The Fertilisers and Chemicals Travancore Ltd. இன் முடிவுகள்

Mar 31, 2024

We have audited the accompanying Standalone Ind AS Financial Statements of THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED (hereinafter referred to as "the Company”), which comprise the Balance Sheet as at March 31, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the statement of Cash Flows, the Statement of Changes in Equity for the year then ended and notes to the Financial Statements, including a summary of the material accounting policies and other explanatory information (hereinafter referred to as "the Standalone Ind AS Financial Statements”). These Standalone Ind AS Financial Statements include financial schedules of five state offices of the Company audited by the other auditors of the Company whose reports have been furnished to us by the Management and our opinion in so far as it relates to the aforesaid state offices, is based solely on the reports of the other auditors.

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”), as amended in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards specified 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 31,2024, the profit, total comprehensive income, its cash flows and changes in equity for the year ended on that date.

Basis for Opinion

We have conducted our audit of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. 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 ethical requirements that are relevant to our audit of the Standalone Ind AS Financial Statements under the provisions of the Act and the Rules 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 opinion on the Standalone Ind AS Financial Statements.

Emphasis of Matter

1. We draw attention to Note No.36 of the Standalone Ind AS Financial Statements regarding the recovery of subsidy/additional compensation by the Government of India amounting to Rs.24,558.89 lakhs.

2. We draw attention to Note No.5 of the Standalone Ind AS Financial Statements regarding the recognition of deferred tax asset (net) amounting to Rs.10,266.78 lakhs on the unabsorbed depreciation and carried forward business loss as per Income Tax Act, 1961 during the year ended March 31,2024

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone I nd 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. We have determined the matters described below to be the key audit matters:

Sl No	Key Audit Matter	Auditors'' Response
1	Accounting of subsidy income from Government of India under DBT Scheme: Under Direct Benefit Transfer (DBT) scheme of Government of India (GoI), the Company is entitled to receive subsidy only upon sale of fertilizer by the dealer to the ultimate beneficiary through Point of Sale (PoS) devices. However, the Company continues to account subsidy as income at the time of sale to dealers as in the earlier scheme, considering the reasonable certainty that the sale will take place and subsidy will be received based on the industry practice and past experience. Refer Note No 28 to the Standalone Ind AS Financial Statements.	Our principal audit procedures included the following: • • Analysed the scheme framed by the Department of Fertilizers (DoF) notified t h r o u g h N o t i fi c a t i o n F . N o . D(FA)/2016/DBT dated March 17, 2017. • • Reviewed the agreement with dealers. • • Reviewed the calculation of subsidy income and assessed the reasonableness of recoverability of subsidy receivable. • Considered the ageing of the stock with the dealers for which sales not reported in the Integrated Fertiliser Management System and reviewed the approach adopted by the Company. • • Verified compliance with Ind AS 20 on ''Accounting for Government Grants and Disclosure of Government Assistance''. • • Verified that the method followed by the Company is consistent on year to year basis.

Sl No	Key Audit Matter	Auditors'' Response
2	Property, Plant & Equipment: Estimates of useful lives and residual value of Property, Plant and Equipment is a significant area requiring Management judgment of estimates and application of accounting policies that have significant effect on the amounts recognized in the Standalone Ind AS Financial Statements.	• • We examined whether the Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant & Equipment. • Reviewed the report of the committee that studied the Impairment of the assets. • • Reviewed the capitalisation made during the year under review. • • Reviewed the valuation statement of the assets held for sale. • • Reviewed the report on the physical verification of Property, Plant and Equipment carried out by the Management and comments of the branch auditors in their report regarding physical verification conducted at depots/ zonal offices. The deficiencies in the physical verification process are reported in clause (i)(b) of Annexure A to this report. • • Reviewed the estimated useful life, residual value of assets and verified the depreciation workings. • • The deficiencies in the reconciliation of land as per documents with the books of accounts and consequent effect on the verification of completeness and correctness of the land are reported inclause (i)(c)(iv) of Annexure A to this report.

Information Other than the Standalone Ind AS Financial Statements and Auditors'' Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Annual Report including Directors'' Report, Management Discussion and Analysis, Report on Corporate Governance, Business Responsibility and Sustainability Report but does not include the Standalone Ind AS Financial Statements and our Auditors'' Report thereon.

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 such other information is materially inconsistent with the Standalone Ind AS Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

The said other information is expected to be made available to us after the date of this audit report. When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and shareholders.

Management''s Responsibility 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 Act with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS specified under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 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.

Auditors'' 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 controls relevant to the audit in order to design audit procedures that

are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial control system 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 auditors'' 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 evidences obtained up to the date of our auditors'' 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 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 maybe 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 auditors'' 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.

Other Matters

1. We did not audit the financial statements of five state offices of the Company included in the Standalone Ind AS Financial Statements of the Company, whose financial schedules reflect total revenue of Rs. 2,32,835.97 lakhs for the year ended March 31,2024, as considered in the Standalone Ind AS Financial Statements and total assets of the state offices amounting to Rs.205.93 lakhs as at March 31,2024. The Company has submitted certain financial schedules which have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the Standalone Ind AS Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these state offices and our report, in so far as it relates to the aforesaid state offices, is based solely on the reports of other auditors.

2. Our opinion on the Standalone Ind AS Financial Statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters, with respect to our reliance on the work done and the reports of the other auditors and financial schedules certified by the

Management, except on the limitation of scope reported by other auditors due to non-provision of the trial balance of the state offices audited by them and their inability to ensure the correctness of the financial schedules due to this.

3. Company has a system of obtaining balance confirmations from the customers and vendors. However, only a few customers and vendors have responded with confirmation.

4. The Standalone Ind AS Financial Statements for the year ended March 31,2023 were audited by another firm of chartered accountants who vide their report dated May 5, 2023 expressed an unmodified opinion on the Standalone Ind AS Financial Statements.

Our opinion is not modified in respect of the above matters

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' 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 the "Annexure A", a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable;

2. Based on verification of books of accounts of the company and according to information and explanations given to us, we give in "Annexure B" a report on the directions issued by The Comptroller and Auditor General of India in terms of sub-section (5) of Section 143 of the Companies Act, 2013.

3. The company does not have the required number of Independent Directors on its Board due to vacancy arising out of end of term of the existing independent directors, from June 2019 onwards hence being non-compliant with relevant Regulations of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015. A penalty has been levied on the Company for this non-compliance.

4. 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 except balance confirmations mentioned in para 3 of Other Matters paragraph and portion of internal audit reports for the fourth quarter.

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 and returns generally adequate for the purpose of our audit have been received from the state offices not audited by us.

c) The reports on the financial schedules of the five state offices of the Company audited under Section 143(8) of the Act by other auditors have been given to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flows Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account and with the returns received from five state offices not audited by us, subject to the limitation of scope by other auditors.

e) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015.

f) In view of exemption given vide notification no. G.S.R. 463(E) dated June 5, 2015, as amendedvide notification no. G.S.R 582(E) dated June 13, 2017, issued by Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of directors, are not applicable to the Company

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to the Standalone Ind AS Financial Statements and the operating effectiveness of such controls, refer to our separate report in "Annexure C".

h) Being a Government Company, the provisions of section 197 of the Act with respect to the matters to be included in the Auditors'' Report is not applicable vide notification no. G.S.R. 463(E) dated June 5, 2015, as amended vide notification no. G.S.R 582(E) dated June 13, 2017, issued by Ministry of Corporate Affairs.

I) With respect to the other matters to be included in the Auditors'' Report 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 the Standalone Ind AS Financial Statements. (Refer Note No. #48 of 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 as at March 31,2024.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year.

iv. (a) The Management has represented that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, 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;

(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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;

(c) Based on the audit procedures that has been considered reasonable and appropriate in the circumstances, 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 (a) and (b) above, contain any material misstatement.

v. As stated in Note No. 16 to the Standalone Ind AS Financial Statements,

a) The final dividend proposed in the previous year declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.

b) The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.

vi. Based on our examination which included test checks, the company has used an accounting 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 our audit we did not come across any instance of audit trail feature being tampered with.

For G Venugopal Kamath & Co.

Chartered Accountants Firm Regn No: 004674S

Sd/-

CA Vivek N Shenoy

Partner

Membership No:217021 UDIN:24217021BKERYU2928

Place: Kochi Date: May 16, 2024

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Mar 31, 2023

The Fertilisers and Chemicals Travancore Limited

Report on the Audit of the Standalone Ind AS Financial Statements

OPINION

We have audited the accompanying Standalone Ind AS Financial Statements of The FERTILISERS AND CHEMICALS TRAVANCORE LIMITED (hereinafter referred to as "the Company”), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of the 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, as amended (''''the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards specified 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, the profit and total comprehensive income, its cash flows and changes in equity for the year ended on that date.

Basis for Opinion

We have conducted our audit of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. 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 ethical requirements that are relevant to our audit of the Standalone Ind AS Financial Statements under the provisions of the Act and the Rules 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 opinion on the Standalone Ind AS Financial Statements.

Emphasis of Matter

1. We draw attention to Note #2.3 of the Standalone Ind AS Financial Statements regarding the restatement of the opening balance of Property, Plant & Equipment on April 1, 2021 valued at Rs. 47,956 lakhs.

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

Other Matters

1. Company has a system of obtaining balance confirmations relating to the customers and vendors. However, only a few customers and vendors have responded with confirmation.

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, 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. We have determined the matters described below to be the key audit matters:

Sl No	Key Audit Matter	Auditors'' Response
1	Accounting of subsidy income from Government of India under DBT Scheme: Under Direct Benefit Transfer (DBT) scheme of Government of India (GoI), the Company is entitled to receive subsidy only upon sale of fertilizer by the dealer to the ultimate beneficiary through Point of Sale (PoS) devices. However, the Company continues to account subsidy as income at the time of sale to dealers as in the earlier scheme, considering the reasonable certainty that the sale will take place and subsidy will be received based on the industry practice and past experience. Refer Note #28 to the Standalone Ind AS Financial Statements	Our principal audit procedures included the following: • • Analysed the scheme framed by the Department of Fertilizers (DoF) notified through Notification F. No. D(FA)/2016/ DBT dated March 17th, 2017. • • Reviewed the agreement with dealers. • • Performed analytical review procedures on the subsidy claim lodged by the Company from the inception of the DBT scheme and subsidy accounted by the Company. • • Analysed post Balance Sheet sales through PoS devices in Integrated Fertiliser Management System (iFMS) to assess the sales trend. • Considered the ageing of the stock with the dealers for which sales not reported in the iFMS and assessed the conservative approach adopted by the Company. • • Compliance with Ind AS 20 on ''Accounting for Government Grants and Disclosure of Government Assistance'' • • Method consistently followed by the Company from year to year.

Sl No	Key Audit Matter	Auditors'' Response
2	Property, Plant & Equipment: Estimates of useful lives and residual value of Property, Plant and Equipment is a significant area requiring Management judgment of estimates and application of accounting policies that have significant effect on the amounts recognized in the Standalone Ind AS Financial Statements.	• • We examined whether the Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant & Equipment and our observations are shown in clause (i)(a) to Annexure A to this report. • • Reviewed the report of the committee that studied the Impairment of the assets. • • Reviewed the capitalisation made during the year under review • • Reviewed the valuation report of the assets held for sale. • • Reviewed the report on the physical verification of Property, Plant and E q u i p m e n t c a rr i e d o u t b y th e Management and comments of the branch auditors in their report regarding physical verification conducted at depots/ zonal offices. The deficiencies in the physical verification process are reported in clause (i)(b) of Annexure A to this report. • • The deficiencies in the reconciliation of land as per documents with the books of accounts and consequent effect on the verifi cation of completeness and correctness of the land are reported inclause (i)(c)(iv)of Annexure A to this report

Information Other than the Standalone Ind AS Financial Statements and Auditors'' Report Thereon

The Company''s Board of Directors is responsible for the preparation of 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 Auditors'' Report thereon.

