRs s preparation of the Standalone Ind AS Financial Statements that give a trueand fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the CompanyRs sDirectors as well as evaluating the overall presentation of the Standalone Ind ASFinancial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone Ind AS Financial Statements.

Opinion

Inouropinionandtothebestofourinformationandaccording to the explanations given to usthe aforesaid Standalone Ind AS Financial Statements give the information required by theAct in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including the Ind AS of the state ofaffairs (financial position) of the Company as at March 31 2018 and its loss (financialperformance including other comprehensive income) its cash flows and the changes inequity for the year ended on that date.

Emphasis of Matter

Attention is invited to following notes to the Standalone Ind AS Financial Statements:a) Note 5.1 regarding the provision for diminution in the value of investments made forthe value of Investment in Jaiprakash Engineering and Steel Company Limited (JESCO) asubsidiary and its adequacy based on Management assessment for the reasons stated in thesaid note b) Note 25.1 regarding recognizing Income from urea operations includingreimbursement claims for additional fixed cost input escalation/de-escalation and forproduction beyond reassessed capacity based on prices and provisions applicable under

NPS III Modified NPS III pending notification of final prices under New Urea Policy2015and consequential adjustments if any that may arise. c) Note 36.1.1regardingArbitration awards passed against the Company for USD 15275688 GBP 1145630 and INR221.39 Lakhs; the impact of which has not been recognised in the Financial Statements forreasons stated in the said note;

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

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (AuditorRs s Report) Order 2016 ("theOrder") issued by the Central Government in terms of Section 143(11) of the Act wegive in "Annexure B" a statement on the matters specified in paragraphs 3 and 4of the Order.

2) As required by Section143(3)of the Act we report that: a) We have sought andobtained all the information and explanation swhich 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. c) The Balance Sheet the Statement of Profit and Loss theCash Flow Statement and Statement of Changes in Equity dealt with by this Report are inagreement with the books of account d) In our opinion the aforesaid Standalone Ind ASFinancial Statements comply with the Indian Accounting Standards prescribed under section133 of the Act. e) On the basis of the written representations received from the directorsas on 31st March 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in terms of Section164(2) of the Act. f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". g) With respect to the other matters tobe included in the AuditorRs s Report in accordance with Rule11 of the Companies (AuditandAuditors) Rules2 014 in our opinion and to the be sto fourinformationandaccordingtotheexplanationsgiventous: i. The Company has disclosed the impactof pending litigations on its financial position in its Standalone

Ind AS Financial Statements; –Refer Note 36.1 to the Standalone Ind AS FinancialStatements. ii. The Company did not as at March 31 2018 have any material foreseeablelosses relating to long-term contracts including derivative contracts. iii. There were noamounts as at 31st March 2018 which are required to be transferred to theInvestor Education and Protection Fund by the Company.

for M. Bhaskara Rao & Co
Chartered Accountants
Firm Registration No. 000459S
Anilkumar Mehta
Partner
Hyderabad Membership No.14284
May 25 2018

Re: Nagarjuna Fertilizers and Chemicals Limited

Annexure A to the Independent AuditorsRs report

((Referred to in paragraph 2(f) under Rs Report on Other Legal and RegulatoryRequirementsRs section of our report to the Members of Nagarjuna Fertilizers and ChemicalsLimited of even date)

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

We have audited the internal financial controls over financial reporting of NagarjunaFertilizers and Chemicals Limited ("the Company") as of March 31 2018 inconjunction with our audit of the Standalone Ind AS Financial Statements of the Companyfor the year ended on that date.

ManagementRs s Responsibility for Internal Financial

Controls

The CompanyRs 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 FinancialReporting" issued by the Institute of Chartered Accountants of India (Rs ICAIRs ).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to companyRs s policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act

2013.

AuditorsRs Responsibility

Our responsibility is to express an opinion on the CompanyRs 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 FinancialReporting" (the "Guidance Note") and the Standards on Auditing issued byICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls. 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 was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk whether amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditorsRs judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the CompanyRs s internal financial controls system over financialreporting.

Meaning of Internal Financial Controls over Financial

Reporting

A CompanyRs 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 companyRs s internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompanyRs 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

for M. Bhaskara Rao & Co
Chartered Accountants
Firm Registration No. 000459S
Anilkumar Mehta
Partner
Hyderabad Membership No.14284
May 25 2018

Re: Nagarjuna Fertilizers and Chemicals Limited

ANNEXURE B TO THE INDEPENDENT AUDITORSRs REPORT

(Referred to in paragraph 1 under Rs Report on Other Legal and RegulatoryRequirementsRs section of our report of even date)

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situationof its fixed assets. (b) A major portion of the fixedassets have been physically verified during the year by the Management in accordance witha programme of verification which in our opinion provides for physical verification ofall the fixed assets at reasonable intervals having regard the size of the Company and thenature of its assets. According to the information and explanations given to us thediscrepancies noticed on such verification were not material and have been properly dealtwith in the books of account.

