| 1. We have audited the attached balance sheet of Nagarjuna Fertilizers
and Chemicals Limited, as at 31st March, 2011, the profit and loss
account for the year ended on that date and the cash flow statement for
the year ended on that date both 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 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 (CARO)
issued by the Central Government of India in terms of sub-section (4A)
of section 227 of the Companies Act, 1956, we enclose in the Annexure 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:
i) 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;
ii) 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;
iii) The balance sheet, profit and loss account and cash flow statement
dealt with by this report are in agreement with the books of account;
iv) In our opinion, the balance sheet, profit and Loss account and cash
flow statement dealt with by this report is in compliance with the
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956.
v) Without qualifying our opinion, we draw our attention, to the
following Notes to Accounts in Schedule 13 B
a) Note No 8 regarding accounting of subsidy under Group Concession
Scheme.
b) Note No 9 (b) regarding perception of management of recoverability
of certain outstanding advances
vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with
notes and significant accounting policies 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:
a. in the case of the balance sheet, of the state of affairs of the
company as at 31st March, 2011;
b. in the case of the profit and loss account, of the profit for the
year ended on that date; and
c. in the case of the cash flow statement, of the cash flows for the
year ended on that date.
5. On the basis of written representations received from the directors,
as on 31st March, 2011 and taken on record by the Board of Directors,
we report that none of the directors is disqualified as on 31st March,
2011 from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
ANNEXURE Re: Nagarjuna Fertilizers and Chemicals Limited
(Referred to in paragraph 3 of our report of even date)
(i) (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) According to the information and explanations given to us, the
fixed assets (excluding assets given on lease) have been physically
verified by the management during the year in accordance with programme
of verification, which in our opinion, is reasonable having regard to
the size of the Company and the nature of the assets. According to the
information and explanations given to us, the discrepancies noticed on
such verification were not material and have been properly dealt with
in the books of account.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute 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) (a) Physical verification of inventories at plants and at ware
houses has been conducted by the management at reasonable intervals
during the year. In our opinion having regard to nature of business and
location of stocks, the frequency of verifications is reasonable.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and nature of its business.
(c) In our opinion, the company is maintaining proper records of
inventories. According to information and explanations given to us, the
discrepancies noticed on verification between physical stocks and book
records were not material in relation to the operations of the company
and the same have been properly dealt with in the books of account.
(iii) (a) The Company has not granted any loan, secured or unsecured to
companies, firms or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Accordingly sub clauses
(b), (c) and (d) of clause (iii) of this Order are not applicable.
(b) According to the information and explanation given to us, the
company has not taken any loan, secured or unsecured from companies,
firms or other parties covered in the register maintained under section
301 of the Companies Act, 1956. Accordingly paragraphs (iii) (e), (f)
and (g) of clause (iii) of CARO are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the company and the nature of its business with regard
to purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
major weakness in such internal control system.
(v) (a) In our opinion and according to the information and
explanations given to us, all the contracts or arrangements that need
to be entered in the register maintained under section 301 of the Act
have been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees Five Lakhs in respect of
any party during the year have been made at prices which are, prima
facie, reasonable having regard to the prevailing market prices
wherever available at the relevant time.
(vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by
Reserve Bank of India and provisions of Section 58A and 58AA or any
other relevant provisions of the Act and the Companies (Acceptance of
Deposits) Rules 1975 with regard to deposits accepted from the public.
According to the information and explanations given to us, the Company
has complied with the orders passed by the Company Law Board or
National Company Law Tribunal or Reserve Bank of India or any Court or
any other Tribunal on the Company in respect of the aforesaid deposits.
(vii) The internal audit of the Company has been conducted by internal
audit department. In our opinion, the scope and coverage of Internal
Audit is commensurate with the size of the Company and nature of its
business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for
maintenance of cost records prescribed under Section 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.
(ix) (a) According to the information and explanations given to us, the
company is regular in depositing undisputed statutory dues including
Provident Fund, Investor Education and Protection Fund, Employees
State Insurance, Income- tax, Sales-tax, Wealth Tax, Service Tax,
Custom Duty, Excise Duty, cess and any other material statutory dues
applicable to it with the appropriate authorities during the year.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of the aforesaid dues were
outstanding as at March 31, 2011 for a period of more than six months
from the date they become payable.
(c) According to the information and explanations given to us, there
are no dues of sales tax/ income tax / custom tax / wealth tax /
service tax / excise duty / cess which have not been deposited on
account of any dispute.
(x) The company does not have accumulated losses and has not incurred
any cash losses during the financial year covered by our audit and in
the immediately preceding financial year.
(xi) According to the information and explanations given to us, the
company has not defaulted in repayment of dues to financial
institutions, banks and 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.
Accordingly, the provisions of para 4 (xii) of CARO are not applicable
to the company.
(xiii) In our opinion, the company is not a chit fund / nidhi / mutual
benefit fund / society. Accordingly the provisions of para 4 (xiii) of
CARO are not applicable to the company.
(xiv) In our opinion and according to the information and explanations
given to us, the company does not deal or trading shares, securities,
debentures, other investments. Accordingly, the provisions of para 4
(xii) of CARO are not applicable to the company.
(xv) According to the information and explanations given to us, the
company during the year has not given any guarantee for the loans taken
by others from banks or financial institutions.
(xvi) To the best of our knowledge and belief and according to the
information and explanations given to us, in our opinion, term loans
availed by the company were, prima facie, applied by the company during
the year for the purposes for which they were obtained.
(xvii) According to the information and explanations given to us and on
an overall examinations of the balance sheet of the company, funds
raised on short-term basis have, prima facie, not been used for
long-term investment.
(xviii) According to the information and explanations given to us, the
company has not made preferential allotment of the shares during the
year to parties and companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us and the
records examined by us, securities / charges have been created in
respect of debentures issued.
(xx) During the year covered by our audit, the company has not raised
any money by public issues.
(xxi) To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the company
was noticed or reported during the year.
for M. BHASKARA RAO & CO.
Chartered Accountants
Firm Registration No: 000459 S
M.V. Ramana Murthy
Partner
MEMBERSHIP NUMBER:206439
Hyderabad, April 28, 2011
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