Tuticorin Alkali Chemicals and Fertilizers Limited
Report on the Audit of the Financial Statements Opinion
We have audited the accompanying financial statements of Tuticorin Alkali Chemicals and Fertilizers Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (Including Other Comprehensive Income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("the Act') in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015 ("lnd AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, profit, other comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under sectionl 43(10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics
issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules there under,and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter:
We draw attention in the Note 3(i) to the financial statement which states that, during the year, the Company has changed its accounting policy with respect to subsequent measurement of class of assets under property, plant and equipment consisting, of freehold land and building, from cost model to revaluation model in accordance with INDAS 16 to reflect the fair value of land and building, which as per management, provides reliable and more relevant information about the entity's financial position. Accordingly, fair value of free hold land and building was obtained from an independent valuer as on March 31,2023 resulting in fair value gain of Rs 19,889.11 lakhs (net of deferred taxes amounting to Rs 3,969.81 lakhs) being recorded in other comprehensive income.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended March 31, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined following matters as key audit matters to be communicated in our report.
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Key Audit Matter
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Auditor's Procedures
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Revenue recognition
During the current year, Company's revenues has increased substantially compared to past historical trends amounting to Rs 51,508.92 lakhs (PY: Rs 18,056.54 lakhs).
The Company recognises revenue from sale of goods when control of the goods are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. Revenue from sale of goods is accounted at point in time when control of goods is transferred to customers and there are no unfulfilled obligations, which is on despatch of the goods, in accordance with lnd AS 115 "Revenue from Contracts with Customers".
Revenue recognition is considered as significant audit risk considering the significance of the revenue amounts recorded and also the significant judgement involved in recognising the timing of transfer of control. There is also risk of misstatement of the Financial Statements related to transactions occurring close to the year end, as these transactions could be recorded in the incorrect financial period.
Also, the Company and external stakeholders focus on revenue as key performance indicator and therefore there could be a risk of material misstatement with respect to revenue recognition.
Accordingly, based on the above significant judgement and estimations involved, revenue recognition is considered as a key audit matter.
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We have assessed the Company's process for recognition of revenue. Our audit procedures consist of testing the design and implementation, Operative effectiveness of controls involved and substantive testing as enumerated below:
1. Assessed the appropriateness of Company's accounting policy of Company with respect to revenue recognition under INDAS 115 "Revenue from contracts with customers".
2. Evaluated the design and implementation and tested the operative effectiveness of key financials controls relating to revenue recognition with combination of inquiry, inspection and observation on test check basis.
3. Performed substantive procedures on samples selected on test check basis throughout the year, by verifying with the sales invoice, proof of despatch, purchase orders etc as applicable to evaluate transfer of control and satisfaction of performance obligations.
4. Obtained direct confirmation of balances and transactions from major customers.
5. Performed cut-off procedures on revenue transactions near the year end by verifying the supporting documents for the despatch of goods for to verify whether the revenue was recognised in the correct appropriate accounting period, in accordance with lnd AS 115.
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Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and analysis report, and Director's report along with annexures but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
The Company's management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management and Board of Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether 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 audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
We give in "Annexure A" a detailed description of Auditor's responsibilities for Audit of the Financial Statements.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been 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 other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure C".
(g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 33 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. 1) The Management has represented that, to the best of its
knowledge and belief as disclosed in note no 40, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
2) The Management has represented, that, to the best of its knowledge and belief as disclosed in note no 40, no funds
have been received by the Company from any person(s) or entity(s), including foreign entities (Funding Parties), with the understanding, whether recorded in writing or otherwise, as on the date of this audit report, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
3) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, and according to the information and explanations provided to us by the Management in this regard nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e) as provided under (1) and (2) above, contain any material mis-statement.
v The Company has neither declared nor paid any dividend during the year.
vi As proviso to rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Company only w.e.f. April1, 2023. Accordingly reporting under this clause is not applicable.
3. In our opinion, according to information, explanations given to us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 of the Act and the rules thereunder.
For MSKA & Associates
Chartered Accountants ICAI Firm Registration No. 105047W
Geetha Jeyakumar
Partner
Place: Chennai Membership No. 029409
Date: May 24, 2023 UDIN: 23029409BGTMVB8400
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