(c) According to the information and explanations furnished to us and based on ourreview title deeds of its immovable properties are not held in the name of the Company inrespect of land to the extent of 340.11 acres in 104 cases situated in Nellore DistrictAndhra Pradesh in the possession of the Company pending registration of the titlesthereto in its name.

(ii) According to the information and explanations furnished to us in respect of theCompanyRs s inventoriesphysical verification of inventories at plants and warehouses hasbeen conducted by the management at reasonable intervals during the year. In our opinionhaving regard to the nature of its business and location of its stocks the frequency ofverification is reasonable. Further the discrepancies noticed on such verificationbetween the physical stocks and the respective records were not material in relation tothe size of operations of the Company and the same have been properly dealt with in thebooks 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 Liability

Partnerships or other parties covered in the Register maintained under Section 189 ofthe Companies Act 2013. Accordingly reporting under clauses (a) (b) and (c) ofparagraph 3(iii) of the Order does not arise.

(iv) According to the information and explanations furnished to us the Company has notgranted any loans nor made any investments or given any guarantees or securities duringthe year to any of the parties specified in Sections 185 and 186 of the Companies

Act 2013 except Moneys advances to Nagarjuna Oil

Refinery Limited pursuant to the Composite Scheme of

Arrangement and Amalgamation which the Company has been legally advised does not comeunder the purview of the aforesaid sections.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits. Accordingly reporting under provisions ofparagraph 3(v) of the Order does not arise. (vi) We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Rules in force made by the Central Governmentunder sub-section (1) of Section 148 of the Companies Act 2013 and are of the opinionthat prima facie the prescribed cost records have been made and maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete. (vii) According to the information and explanationsgiven to us in respect of statutory dues: (a) There were a few delays in depositingundisputed statutory dues including Provident Fund EmployeesRs State InsuranceIncome-tax GST Sales Tax Wealth Tax Service Tax Customs Duty Excise Duty ValueAdded Tax Cess and other material statutory dues applicable to it with the appropriateauthorities and there were no amounts payable in respect of the aforesaid undisputedstatutory dues in arrears as at March 31 2018 for a period of more than six months fromthe date they became payable.

(b) Details of dues of Income Tax Sales Tax Service Tax Customs Duty Excise DutyValue added Tax which have not been deposited as on March 31 2018 on account of disputeare as below:

Name of statute Nature of dues Amount ( Rs in lakhs) Period to which the amount relates Forum where dispute is pending
Income Tax Tax 32.15 2012-13 ITAT Hyderabd
102.00 2013-14 ITAT Hyderabd
174.00 2014-15 CIT(A)
Hyderabad
VAT & CST Tax 7.92 2008-09 DC Appeals
Maharastra
VAT 0.78 2009-10 DC Appeals
Ernakulam
VAT 6.93 2011-12 DC Appeals
Ernakulam
CST 139.00 2013-14 AP Appellate
Tribunal –
Visakhapatnam
VAT 463.72 2014-15 ACCT Trichy
VAT 20.95 2015-16 AP High Court
Central Tax 103.00 2009-10 & CESTAT
Excise 2010-11 (Dec Bangalore
2009 to July
2010)
Service Tax Tax 1.88 2013-14 CSETAT
Hyderabad
10.55 2013-14 Commissioner
Appeals Vizag
Total 1062.88

(viii) According to be information and explanations given to us the company has notdefaulted in repayment of loans or borrowings to financial institutions banks governmentor from debenture holders. (ix) The Company has not raised moneys by way of initial publicoffer or further public offer (including debt instruments). In our opinion and accordingto the information and explanations given to us the term loans have been applied by theCompany during the year for the purposes for which they were raised.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the

Company by its officers or employees has been noticed or reported during the year. (xi)In our opinion and according to the information and explanations given to us the Companyhas paid / provided managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theCARO 2016 is not applicable. (xiii) In our opinion and according to the information andexplanations given to us the Company is in compliance with Section 177 and 188 of theCompanies Act 2013 where applicable for all transactions with the related parties andthe details of related party transactions have been disclosed in the Standalone Ind ASFinancial Statements as required by the applicable accounting standards (xiv) During theyear the Company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures and hence reporting under clause (xiv) of CARO 2016is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of section 192 of the Companies Act 2013 are notapplicable.

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

for M. Bhaskara Rao & Co
Chartered Accountants
Firm Registration No. 000459S
Anilkumar Mehta
Partner
Hyderabad Membership No.14284
May 25 2018