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Zuari Agro Chemicals Ltd.

BSE: 534742 Sector: Agri and agri inputs
NSE: ZUARI ISIN Code: INE840M01016
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VOLUME 24713
52-Week high 158.90
52-Week low 83.30
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Mkt Cap.(Rs cr) 458
Buy Price 0.00
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Sell Price 0.00
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OPEN 109.00
CLOSE 107.50
VOLUME 24713
52-Week high 158.90
52-Week low 83.30
P/E
Mkt Cap.(Rs cr) 458
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Zuari Agro Chemicals Ltd. (ZUARI) - Auditors Report

Company auditors report

To the Members of Zuari Agro Chemicals Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statementsof Zuari Agro Chemicals Limited ("the Company") which comprise the BalanceSheet as at March 31 2020 the Statement of Profit and Loss including the statement ofOther Comprehensive Income the Cash Flow Statement and the Statement of Changes in Equityfor the year then ended and notes to the standalone Ind AS financial statementsincluding a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS 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 the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2020 its loss including other comprehensive loss its cash flows and the changes inequity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS 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'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the Rs Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements.

Material Uncertainty Related to Going Concern

We draw attention to Note 54 of the accompanying standalone Ind ASfinancial statements which states that in addition to net current liability position asat March 31 2020 there are other factors indicating material uncertainty over timelydischarge of its liabilities and its consequential impact on Company's ability to continueas a going concern. Note 54 also describes the mitigating factors considered by themanagement in its assessment in view of which the accompanying standalone Ind ASfinancial statements have been prepared under the going concern assumption.

Our opinion is not qualified in respect of this matter.

Emphasis of Matters

1) We draw attention to Note 49 of the accompanying standalone Ind ASfinancial statements which describes the uncertainties and the impact of COVID-19pandemic on the Company's operations and standalone Ind AS financial statements asassessed by the management.

2) We draw attention to Note 52 of the accompanying standalone Ind ASfinancial statements which describes the impact of INR 11779.39 lakhs as an adjustmentrelated to impairment of investment in MCA Phosphates Pte Ltd. which has led to arestatement of the standalone Ind AS financial statements for the year ended March 312019.

3) We draw attention to Note 43 of the accompanying standalone Ind ASfinancial statements wherein the Company is carrying a receivable of INR 1949.03 lakhsin relation to the subsidy income accrued during the year ended March 31 2013. Based onthe legal opinion obtained by the Company the management believes that the amount isfully recoverable from the department of fertilizers. Pending settlement of thedifferential subsidy amount as more fully explained in note the Company has not made anyprovision in this regard in the standalone Ind AS financial statements.

4) We draw attention to Note 7 of the accompanying standalone Ind ASfinancial statements regarding Goods and Services Tax ('GST') credit on input servicesrecognized by the Company based on its assessment and on a legal opinion obtained by theCompany and reliance placed on an order of High Court of Gujarat providing interim reliefin a similar matter. The Company has also filed a writ petition in the High Court ofBombay at Goa.

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

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements forthe financial year ended March 31 2020. These matters were addressed in the context ofour audit of the standalone Ind AS financial statements as a whole and in forming ouropinion thereon and we do not provide a separate opinion on these matters. For eachmatter below our description of how our audit addressed the matter is provided in thatcontext.

In addition to the matter described in the Rs Material UncertaintyRelated to Going Concern' section we have determined the matters described below to bethe key audit matters to be communicated in our report. We have fulfilled theresponsibilities described in the Auditor's responsibilities for the audit of thestandalone Ind AS financial statements section of our report including in relation tothese matters. Accordingly our audit included the performance of procedures designed torespond to our assessment of the risks of material misstatement of the standalone Ind ASfinancial statements. The results of our audit procedures including the proceduresperformed to address the matters below provide the basis for our audit opinion on theaccompanying standalone Ind AS financial statements.