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 such other information is materially inconsistent with the Standalone Ind AS Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

The said other information is expected to be made available to us after the date of this audit report. When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and shareholders.

Management''s Responsibility 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 Act with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 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 are also responsible for overseeing the Company''s financial reporting process.

Auditors'' 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 judgement 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 controls relevant to the audit in order to design audit procedures that

are appropriate in the circumstances. Under section 143(3)(I) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial control system 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 auditors'' 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 evidences obtained up to the date of our auditors'' 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 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 aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Ind AS Financial Statements maybe 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 auditors'' 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

Other Matters

1. We did not audit the financial statements of five states comprising marketing offices of the Company included in the Standalone Ind AS Financial Statements of the Company, whose financial statements reflect total revenue of Rs. 2,40,896.66 lakhs for the year ended on that date, as considered in the Standalone Ind AS Financial Statements and total assets not quantifiable in the absence of certified trial balance of the areas as at March 31,2023. The Company has submitted certain "financial schedules” only which have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the Standalone Ind AS Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these states and our report, in so far as it relates to the aforesaid states, is based solely on the reports of other auditors.

2. Our opinion on the Standalone Ind AS Financial Statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters, with respect to our reliance on the work done and the reports of the other auditors and the Standalone Ind AS Financial Statements / Financial Information certified by the Management, except on the limitation of scope

reported by other auditors due to non-provision of the trial balance of the states audited by them and their inability to ensure the correctness of the financial schedules due to this.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' 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 the "Annexure A”, a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable;

2. Based on verification of books of accounts of the company and according to information and explanations given to us, we give in "Annexure B” a report on the directions issued by The Comptroller and Auditor General of India in terms of sub-section (5) of Section 143 of the Companies Act, 2013.

3. The company does not have the required number of Independent Directors on its Board due to vacancy arising out of end of term of the existing independent directors, from June 2019 onwards hence being non-compliant with relevant Regulations of SEBI Listing Obligation and Disclosure Requirements (LODR) Regulations, 2015. A penalty had been levied on the Company for this non-compliance.

4. 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 except for the internal audit reports of the Company relating to the fourth quarter and portions of internal audit reports relating to the third quarter for the financial year 2022-23.

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 and returns generally adequate for the purpose of our audit have been received from the units/ marketing offices not audited by us.

c) The reports on the accounts of the five states of the Company audited under Section 143(8) of the Act by other auditors have been given to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flows Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account and with the returns received from five states not audited by us, subject to the limitation of scope by other auditors.

e) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015.

f) In view of exemption given vide notification no. G.S.R. 463(E) dated June 5, 2015, as amended vide notification no. G.S.R 582(E) dated June 13, 2017, issued by Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of directors, are not applicable to the Company.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to the Standalone Ind AS Financial Statements and the operating effectiveness of such controls, refer to our separate report in "Annexure C”.

h) With respect to the other matters to be included in the Auditors'' Report 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 the Standalone Ind AS Financial Statements. (Refer Note #48 of 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 as at March 31,2023.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year.

iv. (a) The management has represented that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, 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;

(b) The management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, 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;

(c) Based on the audit procedures that has been considered reasonable and appropriate in the circumstances, 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 (a) and (b) above, contain any material misstatement.

v. The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.

Being a Government Company, the provisions of section 197 of the Act with respect to the matters to be included in the Auditor''s Report is not applicable vide notification no. G.S.R. 463(E) dated June 5, 2015, as amended vide notification no. G.S.R 582(E) dated June 13, 2017, issued by Ministry of Corporate Affairs.

For K Venkatachalam Aiyer & Co.

Chartered Accountants FRN: 004610S

Sd/-

CA V Ramachandran

Partner

Membership No:020504 UDIN:23020504BGWUBV1894

Place: Kochi Date: May 5, 2023

---

Mar 31, 2022

Report on the Audit of the Standalone Ind AS Financial

Statements

Qualified Opinion

We have audited the accompanying Standalone Ind AS Financial Statements of The FERTILISERS AND CHEMICALS TRAVANCORE LIMITED (hereinafter referred to as “the Company”), which comprise the Balance Sheet as at March 31^st, 2022, the Statement of Profit and Loss (including Other Comprehensive Income), the statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of the 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, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013, as amended (‘‘the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards specified 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^st, 2022, the profit and total comprehensive income, its cash flows and changes in equity for the year ended on that date.

Basis for Qualified Opinion

As explained in Note #2.3 regarding conversion of leasehold to freehold land to the Company, though the Government of Kerala (GoK) has accorded freehold right to the Company over 143.22 acres of land during the financial year 2019-20, the Company is yet to receive freehold title pending registration formalities. Accordingly, the fair value of the non-monetary asset of freehold title of the land converted as required under Ind AS 16 -Property, Plant and Equipment and the consequent applicability of other Ind ASs on the Standalone Ind AS Financial Statements have not been recognized by the Company. The Company has obtained a registered

valuer’s report valuing the said property at Rs. 47,956 lakhs during the year. In the event of adopting the aforesaid value as fair value in the financial statements, the impact thereof would be increase inboth Property, Plant and Equipment and Other Equity to the tune of Rs. 47,956 lakhs from the present values shown.

We have conducted our audit of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. 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 together with the ethical requirements that are relevant to our audit of the Standalone Ind AS 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 qualified opinion on the Standalone Ind AS Financial Statements.

Going Concern

The Company has accumulated loss amounting to Rs. 55,246 lakhs (previous year Rs. 91,022 lakhs). The Company’s current liabilities exceeded its current assets by Rs. 8,560 lakhs. Some of the key financial ratios of the Company are adverse. However, the Company has reported net profit including other comprehensive income of Rs. 36,938 lakhs during the year (previous year of Rs. 31,544 lakhs). The Company has a balance under current assets of Cash and Cash Equivalents and Other Bank balances of Rs. 1,87,647 lakhs (previous year Rs. 1,66,687 lakhs) as at year end. The company has submitted a proposal for restructuring of the loan received from Government of India amounting to Rs. 1,28,273 lakhs and interest due thereon. After considering these conditions, the standalone financial results of the Company have been prepared on going concern basis. Our opinion is not modified in respect of this matter.

Emphasis of Matter

1. We draw attention to Note #17.1 of the Standalone Ind AS Financial Statements regarding the confirmation of the loan and interest due thereon on the Government of India loan of Rs. 2,96,557 lakhs outstanding as on March 31^st,2022 which has been received upto March 31^st, 2020 only.

2. Note #7.5& #27.1 regarding estimated provision against irregularities in stock pending investigation in progress of Rs 218.50 lakhs.

Our opinion is not modified in respect of these 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. In addition to the matter described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters:

Sl No	Key Audit Matter	Auditors’ Response
1	Accounting of subsidy income from Government of India under DBT Scheme: Under Direct Benefit Transfer (DBT) scheme of Government of India (GoI), the Company is entitled to receive subsidy only upon sale of fertilizer by the dealer to the ultimate beneficiary through Point of Sale (PoS) devices. However, the Company continues to account subsidy as income at the time of sale to dealers as in the earlier scheme, considering the reasonable certainty that the sale will take place and subsidy will be received based on the industry practice and past experience. Refer Note #28 to the Standalone Financial Statements	Our principal audit procedures included the following: • Analysed the scheme framed by the Department of Fertilizers (DoF) notified through Notification F. No. D(FA)/2016/DBT dated March 17th, 2017. • Reviewed the agreement with dealers. • Performed analytical review procedures on the subsidy claim lodged by the Company from the inception of the DBT scheme and subsidy accounted by the Company. • Analysed post Balance Sheet sales through PoS devices in Integrated Fertiliser Management System (iFMS) to assess the sales trend. • Considered the ageing of the stock with the dealers for which sales not reported in the iFMS and assessed the conservative approach adopted by the Company. • Compliance with Ind AS 20 on ‘Accounting for Government Grants and Disclosure of Government Assistance’ • Method consistently followed by the Company from year to year.
2	Property, Plant & Equipment:Estimates of useful lives and residual value of Property, Plant and Equipment is a significant area requiring Management judgment of estimates and application of accounting policies that have significant effect on the amounts recognized in the Standalone Ind AS Financial Statements.	• We examined whether the Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant & Equipment and our observations are shown in clause (i)(a) to Annexure A to this report. • Reviewed the report of the committee that studied the Impairment of the assets. • Reviewed the capitalisation made during the year under review

Sl No	Key Audit Matter	Auditors’ Response
		• Reviewed the valuation report of the assets held for sale. • Reviewed the report on the physical verification of Property, Plant and Equipment carried out by the Management and comments of the branch auditors in their report regarding physical verification conducted at depots/ zonal offices. The deficiencies in the physical verification process are reported in clause (i)(b) ofAnnexure A to this report. • The deficiencies in the reconciliation of land as per documents with the books of accounts and consequent effect on the verification of completeness and correctness of the land are reported inclause (i)(c)(iv)of Annexure A to this report

Information Other than the Standalone Ind AS Financial Statements and Auditors’ Report Thereon

The Company’s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Annual report, but does not include the Standalone Ind ASFinancial Statements and our Auditors’ Report thereon.

Our opinion on the Standalone Ind ASFinancial 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 ASFinancial Statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the Standalone Ind AS Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

The said other information is expected to be made available to us after the date of this audit report. When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and shareholders.

Management’s Responsibility 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 Act with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian

Accounting Standards (Ind AS) specified under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 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 are also responsible for overseeing the Company’s financial reporting process.

Auditors’ 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 controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial control system 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 auditors’ report to the related disclosures in the Standalone Ind AS Financial Statementsor, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidences obtained up to the date of our auditors’ 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 financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 auditors’ 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 Other Matters

1. We did not audit the financial statements of five states comprising marketing offices of the Company included in the Standalone Ind AS Financial Statements of the Company, whose financial statements reflect total revenue of Rs. 2,14,803 lakhs for the year ended on that date, as considered in the Standalone Ind AS Financial Statements and total assets not quantifiable in the absence of certified trial balance of the areas as at March 31^st, 2022. The Company has submitted certain “financial schedules” only which have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the Standalone Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of these states and our report, in so far as it relates to the aforesaid states, is based solely on the reports of other auditors.

2. Our opinion on the Standalone Ind AS Financial Statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters, with respect to our reliance on the work done and the reports of the other auditors and the Standalone Ind AS Financial Statements / Financial Information certified by the Management, except on the limitation of scope reported by other auditors due to non-provision of the trial balance of the states audited by them and their

inability to ensure the correctness of the financial schedules due to this.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors’ 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 the “Annexure A”, a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable;

2. Based on verification of books of accounts of the company and according to information and explanations given to us, we give in “Annexure B” a report on the directions issued by The Comptroller and Auditor General of India in terms of sub-section (5) of Section 143 of the Companies Act, 2013.

3. 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 except the internal audit reports for the fourth quarter for the financial year 2021 -22.

