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, 2025, 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, 2025 and notes to
the financial statements, including a summary of material
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, 2025 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. 46 - 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.
b) Note No. 48 - Gas pooling applicable to Fertilizer
(Urea) sector:
The matter relating to differential claimed by GAIL
on account of non-recognition of EPMC gas for the
period 2021-22 in the gas pool account and the Spot
gas sourced as per DOF directives during 2022-23
and the substitution of the same with cheaper market
price gas specifically contracted by the Company for
non-urea operations has been represented to DOF
and is yet to be settled.
The Company is of the view that EPMC gas / Spot
gas is specifically meant for urea operations and
thus needs to be subsumed in arriving at the final
pool price and the same should be considered in
the subsidy of urea, since the cost of gas is a pass
through.
As the non-recognition of such EPMC Gas / Spot gas
sourced as per DoF's directives for Urea Operations
is not in accordance with the principles of gas
pooling mechanism, the Company has continued to
recognize such differential i.e. (EPMC / Spot gas price
- Cheaper market gas price) amounting to Rs 80.57
crore cumulatively till March 2025 ( Rs NIL for the
quarter) which has been shown as receivable from
DoF.
Further, Company has disputed the demand of
Rs 52.18 crore raised by GAIL towards pool price
differential as against receivable of Rs 71.39 crore
for FY 22-23 which has been arrived at on account
of non-recognition of EPMC gas/Spot gas in Urea by
FICC by substituting EPMC gas/Spot gas with cheaper
RLNG gas sourced for non-urea operations. The total
disputed amount for the year 2022-23 stands at Rs
123.57 crore. Based on Company's representation
DoF has directed GAIL to keep the demand under
abeyance and the said matter is under examination
by DoF. Total exposure is about to Rs.204.14 crore.
c) Note No. 50 - Price adversity and Upward/Downward
Revision in CFR prices on Imported Phosphatic and
Potassic (P&K) fertilizers
Directives have been given to Fertilizer CPSE's by
Department of Fertilizers (DOF) vide letter No F.21-
01/2023-FM dated 21st September, 2023 and to the
Company vide letter No. F.21-01/2023-FM dated 8th
February, 2024 to ensure availability of Phosphatic
and Potassic (P&K) fertilizers in Rabi 2023-24 and
undertake such procurement on priority with the
assurance that the price adversity if any on such
procurements beyond applicable NBS Subsidy
rates will be addressed by DOF to protect at No
profit No loss basis. Further, DOF vide File Number
21-01/2023-FM-Part(1) dated 29th May 2024 have
also allowed consideration of price adversity beyond
applicable NBS rates to ensure No Profit No Loss for
unsold inventory and sales yet to be acknowledged
in POS by farmers as on 30th September, 2023. The
Company has submitted its claim in respect of the
above which is under process by DoF for actual sales
effected. Accordingly during the nine months ended
the Company has recognized such differential based
on its estimates amounting to approximately Rs.
175.24 crore towards the same (Rs.Nil for current
quarter) towards the price adversity.
Further, additional imports of DAP were also
undertaken as per the directives of DOF with
assurance vide letter no.21-01/2023-FM dated 12th
June 2024 and letter no.21-2/2022-FM(PT) dated
20th August 2024 that the relevant issues will be
suitably addressed. Subsequently, DoF vide letter
no.23011/124/2024-P&K dated 23rd September
2024 announced an additional one-time package
of Rs. 3500 PMT on DAP over and above the
subsidy under NBS scheme for the period 1st April
2024 to 31st December 2024. Further, DoF vide
letter no.23011/127/2024-P&K dated 1st October
2024 also notified that advantage/disadvantage
on upward/downward trend in the CFR prices of
shipments to DAP and other P & K fertilizers which
arrive w.e.f 1st September 2024 to 31st March 2025
will be addressed vis-a-vis the benchmark rates
considered under NBS. Accordingly during the year
ended the Company has recognized such differential
(i.e. over and above the benchmark price) based on
its estimates amounting to Rs 113.60 crore on DAP
imports undertaken during 1st September 2024 to
31st March 2025.
d) Note No. 66 - Exceptional Item:
The Company had sold 16,530 sq meters of
Transferable Development Rights (TDR) during the
year ended 31st March, 2024 and realized a gain
of Rs. 25.28 Crores which had been reported as an
exceptional item for the year ended 31st March 2024
(Rs Nil during the current year).
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.
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Sr.
No.
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Key Audit matter
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Response to Key Audit Matter
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1.
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Revenue recognition and measurement in respect to
subsidy income.
Recognition of subsidy is generally made on the basis
of in principle recognition/approval /settlement of
claims from Government of India/Fertilizer Industry Co¬
ordination Committee while finalizing the standalone
Ind AS financial statements.
During the year, Subsidy adjusted on account of the
escalations/de-escalations basis for the year amounts
to Rs. 247.88 Crore refundable to FICC/DOF (PY
Rs. 409.39 Crore refundable).
Such adjustments have been done for escalations/de-
escalations in the cost of inputs and other costs, as
estimated by the management based on the prescribed
norms in line with known policy parameters.
