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You can view full text of the latest Auditor's Report for the company.

BSE: 524230ISIN: INE027A01015INDUSTRY: Fertilisers

BSE   ` 128.15   Open: 128.25   Today's Range 127.70
131.00
+0.30 (+ 0.23 %) Prev Close: 127.85 52 Week Range 90.75
190.00
Year End :2023-03 

Independent Auditor’s Report

TO THE MEMBERS OF RASHTRIYA CHEMICALS AND
FERTILIZERS LIMITED

Report on the Audit of the Standalone Ind AS Financial
Statements

Opinion

We have audited the accompanying Standalone Ind AS
Financial Statements of
RASHTRIYA 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 ended March 31, 2023 and notes to the
financial statements, including a summary of significant
accounting policies and other explanatory information
(hereinafter referred to as "the Standalone Ind AS Financial
Statements”).

In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid Standalone Ind
AS 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 the Companies (Indian Accounting Standards)
Rules, 2015, as amended, ("Ind AS”) and other accounting
principles generally accepted in India, of the state of affairs
of the Company as at March 31, 2023 and its profit and total
Comprehensive Income, changes in equity and its cash flows
for the year ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Ind AS Financial
Statements in accordance with the Standards on Auditing
specified under section 143(10) of the Act (SAs). Our
responsibilities under those Standards are further described
in the
Auditor’s Responsibilities for the Audit of the
Standalone Ind AS 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 independence
requirements that are relevant to our audit of the Standalone
Ind AS Financial Statements under the provisions of the
Act and the Rules made thereunder, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements and the ICAI’s Code of Ethics. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the
Standalone Ind AS Financial Statements.

Emphasis of Matter

We draw attention to the following matters:

a) Note No. 48 - Property, Plant and Equipment:
Title deeds of Immovable properties:

In respect of immovable properties other than land, i.e.
building and other structures situated at its Trombay
and Thal units, the Company has self-constructed
properties on the land owned by the Company as
evidenced by property cards/title deeds of land.

The Company has contested that major portion of the
immovable assets became vested with the Company
as a result of Government of India reorganizing certain
fertilizers companies in the past. Based on the legal
opinion obtained, the company is of the view that it has
clear title to the same and also initiated the process of
obtaining evidence of title towards self-constructed
properties.

Apart from such properties, immovable properties,
including land for which title deeds are not in the name
of the Company is mentioned in the standalone Ind AS
financial statements.

b) Note No. 50 - Gas pooling applicable to Fertilizer
(Urea) sector:

During the year 2022-23, the Company has recognized
a receivable of ' 79.84 crores recoverable from
Department of Fertilizers on account of pooled price
differential for the Year 2021-22 and for the period
December 2022 to February 2023 raised by GAIL India
Limited on account of substitution of EPMC and Spot
gas used for Urea operations with cheaper market
priced gas.

c) Note No. 67 - Exceptional Item:

Pursuant to the Ministry of Petroleum & Natural Gas
(MoPNG) order No. L-13013/3/2012-GP-I, dated: 16th
December 2015, GAIL had sought a differential levy
on usage of gas for non-fertilizer/non-Urea operations,
amounting to ' 1457.92 crores for the period
commencing from 1st July 2006 till 30th June, 2019 by
initiating arbitration proceedings before Administrative
Mechanism for Resolution of CPSEs Disputes (AMRCD).
The Liability pertaining to period 1st July 2006 till
31st March 2016 was settled and excess provision of
' 147.00 crores were reported as an exceptional item
in Year 2021-22. During the current year 2022-23,
the liability from Financial Year 2016-17 onwards is

crystalized and ' 30.15 crores excess provision is not
considered necessary has been derecognized and
reported as an exceptional item.

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

Key Audit Matters

Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
standalone Ind AS financial statements of the current period.

These matters were addressed in the context of our audit
of the Standalone Ind AS Financial Statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.