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 and returns generally adequate for the purpose of our audit have been received from the units/ marketing offices not audited by us.

c) The reports on the accounts of the five states of the Company audited under Section 143(8) of the Act by other auditors have been given to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flows Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account and with the returns received from five states not audited by us, subject to the limitation of scope by other auditors.

e) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting

Standards) Rules, 2015 subject to the matter specified in paragraph 3 above.

f) In view of exemption given vide notification no. G.S.R. 463(E) dated June 5, 2015, issued by Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of directors, are not applicable to the Company.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to the Standalone Ind AS Financial Statements and the operating effectiveness of such controls, refer to our separate report in “Annexure C”.

h) With respect to the other matters to be included in the Auditors’ Report 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 the Standalone Ind AS Financial Statements. (Refer Note #48 of 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 has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, where applicable.

Being a Government Company, the provisions of section

197 of the Act with respect to the matters to be included

in the Auditor’s Report is not applicable

For K Venkatachalam Aiyer & Co.

Chartered Accountants

FRN: 004610S

Sd/-

CA V Ramachandran

Partner

Membership No:020504

UDIN:22020504AIUYLA4535

Place: Kochi

Date: May 6^th, 2022

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Mar 31, 2021

Report on the Audit of the Standalone Ind AS Financial StatementsQualified Opinion

1. We have audited the accompanying Standalone Ind AS financial statements of The FERTILISERS AND CHEMICALS TRAVANCORE LIMITED (the Company), which comprise the Balance Sheet as at March 31, 2021, the Statement of Profit and Loss (including Other Comprehensive Income), the statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “ the Standalone Ind AS Financial Statements”).

2. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013, as amended (‘‘the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards specified 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, 2021, the profit and total comprehensive income, its cash flows and changes in equity for the year ended on that date.

Basis for Qualified Opinion

3. As explained in Note #1.2.2 and Note #35 regarding sale of land and conversion of leasehold to freehold land to the Company, though the Government of Kerala (GoK) has accorded freehold right to the

Company over 143.22 acres of land during the financial year 2019-20, the Company is yet to receive freehold title. According to the Company, the fair value of the non-monetary asset of freehold title of the land converted as required under Ind AS 16-Property Plant and Equipment and the consequent revenue cannot be recognized at this stage, not quantified. In view of this, we are unable to comment on the compliance of the said Ind AS and the impact thereof on the financial statements.

4. We conducted our audit of the Standalone Ind AS Financial Statement in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statement 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 together with the ethical requirements that are relevant to our audit of the 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 qualified opinion on the Standalone Ind AS Financial Statement.

Going Concern

5. We draw attention to Note #57 of standalone financial statements. The Company has accumulated loss amounting to D 90,521.41 lakhs (previous year D 1,21,401.85 lakhs) with a negative net worth of D 17,498.37 lakhs (previous year D 49,192.15 lakhs). The current liabilities exceed its current assets by D 39,461.42 Lakhs (Previous year: current assets exceed its current liabilities by D 19727.66 lakhs). However, the Company has reported net profit of D 35,198.07 lakhs during the year and in previous year of D 97,550.23 lakhs. The

Company has a balance under current assets of Cash and Cash Equivalents and Other Bank balances of D 1,66,686.81 Lakhs (previous year D 68,471.73 lakhs) as at year end. The company submitted proposal for restructuring of the loan received from Government of India. After considering these conditions, the standalone financial statements of the Company have been prepared on going concern basis.

Our opinion is not modified in respect of this matter.

Key Audit Matters

6. 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. In addition to the matter described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters:

Sl No	Key Audit Matter	Auditors’ Response
1	Accounting of subsidy income from Government of India under DBT Scheme: Under Direct Benefit Transfer (DBT) scheme of Government of India (GoI), the Company is entitled to receive subsidy only upon sale of fertilizer by the dealer to the ultimate beneficiary through Point of Sale (PoS) devices. However, the Company continues to account subsidy as income at the time of sale to dealers as in the earlier scheme, considering the reasonable certainty that the sale will take place and subsidy will be received based on the industry practice and past experience. Refer Note #27 to the standalone financial statements	Our principal audit procedures included the following: • Analyzed the scheme framed by the Department of Fertilizers (DoF) notified through Notification F. No. D(FA)/2016/DBT dated March 17, 2017. • Reviewed the agreement with dealers. • Performed analytical review procedures on the subsidy claim lodged by the Company from the inception of the DBT scheme and subsidy accounted by the Company. • Analyzed post Balance Sheet sales through PoS devices in Integrated Fertiliser Management System (iFMS) to assess the sales trend. • Considered the ageing of the stock with the dealers for which sales not reported in the (iFMS) and assessed the conservative approach adopted by the Company. • Compliance with Ind AS 20 on ''Accounting for Government Grants and Disclosure of Government Assistance'' • Method consistently followed by the Company.
2	Property, Plant & Equipment: Estimates of useful lives and residual value of Property, Plant and Equipment is a significant area requiring Management judgment of estimates and application of accounting policies that have significant effect on the amounts recognized in the Standalone Ind AS Financial Statements.	• We examined whether the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets and our observations are shown in clause 1(a) to Annexure A to this report. • Reviewed the report of the committee that studied the Impairment of the assets. • Reviewed the capitalisation made during the year under review • Reviewed the valuation report of the assets held for sale, regrouped during the year. • We have tested the computation of depreciation on sample basis. • Reviewed the report on the physical verification of Property, Plant and Equipment carried out by the Management and comments of the branch auditors in

			their report regarding physical verification conducted at depots/ zonal offices. The deficiencies in the physical verification process are reported in clause 1(b) to Annexure A to this report • The deficiencies in the reconciliation of land as per documents with the books of accounts and consequent effect on the verification of completeness and correctness of the land are reported in clause 1(c) to Annexure A to this report

Emphasis of Matter

7. We draw attention to Note #18.1 of the standalone Ind AS financial statements regarding the confirmation of the loan and interest due thereon on the Government of India loan of D 2,72,655.07 Lakhs outstanding as on March 31,2021. However we report that the loan and interest due there on as on March 31,2020 is confirmed by the Government of India during the year.

Our opinion is not modified in respect of this matter. Management’s Responsibility for the Standalone Ind AS Financial Statements

8. The Company’s Board of Directors is responsible for the matters stated in section 134(5) of 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, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 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.

9. 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.

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

Auditors’ Responsibilities for the Audit of the Standalone Ind AS Financial Statements

11. 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.

12. 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 controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial control system 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 auditors’ 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 evidences obtained up to the date of our auditors’ 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 financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

13. 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.

14. 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.

15. 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 auditors’ 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

Other Matter

16. We did not audit the financial statements of five states comprising marketing offices of the Company included in the Standalone Ind AS financial statements of the Company, whose financial statements reflect total revenue of Rs 2,16,046.30 lakhs for the year ended on that date, as considered in the standalone Ind AS financial statements and total assets not quantifiable in the absence of certified trial balance of the areas as at March 31, 2021. The Company has submitted certain “financial schedules” only which have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the standalone Ind As financial statements, in so far as it relates to the amounts and disclosures included in respect of these states and our report, in so far as it relates to the aforesaid states, is based solely on the reports of other auditors.

Our opinion on the standalone Ind AS financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters, with respect to our reliance on the work done and the reports of the other auditors and the Standalone Ind AS financial statements / financial information certified by the Management, except on the scope limitation reported by other auditors due to non-provision of the trial balance of the states audited by them and their inability to ensure the correctness of the financial schedules due to this.

17. The Standalone Ind AS financial statements of the Company for the year ended March 31,2020 were audited by another auditor whose report dated June 25, 2020 expressed a qualified opinion on those statements.

Report on other Legal and Regulatory Requirements

18. As required by the Companies (Auditors’ 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 A”, a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable;

19. Based on verification of books of accounts of the company and according to information and explanations given to us, we give in “Annexure B” a report on the directions issued by The Comptroller and Auditor General of India in terms of sub-section (5) of Section 143 of the Companies Act, 2013.

20. 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 and returns generally adequate for the purpose of our audit have been received from the units/ marketing offices not audited by us.

c. The reports on the accounts of the five states of the Company audited under Section 143(8) of the Act by other auditors have been given to us and have been properly dealt with by us in preparing this report.

d. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flows Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account and with the returns received from five states not audited by us, subject to the scope limitation by other auditors.

e. In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian

Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015 subject to the matter specified in paragraph 3 above.

f. In view of exemption given vide notification no. G.S.R. 463(E) dated June 5, 2015, issued by Ministry of Corporate Affairs, provisions of Section 164(2) of the Act regarding disqualification of directors, are not applicable to the Company.

g. With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to the Standalone Ind AS Financial Statements and the operating effectiveness of such controls, refer to our separate report in “Annexure C”.

h. With respect to the other matters to be included in the Auditors’ Report 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 the Standalone Ind AS financial statements. (Refer Note #46 of 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 has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, where applicable.

21. Being a Government Company, the provisions of section 197 of the Act with respect to the matters to be included in the Auditor’s Report is not applicable

For K Venkatachalam Aiyer & Co.

Chartered Accountants FRN 004610S

Sd/-

CA P S Harikrishnan

Partner

Membership No 207560 UDIN : 21207560AAAADM1648

Place: Kochi Date: June 18, 2021

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Mar 31, 2018

Report on the Standalone Financial Statements

1) We have audited the accompanying standalone Ind AS financial statements of THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss(including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

2) 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 state of affairs, profit or loss (including other 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 specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.

3) 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

4) In preparing the 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 operation, or has no realistic alternative but to do so.

Auditor’s Responsibility

5) Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the Accounting and Auditing Standards and matters required to be included in the audit report under the provisions of the Act and the Rules made there under.

6) 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. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

7) An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone financial statements.

8) We are also responsible to conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidences obtained, whether a material uncertainty exists, related to events and conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause an entity to cease to continuing as a going concern.

9) 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.

Opinion

10) In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of the report of other auditors on the financial information of the branches, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2018, its loss (including other comprehensive income), its changes in equity and its cash flows for the year ended on that date.

Material uncertainty related to Going Concern

11) We draw attention to note no # 58 of standalone Ind AS financial statements. The Company has accumulated loss amounting to Rs. 234347 lakhs with a negative net worth of Rs. 164018 lakhs and its net worth has been completely eroded. The Company has incurred a net loss during the current and previous years. This condition indicates the existence of material uncertainty which may cast significant doubt as to the Company’s ability to continue as a going concern. However, the financial statements of the Company have been prepared on going concern basis.

Our opinion is not qualified in respect of this matter.

Other Matter

12) We did not audit the financial statements of four areas comprising marketing offices of the Company whose financial statements reflect total fixed assets of Rs.150 lakhs as at March 31, 2018 and total sales of Rs. 137953 lakhs for the year ended on that date as considered in the financial statement. The Company has submitted certain “financial schedules” only which have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the financial statements, in so far as they relate to the amounts and disclosures included in respect of these areas and our report, in so far as it relates to the aforesaid areas, is based solely on the reports of the other auditors.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

13) As required by the Companies (Auditor’s Report) Order, 2016 (“the CARO”), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the said CARO, to the extent applicable.

14) Based on the verification of books of account of the Company and according to information and explanations given to us, we give in “Annexure B” a report on the Directions/ Additional sub- directions issued by the Comptroller and Auditor General of India in terms of section 143(5) of the Act.