Key audit matters How our audit addressed the key audit matter
Impact of government policies/notifications on recognition of concession income and their recoverability (as described in Note 18 and 9 of the standalone Ind AS financial statements)
The Company recognises concession (subsidy) income receivable from the Department of Fertilizers Government of India as per the New Pricing Scheme for Urea and as per Nutrient Based Subsidy Policy for Phosphatic and Potassic (P&K) fertilizers at the time of sale of goods to its customers. Our audit procedures included the following:
• Read the relevant notifications and policies issued by Department of Fertilizers to ascertain the recognition of concession income adjustments thereto recognised pursuant to changes in the rates and basis for determination of concession income.
During the current year the Company has recognised concession income of INR 97438.48 lakhs and as at March 31 2020 the Company has receivables of INR 68635.11 lakhs relating to concession income. • Obtained an understanding of the process and tested the design and operating effectiveness of controls as established by management in recognition and assessment of the recoverability of the concession income.
We focused on this area because recognition of concession income and assessment of its recoverability is subject to significant judgement of the management and various notifications from the Department of Fertilizers. • Evaluated the management's assessment regarding compliance with the relevant conditions as specified in the notifications and policies and collections of concession income.
• Tested the ageing analysis and assessed the information used by the management to determine the recoverability of the concession income by considering collections against historical trends.
The area of judgement includes certainty around the satisfaction of conditions specified in the notifications and policies collections and provisions thereof likelihood of variation in the related computation rates and basis for determination of accruals of concession income. Accordingly this matter has been determined to be a key audit matter in our audit of the standalone Ind AS financial statements.
• Assessed the related disclosure in standalone Ind AS financial statements.
Transfer of Retail & allied Business to a wholly owned subsidiary Rs 'Zuari Farmhub Limited (ZFL)" on a going concern basis (as described in Note 53 of the standalone Ind AS financial statements)
During the year ended March 31 2020 the Company has transferred Retail & allied Business to its wholly owned subsidiary "Zuari Farmhub Limited (ZFL)" on a going concern basis. Our audit procedures included the following:
• Evaluated the design and tested the operating effectiveness of the controls over the accounting of this transaction.
We focused on this area considering that this was a significant event during the year. • Obtained management's valuation report for the sale consideration.
• Reviewed the accounting analysis of the management for the transaction including impact on other areas.
• Tested supporting workings and evidences related to profit computation.
• Assessed the disclosures in the Ind AS financial statements including disclosures requirement for discontinued operations.
Estimates with respect to recognition of deferred tax assets on unused tax losses (as described in Note 17 of the standalone Ind AS financial statements)
As at March 31 2020 the Company has recognized deferred tax assets of INR 6741.16 lakhs in the standalone Ind AS financial statements. Our audit procedures included the following:
• Gained an understanding of the deferred tax assessment process and assessed the design and tested the operating effectiveness of controls over recognition of deferred tax.
Deferred tax assets are recognized on unabsorbed tax losses when it is probable that taxable profit will be available against which such tax losses can be utilized. The Company's ability to recognize deferred tax assets on unabsorbed tax losses is assessed by the management at the end of each reporting period taking into account forecasts of future taxable profits the law and jurisdiction of the taxable items and the assumptions on which such projections are determined by the management. • Discussed and evaluated management's assumptions and estimates like projected revenue growth margins etc. including impact of new tax rates as per Taxation Laws (Amendment) Ordinance 2019 in relation to the probability of generating future taxable income to support the utilization of deferred tax on unabsorbed tax losses with reference to forecast taxable income and performed sensitivity analysis.
Given the degree of estimation based on the projection of future taxable profits management's decision to create deferred tax assets on unabsorbed tax losses has been identified to be a key audit matter. • Tested the arithmetical accuracy of the model.
• Assessed the related disclosures in respect of the deferred tax assets in the standalone Ind AS financial statements.
Impairment assessment of Investment in Mangalore Chemicals and Fertilizers Limited a subsidiary company (as described in Note 6A of the standalone Ind AS financial statements)
During the current year impairment indicators were identified by the management on its investment in its subsidiary company Mangalore Chemicals and Fertilizers Limited of INR 54112.37 lakhs. As a result an impairment assessment was required to be performed by the Company by comparing the carrying value of these investments to their recoverable amount to determine whether an impairment was required to be recognised. Our audit procedures included the following:
• Assessed the analysis of internal and external factors impacting Company's investment whether there were any indicators of impairment in line with Ind AS 36 "Impairment of Assets".
For the purpose of the above impairment testing value in use has been determined by forecasting future cash flows considering the impact of the economic uncertainties arising from COVID-19 on the discount rates. Furthermore the value in use is highly sensitive to changes in some of the inputs used for forecasting the future cash flows. • Gained an understanding of the impairment assessment process and evaluated the design and tested the operating effectiveness of controls in respect of process of comparing the carrying value of the investments to their recoverable amount to determine whether an impairment was required to be recognized.
Further the determination of the recoverable amount of the investment in Mangalore Chemicals and Fertilizers Limited involved judgment due to inherent uncertainty in the assumptions supporting the recoverable amount of the investment. • Assessed the Company's valuation methodology applied in determining the recoverable amount. In making this assessment we obtained and evaluated the valuation models used to determine the recoverable amount by challenging the key assumptions used by management including:
Accordingly the impairment of investment in Mangalore Chemicals and Fertilizers Limited has been determined as a key audit matter. o With the assistance of specialist we assessed the assumptions around the key drivers of the cash flow forecasts including discount rates expected growth rates and terminal growth rates used in consideration of current and estimated future economic conditions including the impact of COVID-19 on discount rates. Corroborating the price assumptions used in the models against analyst consensus.
o Tested the weighted average cost of capital used to discount the impairment models through engaging valuation experts.
o Discussed potential changes in key drivers as compared to previous year/ actual performance with management in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable.
o Tested the integrity of the models together with their clerical accuracy.
• Assessed the recoverable value by performing sensitivity testing of key assumptions used.
• Evaluated the competence professional qualification objectivity and independence of Company's specialists involved in the process.
• Assessed the related disclosures in this regard in the standalone Ind AS financial statements.

