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Paradeep Phosphates Ltd.

BSE: 543530 Sector: Agri and agri inputs
NSE: PARADEEP ISIN Code: INE088F01024
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VOLUME 283012
52-Week high 72.00
52-Week low 37.45
P/E 17.18
Mkt Cap.(Rs cr) 4,757
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 58.10
CLOSE 58.45
VOLUME 283012
52-Week high 72.00
52-Week low 37.45
P/E 17.18
Mkt Cap.(Rs cr) 4,757
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Paradeep Phosphates Ltd. (PARADEEP) - Auditors Report

Company auditors report

To the Members of Paradeep Phosphates Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of ParadeepPhosphates Limited (the "Company") which comprise the standalone balance sheetas at 31 March 2022 and the standalone statement of profit and loss (including othercomprehensive income) standalone statement of changes in equity and standalone 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 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2022and its profit and other comprehensive loss changes in equity and its cash flows for theyear ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our opinion on the standalone financialstatements.

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 of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Description of Key Audit Matter

The key audit matter How the matter was addressed in our audit
Recognition and recoverability of subsidy revenue (refer notes 8 and 20 to the Standalone Financial Statements) In view of the significance of the matter we performed the following procedures:
The Company recognizes the subsidy revenue from the Department of Fertilisers Government of India ('GoI'). The revenue is recognised as per Nutrient Based Subsidy Policy ('NBS Policy') for Phosphatic and Potassic fertilisers at the time of sale of goods to its customers. • Evaluated the design implementation and operating effectiveness of internal controls for recognition and recoverability of subsidy revenue.
Subsidy revenue is recognized on the basis of rates notified from time to time by the Department of Fertilisers Government of India in accordance with NBS Policy. It is recognised on the quantity of fertilisers sold by the Company. Further recognition and realisability of subsidy income is subject to various conditions as per the GoI Policy. During the year the Company has earned Rs 397722.70 lakhs from subsidy revenue and balance recoverable as at 31 March 2022 is Rs 87555.69 lakhs. • Read the relevant notifications and circulars issued by the GoI from time to time with regard to subsidy policies.
In view of the significance of subsidy revenue and significant judgements involved around the interpretation and satisfaction of conditions specified in GoI policy we have considered recognition and recoverability of subsidy income as a key audit matter. • Tested the NBS rates considered by the Company for the product subsidy with the applicable circulars and notifications.
• Reconciled the sales quantity considered for subsidy revenue with the actual sales made by the Company.
• Evaluated the Company's assessment regarding compliances with relevant conditions as specified in the notifications and policies relating to subsidy.
• Understood and challenged the basis of judgements made in relation to the relevant notifications/circulars including past precedence and subsequent evidence as applicable.
• For evaluating the recoverability of receivables tested the ageing analysis and assessed the information used to determine the recoverability of receivables by considering the historical trends and subsequent collections.

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

The Company's Management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's Board of Director's Report but does not include the standalone financialstatements and our auditor's report 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 whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Management's and Board of Directors' Responsibilities for theStandalone Financial Statements

The Company's Management and Board of Directors are responsible for thematters stated in Section 134(5) of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view of the state of affairsprofit/ loss and 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 Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements the Management andBoard of Directors are responsible for assessing the Company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.

The Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Standalone FinancialStatements

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 financialstatements 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 the Management andBoard of Directors.

• Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting in preparation of standalonefinancial statements and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone 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 conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters 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 wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our 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 of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 Section 143(11) of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

2. (A) 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 beenkept by the Company so far as it appears from our examination of those books.

c) The standalone balance sheet the standalone statement of profit andloss (including other comprehensive income) the standalone statement of changes in equityand the standalone statement of cash flows dealt with by this Report are in agreement withthe books of account.

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on 31 March 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2022 from being appointed as a director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditor's) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

a) The Company has disclosed the impact of pending litigations as at 31March 2022 on its financial position in its standalone financial statements - Refer Note29 to the standalone financial statements.

b) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

c) There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

d) (i) The management has represented that to the best of itsknowledge and belief no funds have been advanced or loaned or invested (either fromborrowed funds or share premium or any other sources or kind of funds) by the Company toor in any other persons or entities including foreign entities("Intermediaries") with the understanding whether recorded in writing orotherwise that the Intermediary shall directly or indirectly lend or invest in otherpersons or entities identified in any manner whatsoever by or on behalf of the Company("Ultimate Beneficiaries") or provide any guarantee security or the like onbehalf of the Ultimate Beneficiaries.