15) 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 and returns generally adequate for the purpose of our audit have been received from the units/marketing offices not audited by us.

c) The reports on the accounts of the four areas of the Company audited under Section 143(8) of the Act by other auditors have been given to us and have been appropriately dealt with by us in preparing this Report.

d) The Balance Sheet, the Statement of Profit and Loss, Statement of Changes in Equity and, the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the four areas not visited by us.

e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015.

f) Being a government company, the provisions of sub section (2) of Section 164 of the Companies Act, 2013 is not applicable.

g) With respect to the adequacy of the internal controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure C” to the Report.

h) 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:

a) The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements.(Refer Note #47)

b) 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.

c) There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company, where applicable.

i. In respect of the Company’s fixed assets:

(a) The Company has maintained generally proper records showing the particulars including quantitative details except impairment losses. Even though fixed asset register contains individual asset identification numbers, no such numbers are marked on the respective fixed assets.

(b) The fixed assets have been stated to be physically verified by the Management during the year and are not observed by us. However, the physical verification procedure needs to be strengthened. As explained to us, no material discrepancies were noticed on such physical verification.

(c) In our opinion and according to information and explanations given to us and on the basis of an examination of records of the Company, the title deeds of immovable properties are held in the name of the Company, except in the following cases.

Particulars	Number of assets	Extent of land	Gross Block as at		Net block as at
		(in acres)	March 31, 2018	March 31,2017	March 31, 2018	March 31,2017
			(Rupees in lakhs)
Freehold land	1	48.49	5131	511*	513*	511*
Leasehold land	1	14.26	_2	_**	_**	_**

*As provided by Management (Refer Note number 1.3 of Property, plant and equipment under Note number 1).

The Company has executed a deed of indemnity with the Lessor in respect of the property on February 26, 2016,wherein it was agreed that the Company is interested to continue the lease for a further period of 30 years from April 01, 2014 to March 31, 2044 on execution of fresh lease deed incorporating mutually agreed terms and conditions. However, no fresh deed is executed till date, though the Company continues to occupy the land and pay the lease rentals.

ii. In respect of the Company’s inventories:

(a) The inventories have generally been physically verified by the Management as at year-end. In our opinion, the frequency of verification needs to be improved.

(b) In our opinion and according to the information and explanations given to us, the procedure of physical verification of inventories followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventories. As explained to us, no material discrepancies were noticed on such physical verification and have been properly dealt with in the books of account, except in case of by-product gypsum.

iii. The Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered under register maintained under section 189 of the Companies Act, 2013 (“the Act”), except the interest free advances in the nature of loans doubtful of recovery, of Rs.953 lakhs (previous year Rs.885 lakhs)to a joint venture company (Refer note number 6)

iv. According to the information and explanations given to us, there are no loans, investments, guarantees and securities given in respect of which provisions of section 185 and 186 of the Act are applicable including the amount due from the joint venture company.

v. According to the information and explanations given to us, the Company has not accepted any deposits from public. Therefore, the provisions of clause (v) of paragraph 3 of the CARO are not applicable to the Company.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under section 148(1) of the Act and are of the opinion that, prima facie, the prescribed cost records have been made and maintained by the Company. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

vii. According to the information and explanations given to us and records of the Company examined by us, in respect of statutory dues:

a. In our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, service tax, goods and services tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it with the appropriate authorities during the year. No undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2018 for a period of more than six months from the date they became payable.

b. The particulars of dues towards income tax, sales tax, service tax, customs duty, excise duty, value added tax, cess which have not been deposited as at March 31, 2018, on account of disputes are given below:

Name of statute	Nature of dues	Demand- net of payment (Rupees in lakhs)	Period to which dispute relates	Forum where dispute pending
Central Excise Act, 1944	Excise duty, interest and penalty against utilization of CENVAT credit against duty payable.	6875	2010-11 to 2013-14 and 2006-07 to 2010-11	Customs, Excise and Service Tax Appellate Tribunal, Bangalore
Central Excise Act, 1944	Excise duty, interest and penalty on shortage of raw material written off.	90	2003-04	Commissioner of Central Excise, Kochi
Finance Act, 1994	Service tax and interest thereon on training fee, upfront premium on shares issued and maintenance charges.	293	2003-04 to 2009-10	Customs, Excise and Service Tax Appellate Tribunal, Bangalore
Finance Act, 1994	Service tax and interest thereon on training fee.	104	2006-07 to 2012-13	Commissioner of Central Excise, Kochi
Madhya Pradesh Entry Tax	Entry tax	4	1980-84	Board of Revenue (Commercial Tax Tribunal) Gwalior, Madhya Pradesh
Sales Tax Act, Punjab	Sales tax	48	1999 -00 to 2000-01	High Court of Haryana and Punjab
Sales Tax Act, Orissa	Sales tax	63	1985-1992	High Court of Orissa
Sales Tax, Kerala	Sales tax	257	2009-10 to 2011-12	Commercial Taxes Ernakulam
Income Tax Act, 1961	Interest on income tax	3	2001-02	Commissioner of Income Tax (Appeals), Kochi
Income Tax Act, 1961	Income tax and interest on payments to foreign technicians	78	1994-95 to 1997-98	High Court of Kerala
Income Tax Act, 1961	Income tax and interest thereon on certain disallowances in assessment.	10	1997-98	High Court of Kerala

viii. Based on our examination of the records of the Company and according to the information and explanations given to us, the Company has no dues to financial institution, bank or debenture holders as at Balance Sheet date. However, the Company has defaulted in repayment of interest on loan from Government of India as at Balance Sheet date, the details of which are given below:

The details of defaulted interest on loan as on reporting date:

Name of lender and nature	Period of default	Defaulted amount (Rupees in lakhs)
Interest accrued and due on loans from Government of India	Less than 1 year	23902

However, the Management is of the view that there is no default in repayment of interest.

ix. According to the information and explanations given to us, the Company has not raised money by way of initial public offer or further public offer. In our opinion and according to the information and explanations given to us, term loan from Government of India has been applied by the Company for which they were sanctioned.

x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

xi. Being a government Company, the provisions of Section 197 read with Schedule V of the Act regarding managerial remuneration are not applicable to the Company and hence reporting under clause (xi) of paragraph 3 of the CARO is not applicable.

xii. The Company is not a Nidhi Company as prescribed under Section 406 of the Act and hence reporting under clause (xii) of paragraph 3 of the CARO is not applicable.

xiii. Based on our examination of the books and records of the Company and according to the information and explanations given to us, all transactions with the related parties are in compliance with Section 177 and 188 of the Act, where applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the applicable Accounting Standards.

xiv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any allotment of shares or debentures during the year. Hence reporting under clause (xiv) of paragraph 3 of the CARO is not applicable.

xv. According to the information and explanations given to us and based on our examination of records of the Company, the Company has not entered into any non-cash transactions with the directors or persons connected with him and hence reporting under clause (xv) of paragraph 3 of the CARO is not applicable.

xvi. According to the information and explanations given to us, the Company is not required to be registered under Section 45 IA of the Reserve Bank of India Act, 1934 and hence reporting under clause (xvi) of paragraph 3 of the CARO is not applicable.

We have audited the internal financial controls over financial reporting of FERTILISERS AND CHEMICALS TRAVANCORE LIMITED(‘the Company’) as of March 31, 2018 in conjunction with our audit of the financial statements of the Company for the year ended on that date. Management’s Responsibility for Internal Financial Controls The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘iCaI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013. Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the ‘Guidance Note’) and the Standards on Auditing, issued by the ICAl and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial 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 and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, reasonably adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting need to be strengthened as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company, considering the essential components of internal control stated in the Guidance Note on ‘Audit of Internal Financial Controls Over Financial Reporting’ issued by the Institute of Chartered Accountants of India.

For Babu A Kallivayalil & Co.

Chartered Accountants

Firm Registration No. 05374S

Sd/-

E V Thomas

Kochi Partner

May 30, 2018 Membership No. 3679

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Mar 31, 2017

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of The Fertilisers And Chemicals Travancore Limited (“the Company”), which comprise the Balance Sheet as at 31^st March, 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone 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 financial statements that give a true and fair view of the financial position, financial performance 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, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters, which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31^st, 2017, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

a) We draw attention to Note No. 33 to the standalone financial statement. The Company has accumulated loss amounting to Rs.214356.50 Lakhs and its net worth has been fully eroded, the Company has incurred a net loss during the current and previous years. This condition indicates the existence of material uncertainty which may cast significant doubt as to the Company’s ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said note.

b) We draw attention to Note No. 28.1 to the standalone financial statement. The Company has written back the interest provision amounting to Rs.6834.22 Lakhs during the year and shown under exceptional item. Confirmation in this regard is expected from the Government of India. The Company has received communication dated 26^th May, 2017 from Department of Fertilizers address to Pay and Accounts Officer, Department of Fertilizers, advising to confirm.

c) We draw attention to Note No.19.1 to the standalone financial statement. The Company has shown under other current assets amount of Rs.3046.41 Lakhs as receivable from Government of Kerala towards reimbursement of KVAT paid on purchase of RLNG during the period from 18^th July 2016 to 31^stMarch 2017. The Company has considered the pronouncement made in State Assembly during the budget session.

Our opinion is not modified in respect of this matter

Other Matter

We did not audit the financial statements of 4 areas of marketing division included in the standalone financial statements of the company whose financial information reflect total asset of Rs.201.02 Lakhs as at 31^st March, 2017 and total revenue of Rs.128813.15 Lakhs for the year ended on that date, as considered in the standalone financial statements. The financial information of these branches have been audited by the branch auditors whose report have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our opinion is not qualified in respect of this matter.

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 Companies Act, 2013 we give in the “Annexure A”, a statement on the matters specified in the paragraph 3 and 4 of the Order.

2. As required by Section 143 (5) of the Act, we give in Annexure C, on the basis of such checks of the books and the records of the Company as we considered appropriate and according to the informations and explanations given to us, in the annexure on the directions issued by the Comptroller and Auditor-General of India.

3. As required by section 143(3) of the Companies 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 purpose of our audit;

b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of written representation received from the Directors as on 31^st March, 2017, and taken on record by the Board of Directors, We report that none of the Directors is disqualified as on 31^st March, 2017, from being appointed as director in terms of Section 164(2) of the Act;

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”, our report express an unmodified opinion on the adequacy and the operating effectiveness of the Company’s internal financial control over financial reporting; and

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 29 to the 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 has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosure in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November, 2016 to 30 December, 2016 and these are in accordance with the books of accounts maintained by the Company. Refer Note 17.2 to the financial statements.

ANNEXURE ‘A’ TO THE INDEPENDENT AUDITORS’ REPORT

Referred to in Paragraph (1) under the heading of “Report on Other Legal and Regulatory Requirements’^ our report to the members of The Fertilisers And Chemicals Travancore Limited on the accounts for the year ended 31^st March, 2017

1. In respect of its fixed assets:

(a) The Company is generally maintaining proper records showing full particulars, including the quantitative details and situation of fixed assets.

(b) The company has a regular programme of physical verification of its fixed assets by which fixed assets were verified in a phased manner over a period of three years. In our Opinion, the periodicity of physical verification is reasonable having regard to the size of the Company and nature of its business. To the best of our knowledge, no material discrepancies were noticed on verification conducted during the year as compared with book records.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for 48.49 Acres of land amounting to Rs.510.77 Lakhs for which Patta/ Title Deed is to be issued.

2. In respect of inventories

a. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of accounts.

3. The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, with respect to the loans, investments, guarantees and security made.

5. According to the information and explanation given to us, the Company has not accepted any deposits from the public during the year.