MRP of Urea being fixed by Government of India,
the Company is entitled for subsidy wherein certain
inputs costs are a pass through and compensation
for production beyond a level of production known as
Reassessed capacity is restricted to lower of Import
Parity Price (IPP) of Urea plus other incidental charges
which the government incurs on imported Urea, or its
own concession price, as determined under extant
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Our Procedure included:
Accounting policies and principles:
We have reviewed the Companys accounting policies
for Subsidy on Urea as mentioned under "Note A.
Statement of Material Accounting policies III) B)
Revenue Recognition" of the standalone Ind AS
financial statements and the same is compared with
the applicable Ind AS.
Tests of controls:
We have evaluated the design, implementation
and operating effectiveness of key controls over
recognition of subsidy income.
Tests of details:
We have verified the supporting documentation for
determining that the subsidy was recognized in the
correct accounting period and as per notified rates.
In absence of notified rates, we have verified
calculation of estimated rates based on information
available with the Company for such costs which are
a pass through.
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Sr.
No.
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Key Audit matter
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Response to Key Audit Matter
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policies for Urea. Further subsidy income is net of
adjustments of recoveries towards sale/transfer for
surplus ammonia or non-conversion of entire ammonia
into Urea.
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In case estimation of income is based on other
parameters like IPP of Urea etc. The verification of
the same is based on available information in public
domain.
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Since there is a time lag between actual expenditure
incurred and notification of concession rates for the
year, Management exercises significant judgement in
arriving at the income entitlement on account of same
for the year.
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Testing reasonability of assumptions based on past
trends, consistency in application and changes in the
same owing to change in Government policies.
Performing substantive analytical procedures: -
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Therefore, there is a risk of revenue being misstated
on account of errors in estimation of concession/IPP
rates yet to be notified, due to absence of notification
available and change in methodology/ calculation, if
any for arriving at price concession.
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Ascertainment and analysis of variations with respect
of amounts estimated and actually entitled upon
notification with respect to previous years.
We also assessed as to whether the disclosures in
respect of revenue were adequate.
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2
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Estimation of Provision & Contingent Liabilities
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Internal enquiry:
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In the recognition and measurement of provisions,
there is uncertainty about the timing or amount of the
future expenditure required to settle the liability.
In respect of contingent liabilities, there are estimates
and assumptions made to determine the amount to be
disclosed.
As at the year ended 31 March 2025, the amounts
involved are significant. There is a high degree
of judgement required for the recognition and
measurement of provisions and disclosure of
contingent liabilities.
There is a risk of material misstatement that the
estimates are incorrect and that the provisions or
contingent liabilities are materially misstated.
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We enquired of the senior management and inspected
the minutes of the board and various committees
of the board where relevant, for claims arising and
challenged whether provisions are required.
Tests of details:
In respect of significant claims, we checked the amount
of claim, nature of issues involved, management
submissions and corroborated the same with external
evidence, where available.
Enquiry and confirmation of lawyers:
In respect of matters which are under dispute, we have
assessed opinion of the Company's in-house Legal
Department / external lawyers wherever necessary.
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3
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Information Technology Controls
A significant part of the Company's financial reporting
process is heavily reliant on IT systems with automated
processes and controls over the capture, storage and
extraction of information. A fundamental component
of these processes and controls is ensuring appropriate
user access and change management protocols exist
and being adhered to. These protocols are important
because they ensure that access and changes to IT
systems and related data are made and authorised in
an appropriate manner. As our audit sought to place
a high level of reliance on IT systems and application
controls related to financial reporting, high proportion
of the overall audit effort was in Information Technology
(IT) Systems and Controls. We focused our audit on
those IT systems and controls that are significant to
the Company's financial reporting process.
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We focused our audit on those IT systems and controls
that are significant to the Company's financial
reporting process.
We assessed the design and tested the operating
effectiveness of the Company's IT controls including
those over user access and change management as
well as data reliability.
In a limited number of cases, we adjusted our planned
audit approach as follows:
- We extended our testing to identify whether
there had been unauthorized or inappropriate
access or changes made to critical IT systems
and related data;
- Where automated procedures were supported by
systems with identified deficiencies, we extended
our procedures to identify and test alternative
controls; and
- Where required, we performed a greater level of
testing to validate the integrity and reliability of
associated data and reporting.
Further, We have relied on provisional observations
of independent consultant's past reports and the
Company's replies to the observations raised by the
consultants.
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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 Management and Board of Directors
are 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 42.1.3 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 42 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) Based on our examination which included test checks,
the Company has used an SAP HANA software for
maintaining its books of account which has a feature
of recording audit trail (edit log) facility and the same
has operated throughout the year for all relevant
transactions recorded in the software. Further,
during the course of audit we did not come across
any instance of audit trail feature being tampered
with. [Additionally, the audit trail has been preserved
by the Company as per the statutory requirements
for record retention.]
For K. Gopal Rao & Co For Parakh & Co.
Chartered Accountants Chartered Accountants
FRN : 000956S FRN : 001475C
Gopal Krishna Raju Shalabh Jain
Partner Partner
M. No.: 205929 M. No.: 441015
UDIN: 25205929BMLDMO8242 UDIN: 25441015BMOGES9505
Place: Mumbai
Date: 27th May, 2025
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