(ii) The management has represented that to the best of its knowledgeand belief no funds have been received by the Company from any persons or entitiesincluding foreign entities ("Funding Parties") with the understanding whetherrecorded in writing or otherwise that the Company shall directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Parties ("Ultimate Beneficiaries") or provide any guaranteesecurity or the like on behalf of the Ultimate Beneficiaries.

(iii) Based on such audit procedures as considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under subclause (d) (i) and (d) (ii) contain any materialmisstatement.

e) The Company has neither declared nor paid any dividend during theyear.

(C) With respect to the matter to be included in the Auditor's Reportunder Section 197(16) of the Act:

In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) ofthe Act which are required to be commented upon by us.

ANNEXURE A

to the Independent Auditor's Report on the Financial Statements ofParadeep Phosphates Limited for the year ended 31 March 2022

(Referred to in paragraph (1) under 'Report on Other Legal andRegulatory Requirements' section of our report of even date)

(i) (a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.

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

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has a regularprogramme of physical verification of its Property Plant and Equipment by which allproperty plant and equipment are verified in a phased manner over a period of 3 years. Inaccordance with this programme certain property plant and equipment were verified duringthe year. In our opinion this periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its assets. No discrepancies werenoticed on such verification.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties (other than immovable properties where the Company is the lessee and the leasesagreements are duly executed in favour of the lessee) disclosed in the standalonefinancial statements are held in the name of the Company except for the following whichare not held in the name of the Company:

Description of property Gross carrying value (Rs. in lakhs) Held in the 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. Also indicate if in dispute
Freehold land 27.94 Not applicable Not applicable 1982-85 Delay on account of administrative formalities

(d) 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 revaluedits Property Plant and Equipment or intangible assets during the year.

(e) According to information and explanations given to us and on thebasis of our examination of the records of the Company there are no proceedings initiatedor pending against the Company for holding any benami property under the Prohibition ofBenami Property Transactions Act 1988 and rules made thereunder.

(ii) (a) The inventory except goods-in-transit and stocks lying withthird parties has been physically verified by the management during the year. For stockslying with third parties at the year-end written confirmations have been obtained and forgoods-in-transit subsequent evidence of receipts has been linked with inventory records.In our opinion the frequency of such verification is reasonable and procedures andcoverage as followed by management were appropriate. No discrepancies were noticed onverification between the physical stocks and the book records that were more than 10% inthe aggregate of each class of inventory.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has beensanctioned working capital limits in excess of five crore rupees in aggregate from banksor financial institutions on the basis of security of current assets. In our opinion thequarterly returns or statements filed by the Company with such banks or financialinstitutions are in agreement with the books of account of the Company except as follows:

Quarter Name of bank Particulars Amount as per books of account (Rs. in lakhs) Amount as reported in the quarterly return/ statement (Rs. in lakhs) Amount of difference Whether return/ statement subsequently rectified
30 June 2021 State Bank of India Other current assets 104596.05 107493.64 2897.59 No

(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 made anyinvestments provided guarantee or security or granted any loans or advances in the natureof loans secured or unsecured to companies firms limited liability partnerships or anyother parties during the year. Accordingly provisions of clauses 3(iii)(a) to 3(iii)(f)of the Order are not applicable to the Company.

(iv) According to the information and explanations given to us and onthe basis of our examination of records of the Company the Company has neither made anyinvestments nor has it given loans or provided guarantee or security during the year andtherefore the relevant provisions of Sections 185 and 186 of the Companies Act 2013("the Act") are not applicable to the Company. Accordingly clause 3(iv) of theOrder is not applicable.

(v) The Company has not accepted any deposits or amounts which aredeemed to be deposits from the public. Accordingly clause 3(v) of the Order is notapplicable.

(vi) We have broadly reviewed the books of accounts maintained by theCompany pursuant to the rules prescribed by the Central Government for maintenance of costrecords under Section 148(1) of the Act in respect of its manufactured goods (and/orservices provided by it) and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not carried out a detailedexamination of the records with a view to determine whether these are accurate orcomplete.

(vii) (a) The Company does not have liability in respect of Servicetax Duty of excise Sales tax and Value added tax during the year since effective 1 July2017 these statutory dues has been subsumed into GST.