6. We have broadly reviewed the books of accounts maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 as prescribed by the Central Government under section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7. a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees State Insurance Fund, Income Tax, Wealth Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanation given to us, no material undisputed amounts payable in respect of Provident Fund, Employees State Insurance Fund, Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other material statutory dues were in arrears as at 31^st March, 2017 for a period of more than six months from the date they became payable.

b) According to the information and explanation given to us, the following disputed dues of Sales Tax, Income Tax, Customs Duty , Excise Duty, Service Tax, Cess etc. which have not been deposited as on 31^st March, 2017 are given below.

Natureof Statute	Nature of Dues	Forum where Dispute pending	Financial Year	Amount involved (Rs. in lakhs)	Amount unpaid (Rs. in lakhs)
Central Excise Act, 1944	Duty, penanlty with interest demand disputed by company. Cenvat utilised for fertilizer clearances	Customs, Excise and Service Tax Appellate Tribunal, Bangalore	2010 to 2013-14	8742.53	6512.75
Central Excise Act, 1944	Duty with interest and penalty on shortages written off	Commissioner of Central Excise, Kochi	2003-04	86.77	86.77
Central Excise Act, 1944	Duty with interest and penalty on Cenvat availment	Customs, Excise and Service Tax Appellate Tribunal, Bangalore	2006-07 to 2010-11	0.49	0.44
Finance Act, 1944	Tax Penalty and interest demand on service tax	Customs, Excise and Service Tax Appellate Tribunal, Bangalore	2003-04 to 2009-10	290.46	278.05
Finance Act, 1944	Tax Penalty and interest demand on service tax	Commissioner of Central Excise, Kochi	2006-07 to 2012-13	98.99	98.99
Madhya Pradesh Entry Tax	Entry tax demand	Board of Revenue (Commercial Tax Tribunal) Gwalior, Madhya Pradesh)	1980-84	3.67	3.67
Sales Tax Act, Punjab	Sales tax demand	High Court of Haiana & Punjab	1999-2000 2000-2001	119.00	46.03
Sales Tax Act, Orissa	Sales tax demand	High Court of Orissa	1985-1992	63.00	63.00
Sales Tax Act, Kerala	Sales tax demand	Commercial Taxes, Ernakulam	2011-2012	7.68	7.68
Income Tax Act, 1961	Tax demand due to disallowances	High Court of Kerala	1987-88	11.77	-
Income Tax Act, 1961	Tax demand due to disallowances	High Court of Kerala	1989-90	32.40	-
Income Tax Act, 1961	Interest demand u/s 234B(3)	CIT (Appeals), Kochi	2001-02	2.94	-
Income Tax Act, 1961	Tax demand due to disallowance	CIT (Appeals), Kochi	2005-06	1.32	-
Income Tax Act, 1961	Additional Tax and Interest demanded on payments to foreign technicians	High Court of Kerala	1994-95 to 1997-98	103.05	78.21
Income Tax Act, 1961	Tax demand due to disallowance	High Court of Kerala	1997-98	10.49	10.49

8. In our opinion and according to the information and explanations given to us and based on the documents and records produced before us, the Company has not defaulted in repayment of loans or borrowings to Financial Institutions, Banks, Government or dues to debenture holders.

9. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments). The term loans raised during the year were applied for the purpose for which those are raised.

10. According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit. However, on initiation of vigilance enquiry it is observed that, a tender for sale of gypsum awarded to a contractor enabled certain beneficiary to gain undue benefits. Based on the intervention of GOI, the Company have cancelled the sale of gypsum to the said contractor. Since the data relating to undue benefits is not available with the Company, we are not in a position to quantify the amount involved.

11. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

13. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

14. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

15. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For K. VARGHESE & Co.

Chartered Accountants

(Firm Registration No. 004525S)

Sd/-

Sam Varghese

New Delhi Partner

30^th May, 2017 (Membership No. 216979)

---

Mar 31, 2016

To The Members of The Fertilizers And Chemicals Travancore Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of The Fertilizers And Chemicals Travancore Limited (“the Company”), which comprise the Balance Sheet as at 31^st March, 2016, the Statement of Profit and Loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Standalone 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 financial statements that give a true and fair view of the financial position, financial performance 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, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters, which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements.

The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall , presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31^st , 2016, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

a) We draw attention to Note No. 33 to the standalone financial statement. The Company has accumulated loss amounting to Rs. 1,95,660.28 Lakhs and its net worth has been fully eroded, the Company has incurred a net loss during the current and previous years. This condition indicates the existence of material uncertainty which may cast significant doubt as to the Company''s ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said note.

Our opinion is not modified in respect of this matter

Other Matter

We did not audit the financial statements of 5 area/regional offices of marketing division included in the standalone financial statements of the company whose financial information reflect total asset of Rs. 932.64 Lakhs as at 31^st March, 2016 and total revenue of Rs. 1,15,882.20 Lakhs for the year ended on that date, as considered in the standalone financial statements. The financial information of these branches have been audited by the branch auditors whose report have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our opinion is not qualified in respect of this matter.

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 Companies Act, 2013 we give in the “Annexure A”, a statement on the matters specified in the paragraph 3 and 4 of the Order.

2. As required by Section 143 (5) of the Act, we give in Annexure C, on the basis of such checks of the books and the records of the Company as we considered appropriate and according to the information’s and explanations given to us, in the annexure on the directions issued by the Comptroller and Auditor-General of India.

3. As required by section 143(3) of the Companies 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 purpose of our audit;

b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of written representation received from the Directors as on 31^st March, 2016, and taken on record by the Board of Directors, We report that none of the Directors is disqualified as on 31^st March, 2016, from being appointed as director in terms of Section 164(2) of the Act;

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”, our report express an unmodified opinion on the adequacy and the operating effectiveness of the Company’s internal financial control over financial reporting; and

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 29 to the 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 has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

1. In respect of its fixed assets:

ANNEXURE ‘A’ TO THE INDEPENDENT AUDITORS’ REPORT

Referred to in Paragraph (1) under the heading of “Report on Other Legal and Regulatory Requirements’^ our report to the members of The Fertilizers And Chemicals Travancore Limited on the accounts for the year ended 31st March, 2016

(a) The Company is generally maintaining proper records showing full particulars, including the quantitative details and situation of fixed assets.

(b) The company has a regular programme of physical verification of its fixed assets by which fixed assets were verified in a phased manner over a period of three years. In our Opinion, the periodicity of physical verification is reasonable having regard to the size of the Company and nature of its business. To the best of our knowledge, no material discrepancies were noticed on verification conducted during the year as compared with book records.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for 48.49 Acres of land amounting to Rs. 510.77 Lakhs for which Patta/ Title Deed is to be issued.

2. In respect of inventories

a. The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of accounts.

3. The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, with respect to the loans, investments, guarantees and security made.

5. According to the information and explanation given to us, the Company has not accepted any deposits from the public during the year.

6. We have broadly reviewed the books of accounts maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 as prescribed by the Central Government under section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7. a) According to the information and explanations

given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees State Insurance Fund, Income Tax, Wealth Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanation given to us, no material undisputed amounts payable in respect of Provident Fund, Employees State Insurance Fund, Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other material statutory dues were in arrears as at 31^st March, 2016 for a period of more than six months from the date they became payable.

b) According to the information and explanation given to us, the following disputed dues of Sales Tax, Income Tax, Customs Duty, Excise Duty, Service Tax, Cess etc. which have not been deposited as on 31^st March, 2016 are given below.

Nature of Statute	Nature of Dues	Forum where Dispute pending	Financial Year	Amount involved (Rs. in lakhs)	Amount unpaid (Rs. in lakhs)
Central Excise Act, 1944	Duty, penalty with interest demand disputed by company. Cenvat utilized for fertilizer clearances	Customs, Excise and Service Tax Appellate Tribunal, Bangalore	2010-11 to 2013-14	8381.06	6151.28
Central Excise Act, 1944	Duty with interest and penalty on shortages written off	Commissioner of Central Excise, Kochi	2003-04	83.49	83.49
Central Excise Act, 1944	Duty with interest and penalty on Cenvat availment	Customs, Excise and Service Tax Appellate Tribunal, Bangalore	2006-07 to 2010-11	5.44	5.22
Finance Act, 1994	Tax Penalty and interest demand on service tax	Customs, Excise and Service Tax Appellate Tribunal, Bangalore	2003-04 to 2009-10	274.37	262.00
Finance Act, 1994	Tax Penalty and interest demand on service tax	Commissioner of Central Excise, Kochi	2006-07 to 2012-13	95.52	95.52
Madhya Pradesh Entry Tax	Entry tax demand	Board of Revenue (Commercial Tax Tribunal) Gwalior, Madhya Pradesh	1980-84	3.67	3.67
Sales Tax Act Punjab	Sales tax demand	High Court of Haryana and Punjab	1985-92	43.76	43.76
Sales Tax Act, Orissa	Sales tax demand	High Court of Orissa	2000-01	63.00	63.00
Income Tax Act, 1961	Tax demand due to disallowances	High Court of Kerala	1987-88	11.77	-
Income Tax Act, 1961	Tax demand due to disallowances	High Court of Kerala	1989-90	32.40	-
Income Tax Act, 1961	Interest demand u/s 234B (3)	CIT (Appeals), Kochi	2001-02	2.94	-
Income Tax Act, 1961	Tax demand due to disallowance	CIT (Appeals), Kochi	2005-06	1.32	-
Income Tax Act, 1961	Additional Tax and Interest demanded on payments to foreign technicians	High Court of Kerala	1994-95 to 1997-98	103.05	78.21
Income Tax Act, 1961	Tax demand due to disallowances	High Court of Kerala	1997-98	10.49	10.49

8. In our opinion and according to the information and explanations given to us and based on the documents and records produced before us, the Company has not defaulted in repayment of loans or borrowings to Financial Institutions, Banks, Government or dues to debenture holders.

9. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments). The term loans raised during the year were applied for the purpose for which those are raised.

10. According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

11. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

13. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

14. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

15. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

We have audited the internal financial controls over financial reporting of The Fertilizers And Chemicals Travancore Limited (“the Company”) as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

ANNEXURE ‘B’ TO THE INDEPENDENT AUDITORS’ REPORT

Referred to in Paragraph (f) under the heading of “Report on Other Legal and Regulatory Requirements’^ our report to the members of The Fertilizers And Chemicals Travancore Limited on the accounts for the year ended 31^st March, 2016 Report on the Internal Financial Controls over financial reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

Management’s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on “the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’)”. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing, prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion and to the best our information and according to the explanations given to us , the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, based on “the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India”.

For K. VARGHESE & Co.

Chartered Accountants

(Firm Registration No. 004525S)

Sd/-

Sam Varghese

New Delhi Partner

30^th May, 2016 (Membership No. 216979)

---

Mar 31, 2015

We have audited the accompanying standalone financial statements of The Fertilizers And Chemicals Travancore Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, and the Statement of Profit and Loss the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Stand alone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Company's Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance 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, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 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 statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters, which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10} of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 st March 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note No. 33 to the financial statements which indicates that the Company has accumulated losses amounting to Rs. 150440.82 Lacs and its net worth has been fully eroded, the Company has incurred a net loss during the current and previous years and the Company's current liabilities exceeded the current assets as at 31st March 2015. In order to continue operation for the next 12 months the Company is dependent upon the approval of the financial Restructuring Proposal, which has been recommended by Board for Reconstruction of Public Sector Enterprises on 20.12.2013 and is awaiting the final approval of Government of India. This condition indicates the existence of material uncertainty which may cast significant doubt as to the Company's ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis of the reason stated in the said note.