The key audit matters identified in our audit are:

1. Revenue Recognition and measurement in respect of
subsidy income.

2. Estimation of Provision & Contingent Liabilities.

3. Information Technology General Control.

Other Information

The Company’s Board of Directors is responsible for the
other information. The other information comprises the
information included in the Annual report but does not
include the standalone Ind AS financial statements and our
auditor’s report thereon. The Company’s Annual report is
expected to be made available to us after the date of this
auditor’s report.

Our opinion on the standalone Ind AS 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 standalone Ind AS
financial statements, our responsibility is to read the other
information and in doing so, consider whether the other
information is materially inconsistent with the standalone
Ind AS financial statements, or our knowledge obtained in
the audit or otherwise appears to be materially misstated.

When we read the Company’s annual report, if we conclude
that there is a material misstatement therein, we are
required to communicate the matter to those charged with
governance.

Management and Board of Directors’
Responsibilities for the Standalone Ind AS
Financial Statements

The Company’s Board of Directors is responsible for the
matters stated in section 134(5) of the Companies Act,
2013 ("the Act”) with respect to the preparation of these
Standalone Ind AS Financial Statements that give a true and
fair view of the financial position, the financial performance,
total comprehensive income, changes in equity and cash
flows of the Company in accordance with the accounting
principles generally accepted in India, including the Indian
Accounting Standards (Ind AS) prescribed 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 the assets of the Company and
for preventing and detecting frauds and other irregularities;
selection and application of appropriate accounting policies;
making judgments 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 Standalone Ind AS Financial Statements
that give a true and fair view and are free from material
misstatement, whether due to fraud or error.

In preparing the Standalone Ind AS Financial Statements,
management is 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 management either
intends to liquidate the Company or to cease operations or
has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the
Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the
Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about
whether the Standalone Ind AS 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 Standalone Ind
AS Financial Statements.

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

• Identify and assess the risks of material misstatement
of the Standalone Ind AS Financial Statements,
whether due to fraud or error, design and perform audit
procedures responsive to those risks and obtain audit
evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations or
the override of internal control.

• Obtain an understanding of internal financial controls
relevant to the audit in order to design audit procedures
that are appropriate in the circumstances. Under
section 143(3)(i) of the Act, we are also responsible for
expressing our opinion on whether the Company has
adequate internal financial controls with reference to
the standalone Ind AS financial statements in place and
the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by management.

• Conclude on the appropriateness of management’s use
of the going concern basis of accounting and based
on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that
may cast significant doubt on the Company’s ability
to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures
in the Standalone Ind AS Financial Statements or if such
disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease
to continue as a going concern.

• Evaluate the overall presentation, structure and
content of the Standalone Ind AS Financial Statements,
including the disclosures and whether the Standalone
Ind AS Financial Statements represent the underlying
transactions and events in a manner that achieves fair
presentation.

Materiality is the magnitude of misstatements in the
Standalone Ind AS Financial Statements that, individually or
in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the standalone Ind
AS financial statements may be influenced. We consider

quantitative materiality and qualitative factors in (i) planning
the scope of our audit work and in evaluating the results
of our work; and (ii) to evaluate the effect of any identified
misstatements in the standalone Ind AS financial statements.

We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify
during our audit.

We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence and
where applicable, related safeguards.

From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the Standalone Ind AS Financial
Statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated
in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public
interest benefits of such communication.

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
in terms of Section 143(11) of the Act, we give in
“Annexure A” a statement on the matters specified in
paragraphs 3 and 4 of the Order.

2. As required by Section 143 (5) of the Act, we give in
“Annexure B” the directions and sub-directions issued
by the Comptroller and Auditors General of India (CAG),
the action taken thereon and its impact on the accounts
and the standalone Ind AS financial statements of the
Company.