According to the information and explanations given to us and on thebasis of our examination of the records of the Company in our opinion amounts deducted /accrued in the books of account in respect of undisputed statutory dues including Goodsand Services Tax ('GST') Provident fund Employees' State Insurance Income-Tax Duty ofCustoms Cess and other statutory dues have generally been regularly deposited with theappropriate authorities though there have been slight delays in a few cases of goods andservices tax and income tax.

According to the information and explanations given to us and on thebasis of our examination of the records of the Company no undisputed amounts payable inrespect of Goods and Services Tax ('GST') Provident fund Employees' State InsuranceIncome-Tax Duty of Customs Cess and other statutory dues were in arrears as at 31 March2022 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and onthe basis of our examination of the records of the Company statutory dues relating toGoods and Service Tax Provident Fund Employees State Insurance Income- Tax Duty ofCustoms or Cess or other statutory dues which have not been deposited on account of anydispute are as follows:

Name of the statute Nature of dues Demand Amount (Rs in lacs) Amount deposited in dispute (Rs in lacs) Period to which the amount relates Forum where dispute is pending
Income-tax Act 1961 Income tax demand 66.39 Nil 2010-11 Commissioner of Income- tax (Appeals)
Income-tax Act 1961 Income tax demand 80.20 Nil 2016-17 Orissa High Court
Income-tax Act 1961 Income tax demand 163.21 Nil 2015-16 & 201617 Commissioner of Income- tax (Appeals)
Income-tax Act 1961 Income tax demand 11.18 Nil 2015-16 Commissioner of Income- tax (Appeals)
Central Goods and Services Tax Act 2017 Goods and Services Tax Demand 1999.90 Nil July 2017 to January 2018 Orissa High Court
Central Sales Tax Act 1956 CST demand on branch transfers and disallowance of export sales 10420.51 2000.00 2005-06 Deputy Commissioner of Sales Tax
Central Sales Tax Act 1956 CST Demand on Branch Transfers 2.44 Nil 2003-04 Joint Commissioner Sales Tax Appeals
The Orissa Value Added Tax Act 2004 Disallowance of Input tax credit 51.96 4.16 April 2016 - June 2017 Additional Commissioner (Appeals)
Maharashtra Value Added Tax Act 2002 Disallowance of Input tax credit 1.02 0.05 2016-17 Deputy Commissioner Sales Tax (Appeals)
Central Sales Tax Act 1956 Demand of Central Sales Tax 51.48 36.04 2013-14 Sales Tax Appellate Tribunal
Central Sales Tax Act 1956 Demand of Central Sales Tax 26.67 9.87 2013-14 Deputy Commissioner Sales Tax (Appeals)
Custom Act 1962 Demand of CVD and SAD on Sulphur 123.42 10.00 2007-12 Customs Excise and Service Tax Appellate Tribunal
Finance Act 1994 Service Tax Demand 50.02 5.01 2009-10 201213 2014-15 and 2015-16 Customs Excise and Service Tax Appellate Tribunal
Central Excise Act 1944 Excise Duty 234.14 17.56 2010-11 Customs Excise and Service Tax Appellate Tribunal
Central Excise Act 1944 Excise Duty 2.77 0.21 2015-2018 Commissioner Appeals (Central Excise Customs & Service Tax)
Finance Act 1994 Service Tax Demand 88.80 6.67 April 2016 to June 2017 Commissioner Appeals (Central Excise Customs & Service Tax)
Orissa Entry Tax Act 1999 Entry Tax Penalty 178.79 Nil October 2010 to March 2012 Deputy Commissioner of Sales Tax
Orissa Entry Tax Act 1999 Entry Tax Interest 2052.47 508.00 2007 to 2012 2014 to September 2015 Orissa High Court
Orissa Entry Tax Act 1999 Entry Tax Interest and Penalty 259.41 Nil October 2009 Commissioner of Sales Tax
Orissa Entry Tax Act 1999 Entry Tax Demand 418.70 Nil March 2006 to July 2008 Orissa High Court
Orissa Entry Tax Act 1999 Entry Tax Demand 6530.02 Nil 2002-03 to September 2015 National Company Law Tribunal
Odisha Irrigation Act 1959 Interest on water charges 2243.65 Nil 2008-2022 Orissa High Court
Odisha Irrigation Act 1959 Contribution to Water Conservation Fund 2322.50 Nil 2015 Orissa High Court

(viii) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has notsurrendered or disclosed any transactions previously unrecorded as income in the books ofaccount in the tax assessments under the Income Tax Act 1961 as income during the year.