We have determined that there are no other key audit matters tocommunicate in our report.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the Director's report but does not includethe standalone Ind AS financial statements and our auditor's report thereon which weobtained prior to the date of this auditor's report and Extract of Annual Return andSecretarial Audit Report which is expected to be made available to us after that date.

Our opinion on the standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether such other information is materially inconsistent with the standalone Ind ASfinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Responsibilities of Management for the StandaloneInd AS Financial Statements

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone Ind ASfinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone Ind AS financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern (refer Note 54 of theaccompanying standalone Ind AS financial statements) and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of theStandalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due 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 Ind AS financialstatements.

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 Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate 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 management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting 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 financial statements (refer paragraph on Material UncertaintyRelated to Going Concern above) or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves 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 standalone IndAS financial statements for the financial year ended March 31 2020 and are therefore thekey audit 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016("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.

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 havebeen kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet the Statement of Profit and Loss including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;

(e) The going concern matter described in Material Uncertainty Relatedto Going Concern paragraph above in our opinion may have an adverse effect on thefunctioning of the Company;

(f) On the basis of the written representations received from thedirectors as on March 31 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2020 from being appointed as a director in termsof Section 164 (2) of the Act;

(g) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these standalone Ind ASfinancial statements and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;

(h) In our opinion the managerial remuneration for the year endedMarch 31 2020 in relation to Managing Director of the Company has been paid in excess ofthe limits provided in provisions of Section 197 read with Schedule V to the Act by INR81.00 lakhs which is subject to approval of banks/financial institutions and shareholdersby a special resolution as explained in Note 48 of the standalone Ind AS financialstatements and therefore the company has recognised a recoverable of INR 81.00 lakhs fromManaging Director as at March 31 2020.

(i) 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 asamended in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements - Refer Note 32 to thestandalone Ind AS financial statements;

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

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company

For S.R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E/E300005

per Pravin Tulsyan

Partner

Membership Number: 108044

UDIN: 20108044AAAADR2625

Place of Signature : New Delhi

Date : June 19 2020

ANNEXURE Rs 1' REFERRED TO IN PARAGRAPH UNDER THEHEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OFEVEN DATE

Re: Zuari Agro Chemicals Limited ("the Company")

(i) (a) The Company has maintained proper records showing

full particulars including quantitative details and situation of fixedassets.