Our Opinion is not modified in respect of this matter.

Other Matter

We did not audit the financial information of 5 branches included in the standalone financial statements of the Company whose financial information reflect total assets of Rs. 11,262.49 lacs as at 31st March, 2015 and total revenues of Rs. 1,32,152.94 lacs for the lyear ended on that date, as considered in the standalone financial statements. The financial information of these branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our Opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

(i) As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Gavernment in terms of Sub Section 143 of the Company's Act 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

(ii) We are enclosing our report in terms of section 143 (5) of the Act, on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, in the Annexure on the directions and sub-directions issued by the Comptroller and Auditor General of India.

(iii) As required by section 143(3) of the Companies 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 purpose of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) The reports on the accounts of the branch offices of the Company audited under section 143(8) of the Act by branch auditors have been sent to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

e) In our opinion, the aforesaid standalone financial statement comply with the Accounting Standards notified under Section 133 of the Act read with Rule 7 of the Company's (Accounts) Rules, 2014.

f) The going concern matter described in sub-paragraph under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

g) On the basis of the written representations received from the Directoros as on 31st March, 2015 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2015 from being appointed as a Director in terms of Section 164(2) of the Act.

h) 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 29 to the 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 has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

Referred to in Paragraph (1) under the heading of "Report on Other Legal and Regulatory Requirements"of our report of even date

1. In respect of its fixed assets:

a) The Company is generally maintaing proper records showing full particulars including the quantitative details and situation of fixed assets. However in respect of certain regional offices the records are not showing full particulars ofthefixed assets.

b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets were verified in a phased manner over a period of three years. During the year fixed assets were verified and no material discrepancies were noticed on such verification. In our opinion, this periodicity of verification is reasonable having regard to the size of the Company and the nature ofthe business.

2. In respect of its inventory:

a) As explained to us, the inventories have generally been physically verified (except those lying with third parties and in transit) during the year by the management at reasonable intervals.

b) In our opinion and according to the information and explanation given to us , and taking into consideration the nature of business, we are ofthe opinion that the procedures of physical verification of the inventories followed by the Management need to be strengthened in relation to the size of the company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and records were not material in relation to the operation of the company and the same have been properly dealt with in the books of account.

3. The Company has neither granted nor taken any loans, secured or unsecured to companies, firms orother parties covered in the register maintained under Section 189 of the Companies Act, 2013.

4 In our opinion and according to the information and explanations given to us, the internal control system may be strengthened in certain areas at the certain regions to commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and service. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. According to the information and explanation given to us, the Company has not accepted any deposits from the public during the year.

6. We have broadly reviewed the books of account maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 148(1) of the Companies Act, 2013 and are ofthe opinion that prima facie the prescribed records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7.

a) According to the information and explanations given to us no material undisputed amounts payable in respect of Provident Fund, Employees State Insurance Fund, Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues were in arrears as at 31 st March, 2015 for a period of more than six months from the date they became payable.

b) According to the information and explanation given to us, the following disputed dues of sales tax, income tax, customs duty, service tax excised duty, cess, value added tax, etc. which have not been deposited as on 31st March, 2015, are given below.

Name of the Nature of the dues Amount . Period to which Statute income (Rupees in Lacs) dispute relates

Income Tax Act, 1961 Tax demand due to 10.49 1997-98 disallowances

Income Additional tax and interest 1994-95 Tax Act, 1961 demanded on payments to 78.21 to foreign technicians 1997-98

Finance Act, Tax, penalty and 2003-04 1994 interest demand on 235.98 to 2008-09 service tax

Finance Act, Tax, penalty and interest 2006-07 1994 demanded, disputed by 86.11 to 2011-12 the Company

Central Duty .penalty and with 2010-11 Excise Act, interest demand disputed 6273.02 to 2011-12 1944 by company. Cenvat utilised for fertiliser clearances

Central Excise Duty with interest and Act, 1944 penalty on shortages written 79.94 2003-04 off

Central Excise Duty with interest Act, 1944 and penalty on 5.53 2006-11 Cenvat avaiiment

Madhya Pradesh Entry tax demand 3.67 1980-84 Entry Tax

Sales Tax Act, Sales tax demand 63.00 1985-92 Orissa

Sales Tax and Central Sales Sales tax demand 30.84 2000-01 Tax Act, Punjab

Name of the Forum where Statute income dispute is pending

Income Tax Act, 1961 High Court of Kerala

Income Tax Act, 1961 High Court of Kerala

Finance Act, Customs, Excise and Service 1994 Tax Appellate Tribunal, Bangalore

Finance Act, Commissioner of 1994 central excise, kochi

Central Customs, Excise and Service Tax Excise Act, Appellate Tribunal, Bangalore 1944

Central Excise Commissioner of Act, 1944 central excise, kochi

Central Excise Commissioner Act, 1944 of central excise, kochi

Madhya Board of Revenue (Commercial Tax Pradesh Tribunal), Gwalior, Madhya Pradesh Entry Tax

Sales Tax Act, High Court of Orissa Orissa

Sales Tax and Central Sales High Court of Tax Act, Punjab Punjab and Haryana

c. According to the information and explanations given to us, the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under has been transferred to such fund within time.

8. The accumulated losses of the company as at 31st march, 2015 are more than One Hundred percentage of its net worth and it has incurred cash losses during the year and in the immediately preceding financial year and provisions of the Sick Industrial Companies ( Special Provisions Act), 1985 is applicable,

9. In our opinion and according to the information and explanations given to us and based on the documents and records produced before us, the Company has not defaulted in repayment of dues to Financial Institutions / Banks.

10. In our opinion and according to the information and explanations given to us, the company has given guarantee for the Loan taken by FACT- RCF Building Products Limited from Banks, to the extent of Rs. 3546.50 Lacs. According to the information and explanation given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the company.

11. In our opinion and according to the information and explanations given to us, the term loans have been appliedbytheCompanyduringtheyearforthepurpose for which they were obtained.

12. To the best of our knowledge and according to the information and explanations given to us, no material fraud on or by the company has been noticed or reported during the year

For K. VARGHESE & Co. Chartered Accountants (Firm Registration No. 004525S) Sd /- K. Varghese KOCHI Partner 29th May 2015 (Membership No. 020674)

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Mar 31, 2013

Report on the Financial Statements

1) We have audited the accompanying Financial Statements of THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013 and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

2) The Company''s Management is responsible for the preparation of the financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 ("the Act") and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

3) Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4) An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risks assessments, the auditors consider internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing and opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

5) We believe that the audit evidence we have obtained is insufficient and appropriate to provide a basis for our audit opinion.

Opinion

6) In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of the report of other auditors on the financial information of the Branch, on the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date,

except qualified opinion in respect of the matters covered in points (i) to (iii) given below :

i. Valuation of closing stock of by product gypsum of 41 lakhs metric tonne, at the rate of rupees 331 per metric tonne based on the assessment of net realizable value by the Management, instead of net realizable value based on the most reliable evidence of approved selling price for bulk sales of rupees 200 per metric tonne exclusive of excise duty, in variation to Accounting Standard 2 issued by the Institute of Chartered Accountants of India resulting in an over valuation of inventory of gypsum by rupees 5364 lakhs and under statement of loss to the same extent.[Refer Note number 15.1].

ii. Classification of fixed asset originally held for sale of rupees 3245 lakhs as current asset instead of non current asset, though the Company has issued sale order in January 2011, which was subsequently cancelled by the Company, and the matter is under litigation in the Hon''able High Court of Kerala [Refer Note number 19.1]

iii. Claim lodged by a contractor of rupees 1,78,490 lakhs towards short fall charge and damages against the Company upon termination of the contract and the dispute is under arbitration. The said claim is shown as a contingent liability and being so, we are unable to comment on the same, considering the significant uncertainty in the final outcome of the case [Refer note number 29.a (vii)].

We further report that:

Had the quantifiable qualifications in paragraph 6 (i) and (ii) above been effected, the loss before tax for the year would have been higher by rupees 5364 lakhs, current assets would have been lower by rupees 8,609 lakhs, non current assets would have been higher by rupees 3245 lakhs and reserves and surplus, negative balance would have been higher by rupees 5364 lakhs.

We are unable to determine the financial impact of the above qualifications in point (iii) in the absence of appropriate details.

Report on Other Legal and Regulatory Requirements

7) As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government in terms of Section 227 (4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

8) As required by Section 227 (3) of the Act, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from the area/ regional offices not audited by us. The area/ regional Auditors'' report have been given to us and have been appropriately dealt with in preparing our report.

c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the area/regional offices not visited by us.

d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211 (3C) of the Act.

e) Being a government company, the provisions of clause (g) of sub section (1) of section 274 of the Companies Act, 1956 is not applicable.

i. In respect of the Company''s fixed assets:

(a) The Company has maintained generally proper records showing most of the particulars including quantitative details and location of fixed assets and in the case of certain Regional Offices, quantitative details and location of fixed assets are not properly recorded.

(b) The fixed assets have not been satisfactorily physically verified by the Management during the year. The physical verification procedure needs to be strengthened. As explained to us, no material discrepancies were noticed on such physical verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

ii. In respect of Company''s inventories:

(a) As explained to us, the inventories have generally been physically verified by the management at reasonable intervals.

(b) In our opinion, the procedures of physical verification of inventories followed by the Management need to be strengthened in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventories and no material discrepancies were noticed on physical verification.

iii. As informed to us, the Company has neither granted nor taken any loans, secured or unsecured, to/ from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956, and hence reporting requirements under clauses (iii) (a) to (g) of this clause do not apply.

iv. In our opinion and according to the information and explanations given to us, the internal control system may be strengthened to commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. According to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control.

v. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956, have been entered in the register under that section.

b) In our opinion and according to the information and explanations given to us, during the year there are no transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, aggregating to rupees five lakhs or more in respect of any party.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with directives issued by Reserve Bank of India, the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975, with regard to the deposit accepted from the public.

vii. In our opinion, the internal audit functions were carried out by the Company at Head office and by firms of Chartered Accountants at area/regional offices have been generally commensurate with the size of the Company and nature of its business.

viii. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government u/s 209 (1) (d) of the Companies Act, 1956 and are of the opinion that, prima facie the prescribed cost records have been maintained by the Company. We have, however, not made a detailed examination of the records with a view to determining whether these records are accurate or complete.

ix a) According to the information and explanations given to us and according to the books and records of the Company produced to us and examined by us, in our opinion, the Company has been generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, service tax, sales tax, customs duty, excise duty and other material statutory dues applicable to it with the appropriate authorities during the year and there were no outstanding as at March 31, 2013 for a period of more than six months from the date they became payable

x. The accumulated losses of the Company as at March 31, 2013 after giving effect to the qualifications in the Auditors'' Report are more than hundred percent of its net worth and it has incurred cash losses during the year and in the immediately preceding financial year and provisions of the Sick Industrial Companies (Special Provisions Act), 1985 is applicable.

xi. Based on our examination of the records of the Company and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks as at Balance Sheet date. Further in our opinion and according to the information and explanations given to us, the Company did not have any amount outstanding to financial institution or debenture holders.

xii. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4 (xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xv. According to the information and explanations given to us, the Company has given guarantee for loan taken by FACT RCF Building Products Limited from State Bank of India, to the extent of Rs.1,750 lakhs [Refer Note number 29(1)(b)].

xvi. According to the information and explanations given to us, we are of the opinion that the term loans availed by the Company were, prima facie, applied during the year for the purpose for which the loans were obtained except temporary deployment in working capital.

xvii. According to the information and explanations given to us and overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised by the Company on short term basis has not been used for long term investments.

xviii.The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

xix. The Company has not issued any debentures.

xx. The Company has not raised any money by public issue during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and as per the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Babu A. Kallivayalil & Co.,

Chartered Accountants,

Firm Registration No.05374S

Sd/-

New Delhi, Mathew Sebastian

October 28,2013. Partner,

Membership No.018859

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Mar 31, 2012

1. We have audited the attached Balance sheet of THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED as at March 31, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have 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 appears from our examination of those books and proper returns adequate for the purposes of our Audit have been received from the area/ regional offices not audited by us. The area/ regional Auditor's Reports have been given to us and have been appropriately dealt with in preparing our report.