(ix) (a) According to the information and explanations given to us andon the basis of our examination of the records of

the Company the Company has not defaulted in repayment of loans andborrowing or in the payment of interest thereon to any lender.

(b) 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 beendeclared a wilful defaulter by any bank or financial institution or government orgovernment authority.

(c) In our opinion and according to the information and explanationsgiven to us by the management term loans were applied for the purpose for which the loanswere obtained.

(d) According to the information and explanations given to us and on anoverall examination of the balance sheet of the Company we report that no funds raised onshort-term basis have been used for long-term purposes by the Company.

(e) According to the information and explanations given to us and on anoverall examination of the standalone financial statements of the Company we report thatthe Company has not taken any funds from any entity or person on account of or to meet theobligations of its associate as defined under the Act.

(f) According to the information and explanations given to us andprocedures performed by us we report that the Company has not raised loans during theyear on the pledge of securities held in its associate (as defined under the Act).

(x) (a) The Company has not raised any moneys by way of initial publicoffer or further public offer (including debt instruments) Accordingly clause 3(x)(a) ofthe Order is not applicable.

(b) 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 made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly clause 3(x)(b) of the Order is not applicable.

(xi) (a) Based on examination of the books and records of the Companyand according to the information and explanations given to us no fraud by the Company oron the Company has been noticed or reported during the course of the audit.

(b) According to the information and explanations given to us noreport under sub-section (12) of Section 143 of the Act has been filed by the auditors inForm ADT-4 as prescribed under Rule 13 of the Companies (Audit and Auditors) Rules 2014with the Central Government.

(c) As represented to us by the management there are no whistle blowercomplaints received by the Company during the year.

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

(xiii) In our opinion and according to the information and explanationsgiven to us the transactions with related parties are in compliance with Section 177 and188 of the Act where applicable and the details of the related party transactions havebeen disclosed in the standalone financial statements as required by the applicableaccounting standards.

(xiv) (a) Based on information and explanations provided to us and ouraudit procedures in our opinion the Company has an internal audit system commensuratewith the size and nature of its business.

(b) We have considered the internal audit reports of the Company issuedtill date for the period under audit.

(xv) In our opinion and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with its directorsor persons connected to its directors and hence provisions of Section 192 of the Act arenot applicable to the Company.

(xvi) (a) The Company is not required to be registered under Section45-IA of the Reserve Bank of India Act 1934.

Accordingly clause 3(xvi)(a) of the Order is not applicable.

(b) The Company is not required to be registered under Section 45-IA ofthe Reserve Bank of India Act 1934. Accordingly clause 3(xvi)(b) of the Order is notapplicable.

(c) The Company is not a Core Investment Company (CIC) as defined inthe regulations made by the Reserve Bank of India. Accordingly clause 3(xvi)(c) of theOrder is not applicable.

(d) According to the information and explanations provided to us theGroup (as per the provisions of the Core Investment Companies (Reserve Bank) Directions2016) does not have more than one CIC.

(xvii) The Company has not incurred cash losses in the current and inthe 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.

(xix) According to the information and explanations given to us and onthe basis of the financial ratios ageing and expected dates of realisation 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) In our opinion and according to the information and explanationsgiven to us there is no unspent amount under sub-section (5) of Section 135 of the Actpursuant to any project. Accordingly clauses 3(xx)(a) and 3(xx)(b) of the Order are notapplicable.

ANNEXURE B

to the Independent Auditor's Report on the standalone financialstatements of Paradeep Phosphates Limited for the year ended 31 March 2022

Report on the internal financial controls with reference to theaforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143of the Companies Act 2013

[Referred to in clause (f) of paragraph 2 under 'Report on Other Legaland Regulatory Requirements' section of our report of even date]

Opinion

We have audited the internal financial controls with reference tofinancial statements of Paradeep Phosphates Limited ("the Company") as of 31March 2022 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2022 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.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 company'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 ("theAct").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls with reference to financial statements. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements were established and maintained and whether suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks 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 with reference to financial statements.

Meaning of Internal Financial controls with Reference to FinancialStatements

A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements include those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial controls with Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

For BSR & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Jayanta Mukhopadhyay
Partner
Place: Mumbai Membership No.: 055757
Date: 28 May 2022 UDIN: 22055757AJUFBX9597

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