3. Non - Compliance of the SEBI Listing Obligation and
Disclosure Requirements (LODR) Regulations, 2015
- as per Regulation 17(1)(b), the Chairman being an
Executive Director,
at least half of the Board of Directors
should be comprised of Independent Directors
including one Women Independent Director. Currently,
the Company does not have required number of
Independent Directors on its board. (Refer Note 44.1.3
to the standalone Ind AS Financial Statements)

4. (A) 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 Standalone Balance sheet, the
Standalone Statement of Profit and Loss
(including Other Comprehensive Income),
Standalone Statement of Changes in Equity
and the Standalone Statement of Cash Flow
dealt with by this report are in agreement
with the relevant books of account.

d) In our opinion, the aforesaid Standalone Ind
AS Financial Statements comply with the
Indian Accounting Standards prescribed
under Section 133 of the Act.

e) The Company being a government company,
the provision of section 164(2) is not
applicable in accordance with the Notification
No. GSR 463 (E) dated June 5, 2015 issued by
Ministry of Corporate Affairs. Accordingly, no
reporting regarding Clause 3(g) of section 143
is required.

f) With respect to the adequacy of the internal
financial controls with reference to the
standalone Ind AS financial statements of the
Company and the operating effectiveness of
such controls, refer to our separate report in
“Annexure C”.

(B) In accordance with Rule 11 of the Companies

(Audit and Auditors) Rules, 2014, as amended 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 Standalone Ind AS Financial Statements
- Refer Note 44 to the Standalone Ind AS
financial statements;

ii. The Company has made provision, as required
under the applicable law or accounting
standards, for material foreseeable losses,
if any, on long-term contracts including
derivative contracts;

iii. There is no delay in transferring amounts,
required to be transferred, to the Investor
Education and Protection Fund by the
Company.

iv. a) The management has represented

that, to the best of its knowledge and
belief, no funds have been advanced or

loaned or invested (either from borrowed
funds or share premium or any kind
of funds) by the Company to or in any
other persons or entities, 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 (“Ultimate
Beneficiaries”) by or on behalf of the
Company or

• provide any guarantee, security
or the like to or on behalf of the
Ultimate Beneficiaries.

b) The management has represented, that,
to the best of its knowledge and belief, no
funds have been received by the Company
from any persons or entities, including
foreign entities (“Funding Parties”), with
the understanding, whether recorded in
writing or otherwise, that the Company
shall:

• directly or indirectly, lend or invest in
other persons or entities identified in
any manner whatsoever (“Ultimate
Beneficiaries”) by or on behalf of the
Funding Party or

• provide any guarantee, security
or the like from or on behalf of the
Ultimate Beneficiaries; and

c) Based on such audit procedures as
considered reasonable and appropriate
in the circumstances, nothing has come
to our notice that has caused us to believe
that the representations under clause (iv)
(a) and (iv) (b) contain any material mis¬
statement.

v. The dividend declared or paid during the year
by the Company is in compliance with section
123 of the Act.

(C) With respect to the other matters to be included in
the Auditor’s Report as per section 197 (16) of the
Act:

In accordance with requirements of section 197
(16) of the act as amended: As per notification
number G.S.R. 463 (E) dated June 5, 2015 issued
by Ministry of Corporate Affairs, Section 197 of the
Act as regards the managerial remuneration is not
applicable to the Company, since it is a Government
Company.

(D) Proviso to Rule 3(1) of the Companies (Accounts)
Rules, 2014 for maintaining books of account
using accounting software which has a feature of
recording audit trail (edit log) facility is applicable
to the Company with effect from April 1, 2023,
and accordingly, reporting under Rule 11(g) of
Companies (Audit and Auditors) Rules, 2014 is not
applicable for the financial year ended March 31,
2023.

For M M Nissim & Co LLP For Gokhale & Sathe

Chartered Accountants Chartered Accountants

Firm Regn. No.107122W/W100672 Firm Regn. No. 103264W

N. Kashinath Atul Kale

Partner Partner

Membership No. 036490 Membership No. 109947

UDIN: 23036490BGXRYV2718 UDIN: 23109947BGVVQE8885

Place: Mumbai
Dated: May 30, 2023