(c) the Balance sheet, Statement of Profit and Loss and Cash Flow statement dealt with by this report are in agreement with the books of account and with the audited returns from the area/regional offices;

5. Being a Government Company, the provisions of clause (g) of sub-section (1) of Section 274 of the Companies Act,1956 is not applicable.

6. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 to the extent applicable except for the points (a) to (c) given below:

(a) Valuation of closing stock of by-product gypsum of 45 lakhs metric tonne, at the rate of Rs.331 per metric tonne based on average selling price of future five years expected sales, instead of net realizable value based on approved selling price for bulk sales of Rs. 200 per metric tonne in variation to Accounting Standard 2 issued by the Institute of Chartered Accountants of India resulting in an over valuation of stock by Rs. 5895 lakhs and inflated profit to the same extent [Refer Note number 17.1].

(b) (i) Recognition of interest income of rupees 718 lakhs during the year and non- provision towards doubtful debts on the accumulated interest receivable on mobilization advance to a contractor, considering the significant uncertainty in realization, as at year end of rupees 4,286 lakhs; in variation of the Accounting Standard 9 issued by the Institute of Chartered Accountants of India [Refer Note numbers 23.1 and 20.3]

(ii) the contractor has also lodged a claim of rupees 1,78,101 lakhs towards shortfall charges and damages against the Company upon termination of the contract and the dispute is under arbitration. The said claim is shown only as a contingent liability and no provision has been made for the possible liability, if any, upon arbitration award and being so, we are unable to comment on the issue, which can have a significant impact, if the award is not in favour of the Company. [Refer Note number 30(i)g]

(c) Non-disclosure as exceptional item of additional compensation on ammonium sulphate of rupees 6591 lakhs received during the year, as is not similar to the subsidy in the ordinary nature besides it pertains to earlier years, instead of disclosure as income of the year; as required under revised schedule VI to the Companies Act, 1956 and Accounting Standard 5 issued by the Institute of Chartered Accountants of India.[Refer Note number 22.3].

We further report that:- Had the quantifiable qualifications in paragraph 6 (a) to (c) above been effected, the profit before extra ordinary items and tax for the year of rupees 1980 lakhs would have been a loss of rupees 14,792 lakhs and the current assets would have been lower by rupees 10,181 lakhs.

7. Subject to the above, in our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the State of affairs of the Company as at March 31, 2012;

(ii) In the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date and

(iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure referred to in paragraph 3 of the Auditors' Report to the Members of THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED, on the financial statements for the year ended March 31, 2012

i a) The Company has maintained generally proper records showing full particulars including quantitative details and location of fixed assets and in the case of certain Regional Offices, quantitative details and location of fixed assets are not properly recorded.

b) The fixed assets have been physically verified by the Management during the year, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. As explained to us, no material discrepancies were noticed on such physical verification.

c) In our opinion and according to the information and explanations given to us, fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern status.

ii a) The inventories have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventories. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of account.

iii As informed to us, the Company has neither granted nor taken any loans, secured or unsecured, to/from Companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956, and hence reporting requirements under clauses (iii) (a) to (g) of this clause do not apply.

iv In our opinion and according to the information and explanations given to us, the internal control system needs to be strengthened to commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. According to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control.

v a) In our opinion and according to the Information and explanations given to us, the particulars of contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956, have been entered in the register under that section.

b) In our opinion and according to the information and explanations given to us there are no transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to rupees five lakhs or more in respect of any party.

vi In our opinion and according to the information and explanations given to us, the Company has complied with directives issued by Reserve Bank of India, the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975, with regard to the deposits accepted from the public.

vii On the basis of the test checks conducted by us and according to the explanations given to us, the Company has an internal audit generally commensurate with the size of the Company and nature of its business.

viii We have broadly reviewed the books and records maintained by the Company pursuant to the order of the Central Government u/s 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima- facie the prescribed accounts and records have been made and maintained by the Company. We have however not made a detailed examination of the records with a view to determining whether these records are accurate or complete.

ix a) According to the information and explanations given to us and according to the books and records of the Company produced to us and examined by us, in our opinion, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income- Tax, Service Tax, Sales Tax, Customs Duty, Excise Duty, and other material statutory dues applicable to it with the appropriate authorities during the year and there were no outstanding as at March 31, 2012 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and the records of the company examined by us, the particulars of dues towards sales tax, income tax, customs duty, excise duty, service tax, entry tax and cess as at March, 31, 2012, which have not been deposited on account of disputes are furnished below:

Name of the Nature of the Dues Amount Period to which Forum where dispute Statute (Rupees) dispute relates is pending

Income Tax Act ,1961 Tax demand due to 10 lakhs 1997-98 High Court of Kerala disallowances

Income Tax Act, 1961 Additional tax and interest 78 lakhs 1994-95 to 1997-98 High Court of Kerala demanded on payments to foreign technicians

Finance Act, 1994 Tax, Penalty and 11 lakhs 2003-04 to 2005-06 Customs, Excise and interest demand Service Tax Appellate on service tax Tribunal, Bangalore

Finance Act, 1994 Tax, Penalty & Interest 65 lakhs 2006-07 to 2010-11 Commissioner of demanded on Service tax Central Excise, Koch disputed by the Company

Customs Act, 1962 Differential duty 40 lakhs 1991-92 to 1992-93 Customs, Excise and Service Tax Appellate Tribunal, Chennai

Central Excise Act, 1944 Duty with interest and 68 lakhs 2003-04 Adjudicating Authority penalty on shortages written off

Central Excise Act, 1944 Duty with interest and 5 lakhs 2006-10 Adjudicating Authority penalty on Cenvat availment

Madhya Pradesh Entry Tax demand 4 lakhs 1980-84 Board of Revenue Entry Tax (Commercial Tax Tribunal), Gwalior, Madhya Pradesh

Sales Tax Act, Orissa Sales Tax demand 63 lakhs 1985-92 High Court of Orissa

Sales Tax and Sales Tax demand 406 lakhs 2000 -01 High Court of Central Sales Tax Act, Punjab and Hariyana Punjab

x. The accumulated losses of the Company as at March 31, 2012 after giving effect to the qualifications in the Auditors' Report are more than fifty percent of its net worth and it has incurred cash losses during the year and in the immediately preceding financial year.

xi. Based on our examination of the records of the company and according to the information and explanations given to us, the company has not defaulted in repayment of dues to banks as at Balance sheet date.

xii. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/society. Therefore, provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order 2003 are not applicable to the Company.

xv. According to the information and explanations given to us, the Company has given guarantee for loan taken by FACT-RCF Building Products Limited from State Bank of India, to the extent of Rs. 1,750 lakhs (Refer Note number 12.2).

xvi. According to the information and explanations given to us, we are of the opinion that the term loans availed by the company were, prima-facie, applied during the year for the purpose for which the loans were obtained except temporary deployment in working capital.

xvii. According to the information and explanations given to us and overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised by the company on short-term basis has not been used for long term investments.

xviii.The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

xix. The Company has not issued any debentures.

xx. The Company has not raised any money by Public Issue during the year.

xxi. During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and as per the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Babu A. Kallivayalil & Co., Chartered Accountants,

Firm Registration No.05374S

Sd/- New Delhi N.K. Alexander July 24,2012 Partner, Membership No.007448

---

Mar 31, 2011

1.We have audited the attached Balance Sheet of THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED as at March 31, 2011 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we consider appropriate and according to the information and explanations given to us, we annexed here to a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) we have 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 appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the area / regional offices not audited by us. The area / regional Auditor's Reports have been given to us and have been appropriately dealt with in preparing our report.

( c) the Balance Sheet and Profit and Loss Account and Cash

Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the area/regional offices;

5. Being a Government Company, the provisions of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 is not applicable.

6. In our opinion, the Balance Sheet, Profit and Loss Account and Cash flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 except for the points (a) to (e) given below:

(a) Valuation of closing stock of by-product gypsum, for rupees 20,354 lakhs as at year end based on five years expected sales, in variation to Accounting Standard 2 issued by the Institute of Chartered Accountants of India. [Refer point 14 (d) of Notes on Accounts of Schedule 25].

(b) Reduction of estimated loss provision of rupees 504 lakhs during the year on retired assets determined in previous year, based on the re-assessment of estimated realisable value as at year end in variation to Accounting Standard 10 issued by the Institute of Chartered Accountants of India, [Refer point 6 of Notes on Accounts of Schedule 25].

(c) Recognition of interest income of rupees 597 lakhs during the year besides the accummulated interest receivable as at year end of rupees 3,568 lakhs on mobilisation advance to a contractor in variation of the Accountaing Standard 9 issued by the Institute of Chartered Accountants of India, considering the significant uncertainity in realisation. This contractor has also lodged a claim of rupees 1,77,713 lakhs against the Company towards shortfall charge and damages upon termination of the contract, shown as contingent liability and the dispute is under arbitration. [Refer points 13 of Notes on Accounts of Schedule 25].

(d) Capitalisation of cost of revamping of main cooling tower of rupees 747 lakhs in the nature of repairs and withdrawal of rupees 175 lakhs on estimation out of estimated gross block of rupees 394 lakhs, in variation to Accounting Standard 10 issued by the Institute of Chartered Accountants of India.

(e) Subsidy receivable of rupees 2,068 lakhs on ammonium sulphate recognised as revenue during 2009-10, since the request of the Company for subsidy is under the consideration of the Government of India and is still pending, though payment of subsidy was discontinued by the Government during that year.

We further report that:- Had the quantifiable qualifications in paragraph 6 (a) to (d) above been effected, the loss before tax for the year would have been higher by rupees 22,202 lakhs and the current assets would bave been lower by rupees 20,951 lakhs and fixed assets would have been lower by rupees 1,251 lakhs.