(b) All fixed assets have not been physically verified by themanagement during the year but there is a regular programme of verification in every twoyears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. No material discrepancies were noticed on such verification.

(c) Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to informationand explanations given by the management the title deeds of immovable propertiesincluded in property plant and equipment are held in the name of the Company except forthe immovable properties acquired during demerger of fertiliser undertaking from ZuariGlobal Limited in an earlier year aggregating to INR 30.08 lakhs and immovable propertiesaggregating to INR 325.17 lakhs acquired under scheme of merger during the previous yearfor which title deeds are not in the name of the Company and conveyance deeds in respectof the same are yet to be executed in the name of the Company.

(ii) The management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies were noticed on suchphysical verification.

(iii) (a) According to the information and explanations given to usthe Company has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under Section189 of the Companies Act 2013. Accordingly the provisions of Clause 3(iii)(a) (b) and(c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanationsgiven to us provisions of Section 185 and 186 of the Companies Act 2013 in respect ofloans to directors including entities in which they are interested and in respect of loansand advances given investments made and guarantees and securities given have beencomplied with by the company.

(v) The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(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 offertilisers and are of the opinion that prima facie the specified accounts and recordshave been made and maintained. We have not however made a detailed examination of thesame.

(vii) (a) Undisputed statutory dues including provident fundemployees' state insurance income-tax sales-tax service tax duty of custom valueadded tax goods and service tax cess and other statutory dues have generally beenregularly deposited with the appropriate authorities though there has been a slight delayin a few cases.

(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax service tax sales-tax duty of custom value added tax goods and servicetax cess and other statutory dues were outstanding at the year end for a period of morethan six months from the date they became payable.

(c) According to the records of the Company the dues of income-taxsales-tax service tax duty of custom duty of excise value added tax goods and servicetax and cess on account of any dispute are as follows:

Name of the Statute Name of the Dues Amount (In INR lakhs) Period to which amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax Demand 4.93 2011-12 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax Demand 39.55 2012-13 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax Demand 66.79 2013-14 Commissioner of Income Tax (Appeals)
Custom Act 1962 Demand for Differential custom duty 522.04 24-03-2011 to 02-12-2011 01-04-2001 to 28-02-2006 2002-03 to 2003-04 2006-07 to 2008-09 CESTAT
Central Sales Tax Act Demand for NonSubmission of "C Form" 2.48 2013-14 Commercial Tax Department
Rajasthan Value Added Tax 2003 Excess Input Credit Availed 22.33 2011-12 Commercial Tax Department
Rajasthan Value Added Tax 2003 Excess Input Credit Availed 9.77 2013-14 Commercial Tax Department
Kerala Value Added Tax 2003 Demand for conceding an inter-state transfer out of taxable items 15.52 2009-10 Commercial Tax Department
Entry of Goods into Local Areas Act 2001 (Telangana) Demand for not complying with the condition for usage 0.08 2012-13 Deputy Commercial Tax
Entry of Goods into Local Areas Act 2001 (Telangana) Demand towards nonpayment of tax 0.24 2017-18 Deputy Commercial Tax
UP Value Added Tax 2008 Penalty Order received for delay in payment of tax from Lucknow UP 9.23 2016-17 Joint Commissioner Appeals
Telangana VAT Act 2005 Short ITC reversal on stock transfers 8.85 2013-17 Joint Commissioner Appeals
Goa Green Cess Cess and penalty on inter-state purchases of Natural Gas 4291.34 July 15 2013 to December 31 2019 Additional Commissioner (Appeals)
UP Value Added Tax 2008 Exparte Order Received 4.34 May 2016 to July 2016 September 2016 October 2016 December 2016 Joint Commissioner Appeals

(viii) According to the information and explanations given by themanagement the Company has delayed in repayment of loans or borrowings to financialinstitutions or banks during the year to the extent of INR 176444.03 lakhs (the delay insuch repayments being for less than 88 days in each individual case) and INR Nil of suchdues were in arrears as on the balance sheet date. The lender wise details are tabulatedas under:

Name During the year ending March 31 2020 (In INR lakhs) Period (Maximum days)
ICICI Bank Limited 17953.25 83
Bank of Baroda 17836.46 88
Canara Bank 15077.54 62
State Bank of India 20365.62 81
Axis Bank Limited 13124.48 48
Yes Bank Limited 19786.46 57
Corporation Bank 24973.56 87
IDBI Bank Limited 11500.00 51
HDFC Bank Limited 17411.68 66
Ratnakar Bank Limited 13041.65 51
IndusInd Bank Limited 5000.00 53
Rabo Bank 373.33 16
Total 176444.03

The Company does not have any loans or borrowings from Government norhas it issued any debentures as at balance sheet date.

(ix) In our opinion and according to the information and explanationsgiven by the management we report that in absence of any stipulation regarding theutilization of loans from the lender we are unable to comment as to whether the termloans have been utilized for the purposes for which they were obtained. According to theinformation and explanations given by the management the Company has not raised any moneyway of initial public offer / further public offer and debt instruments.

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that no fraud by theCompany or no fraud on the Company by the officers and employees of the Company has beennoticed or reported during the year.

(xi) According to the information and explanation given by themanagement the managerial remuneration for the year ended March 31 2020 in relation toManaging Director of the holding company has been paid in excess of the limits provided inprovisions of Section 197 read with Schedule V to the Act by INR 81.00 lakhs which issubject to approval of banks/financial institutions and shareholders by a specialresolution as explained in Note 48 of the standalone Ind AS financial statements andtherefore carried as a recoverable from managing director as at March 31 2020.

(xii) In our opinion the Company is not a Nidhi company. Thereforethe provisions of clause 3(xii) of the order are not applicable to the Company and hencenot commented upon.

(xiii) According to the information and explanations given by themanagement transactions with the related parties are in compliance with Section 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in thenotes to the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and onan overall examination of the balance sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the company and hence not commented upon.

(xv) According to the information and explanations given by themanagement the Company has not entered into any non-cash transactions with directors orpersons connected with him as referred to in Section 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us theprovisions of Section 45-IA of the Reserve Bank of India Act 1934 are not applicable tothe Company.

For S. R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E/E300005

per Pravin Tulsyan

Partner

Membership Number: 108044

UDIN: 20108044AAAADR2625

Place of Signature : New Delhi

Date : June 19 2020

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OFEVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF ZUARI AGRO CHEMICALS LIMITED

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 Zuari Agro Chemicals Limited ("the Company") as of March 31 2020in conjunction with our audit of the standalone Ind AS financial statements of the Companyfor 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting with reference to these standalone Ind ASfinancial 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 to the extent applicable to an audit of internalfinancial controls and both 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 Ind ASfinancial statements was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls over financial reporting with reference tothese standalone Ind AS financial statements and their operating effectiveness. Our auditof internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting with reference tothese standalone Ind AS financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due 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 Ind AS financial statements.

Meaning of Internal Financial Controls Over Financial Reporting withReference to these Standalone Ind AS Financial Statements

A company's internal financial control over financial reporting withreference to these standalone Ind AS financial statements is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingwith reference to these standalone financial statements includes 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 Over FinancialReporting with Reference to these Standalone Ind AS Financial Statements

Because of the inherent limitations of internal financial controls overfinancial reporting with reference to these standalone Ind AS financial statementsincluding the possibility of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingwith reference to these standalone financial statements to future periods are subject tothe risk that the internal financial control over financial reporting with reference tothese standalone financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls over financial reporting with reference to these standaloneInd AS financial statements and such internal financial controls over financial reportingwith reference to these standalone Ind AS financial statements were operating effectivelyas at March 31 2020 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India.

For S. R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E/E300005

per Pravin Tulsyan

Partner

Membership Number: 108044

UDIN: 20108044AAAADR2625

Place of Signature : New Delhi

Date : June 19 2020

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