7. Subject to the above, in our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the State of affairs of the Company as at March 31,2011;

(ii) in the case of the Profit and Loss account, of the loss of the Company for the year ended on that date and

(iii)in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure referred to in paragraph 3 of the Auditors' Report to the Members of THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED, on the financial statements for the year ended March 31, 2011

i. a) The Company has maintained generally proper records showing full particulars including quantitative details and situation of fixed assets.

b) The fixed assets have been stated to be physically verified by the Management during the year, which in our opinion is reasonable having regard to the size of the Company & nature of its assets. As explained to us, no material discrepancies were noticed on such physical verification.

c) In our opinion and according to the information and explanations given to us, fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern status.

ii. a)The inventories have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventories. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of account.

iii. As informed to us, the Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956, and hence reporting requirements under clauses (iii) (a) to (g) of this clause do not apply.

iv. In our opinion and according to the information and explanations given to us, the internal control system needs to be strengthened especially considering the emerging requirements, to commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. According to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control.

v. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act,1956, have been entered in the register under that section.

b) In our opinion and according to the information and explanations given to us, there are no transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 aggregating to rupees five lakhs or more during the year in respect of any party.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with directives issued by Reserve Bank of India, the provisions of section 58 A and 58 AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits )Rules 1975, with regard to the deposits accepted from the public.

vii. On the basis of the test checks conducted by us and according to the explanations given to us, the Company has an internal audit system generally commensurate with the size of the Company and nature of its business.

viii. We have broadly reviewed the books and records maintained by the Company pursuant to the order of the Central Government u/s 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained by the Company. We have however not made a detailed examination of the records with a view to determining whether these records are accurate or complete. ix. a) According to the information and explanations given to us and according to the books and records of the Company produced to us and examined by us, in our opinion, the Company has been generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, service tax, sales tax, customs duty excise duty and other material statutory dues applicable to it with the appropriate authorities during the year and there were no outstanding as at March 31, 2011 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues towards sales tax, income tax, customs duty, excise duty, service tax, entry tax and cess as at March 31, 2011, which have not been deposited on account of disputes are furnished below:

Name of the Nature of the dues Amount Period to which Forum where dispute Statute (Rupees) the dispute relates is pending

Income Tax Act, 1961 Tax demand due to 10 lakhs 1997-98 High Court of Kerala disallowances

Income Tax Act, 1961 Tax demand due to Income Tax Appellate Tribunal, 8 lakhs 2005-06 disallowances Kochi

Income Tax Act, 1961 Additional Tax and interest 78 lakhs 1994-95 demanded on payments to to High Court of Kerala foreign technicians 1997-98

Finance Act, 1994 Tax, penalty and interest 10 lakhs 2003 - 04 Customs, Excise and Service demand to Tax Appellate Tribunal, Bangalore 2005 - 06

Finance Act, 1994 41 lakhs 2005 - 06 Tax, penalty and interest Commissioner of Central Excise, to demanded, disputed by Kochi the Company 2008 - 09

Customs Act, 1962 Differential duty 39 lakhs 1991 - 92 Customs, Excise and Service to1992 - 93 Tax Appellate Tribunal, Chennai

Central Excise Act, Duty with interest and Adjudicating 64 lakhs 2003 - 04 1944 penalty on shortages Authority written off

Madhya Pradesh Board of Revenue (Commercial Tax Entry tax demand 4 lakhs 1980 - 84 Entry Tax Tribunal),Gwalior, Madhya Pradesh

Sales Tax Act, Sales Tax demand 63 lakhs 1985 - 92 High Court of Orissa Orissa

Sales Tax & Central High Court of Punjab Sales Tax demand 380 laks 2000 - 01 Sales Tax Act, Punjab and Haryana

(x) The accumulated losses of the Company as at March 31, 2011 after giving effect to the qualifications in the Auditors' Report are more than Fifty percent of its net worth and it has incurred cash losses during the year and also in the immediately preceding financial year.

(xi) Based on our examination of the records of the Company and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to Banks as at Balance Sheet date.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/society. Therefore, the provisions of clause (4) (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loan taken by FACT – RCF Building Products Limited from State Bank of India, to the extent of Rs. 15.50 Crore. (Refer Point no. 1 (iii) of Notes on Accounts of Schedule 25).

(xvi) According to the information and explanations given to us ,we are of the opinion that the term loans availed by the Company were, prima-facie, applied during the year for the purpose for which the loans were obtained except temporary deployment in working capital.

(xvii) According to the information and explanations given to us and overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised by the company on short-term basis has not been used for long term investments.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) The Company has not issued any debentures .

(xx) The Company has not raised any money by Public Issue during the year.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and as per the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have been informed of such case by the Management.

For Babu A.Kallivayalil & Co.,

Chartered Accountants

Firm Registration Number. 05374S

Sd/-

New Delhi Babu Abraham Kallivayalil

August 12, 2011 Partner, Membership No. 26973

---

Mar 31, 2010

1 We have audited the attached Balance Sheet of the THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED as at March 31,2010 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of Section 227( 4A) of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we annex here to a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure reffered to in paragraph 3 above, we report that:

(a) we have 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 appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the area/regional offices not audited by us. The area / regional Auditorss Reports have been given to us and have been appropriately dealt with in preparing our report;

(c) the Balance Sheet and Profit and Loss Account and Cash

Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the area/regional offices.ln our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in compliance with the accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 except for the points iandivbelow:

i Recognition of interest receivable of rupees 497 lakhs (Previous year rupees 414 lakhs) on mobilization advance to a contractor in variation of the Accounting Standard 9 considering the significant uncertainly in realisation, who has also lodged a claim of rupees 177325 lakhs (Previous year rupees 172988 lakhs) against the Company towards shortfall charge and damages upon termination of the contract, not provided though shown as contingent liability and the dispute is under arbitration. [Refer points 2(h) and 15 of Notes on Accounts of Schedule 25]

ii Reliance on the value of stock of gypsum of rupees 20308 lakhs (Previousyear-rupees 19950 lakhs) accounted for the first time during 2008 - 09, based on five years expected sales, since trend of sales till date is not matching the projection on anyear to year basis. [Refer point 16 (c) of Notes on Accounts of Schedule 25]

iii Non-provision of diminution in value of long term investments ( Refer Schedule No.7) in Fertilizer Companies Government of India Special Bonds, as required under Accounting Standard 13 issued by the Institute of Chartered Accountants of India, as the Company considers it as temporary. [ Refer point 8 of Notes of Accounts of Schedule 25].

iv Non-provision of liability for additional terminal benefits to the employees presently in service, not quantified, consequent to the wage revision with retrospective effect as approved by the Government of India in August 2010, required under Accounting Standard 15 issued by the Institute of Chartered Accountants of India. [ Refer point 1 (a) of Notes on Accounts of Schedule 25]

(d) We further report that:-

Had the quantifiable qualification in paragraph 4 (c) (I) above been effected, the loss before tax for theyear would have been higher by rupees 497 lakhs and the current assets would have been lower by rupees 1981 lakhs, taking into account such income accumulation of earlier years; other being not quantified.

(e) Being a Government Company, the provisions of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 is not applicable.

Subject to the above, in our opinion and to the best of our~~ information and according to the explanations given to us, the said financial statements read together with the notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2010;

(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and

(iii) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure referred to in paragraph 3 of the Auditors Report to the Members of THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED, on the financial statements for the year ended March 31,2010

I. a) The Company has maintained proper records showing full particulars including quantitative detail and location of fixed assets except in the case of certain Regional Offices where location of fixed assets are not properly recorded as reported by Branch Auditors.

b) The fixed assets have been stated to be physically verified by the Management during the year, which in our opinion is reasonable having regard to the size of the Company & nature of its assets. As explained to us, no material discrepancies were noticed on such physical verification. c)ln our opinion and according to the information and explanations given to us, fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern status.

ii. a)The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of Inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining generally proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records were not material and have been properly dealt with in the books of account.

iii. As informed to us, the company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act 1956, and hence reporting requirements under clauses (iii) (a) to (g) of this clause do not apply.

iv. In our opinion and according to the information and explanations given to us, the Company has an internal audit control generally commensurate with the size and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. According to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control.

v. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered , in the register maintained under Section 301 of the Companies Act, 1956, have been entered in the register under that section.

b) In our opinion and according to the information and explanations given to us, there are no transactions in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to rupees Five Lakhs or more in respect of any party.

vi. In our opinion and according to the information and explanations given to us, the Company has complied with directives issued by RBI, the provisions of Section 58 A and 58 AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits )Rules 1975, with regard to the deposit accepted from the public.

vii. On the basis of the test checks conducted by us and according to the explanations given to us, the Company has an internal audit system, generally commensurate with size and nature of its business.

viii. We have broadly reviewed the books and records maintained by the Company pursuant to the order of the Central Government u/s 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained by the Company.

We have however not made a detailed examination of the~ records with a view to determining whether these records are accurate or complete. ix. a) According to the information and explanations given to us and according to the books and records of the Company produced to us and examined by us, in our opinion, the Company has been generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, service tax, sales tax, customs duty and excise duty and other material statutory dues applicable to it with the appropriate authorities during the year and there were no outstanding as at March 31, 2010 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues towards sales tax, income tax, customs duty, excise duty, service tax, entry tax and cess as at March 31,2010 which have not been deposited on account of disputes are furnished below:

Name of the Nature of the dues Amount (Rupees) Statute (Rupees)

Income Tax Act Disallowance contested 10.49 lakhs by the company

Income Tax Act Disallowance contested 1.32 lakhs by the company

Income Tax Act Disallowance contested 32.55 lakhs by the company

Income Tax Act Additional Tax and interest 78.21 lakhs demanded on payments to foreign technicians contested by the company

Finance Act 1994 Tax, penalty and interest 9.77 lakhs demanded, disputed by the Company

Finance Act 1994 Tax, penalty and interest 46.38 lakhs demanded, disputed by the Company

Customs Act Differential duty 39.36 lakhs disputed by the Company

Central Duty with interest and Excise penalty on shortages 60.85 lakhs Act written off

Madhya Pradesh Entry tax demanded 3.67 lakhs Entry Tax disputed by the Company

Sales Tax Sales Tax demanded, 63 lakns Act Orissa disputed by the Company

Sales Tax & Central Sales Tax demanded, 355.07 lakhs Sales Tax Act Punjab disputed by the Company



Name of the Period to which Forum where the dispute Statue the dispute relates is pending

Income Tax Act 1997-98 High Court of Kerala

Income Tax Act 2005-06 Commissioner of Income Tax, Kochi

Income Tax Act 2005-06 Income Tax Appellate Tribunal, Kochi

Income Tax Act 1994-95 to High Court of Kerala 1997-98

Finance Act 1994 2003 - 04 to CESTAT, Bangalore 2005 - 06

Finance Act 1994 2005 - 06 Commissioner of Central Excise, to Kochi

Customs Act 2008 - 09 to 1992- 93 CESTAT, Chennai

Central Excise Act 2003-04 Adjudicating Authority

Madhya Pradesh Entry Tax 1980 - 84 Board of Revenue (Commercial Tax Tribunal),Gwalior,Madhya Pradesh

Sales Tax Act Orissa 1985-92 High Court of Orissa

Sales Tax & Central Sales Tax Act Punjab 2000 - 01 High Court of Punjab and Haryana

x. The accumulated losses of the Company as at March 31,2010 are more than fifty percent of its net worth and it has incurred cash losses during the year, though not in the immediately preceding financial year.

xi. Based on our examination of the records of the Company and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks as at Balance Sheet date.

xii. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund / society. Therefore, the provision of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xv. According to the information and explanations given to us, the Company has given guarantee for loan taken by FACT-RCF Building Products Limited from State Bank of India, to the extent of Rs. 17.50 crore. (Refer point number.2 (iii) of Notes on Accounts of Schedule 25).

xvi. According to the information and explanations given to us, we are of the opinion that the term loans availed by the funds raised by the Company were prima-facie applied forthe purpose for which the loans were obtained except temporary deployment in working capital.

xvii. According to the information and explanations given to us and overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised by the Company on short-term has not been used for long term investments.

xviii. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

xix. The Company has not issued any debentures.

xx. The Company has not raised any money by public issue during the year.

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and as per the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Babu A.Kallivayalil & Co., Chartered Accountants

Firm Registration Number: 05374S

Sd/-

CA. E. V. Thomas

Partner Membership No. 03679

Kochi August 17,2010