We have audited the accompanying standalone financial statements of National Fertilizers Limited
(hereinafter referred to as “the Company”) which comprise the standalone balance sheet as at 31st March
2025, the standalone statement of profit and loss (including other comprehensive income), the standalone
statement of cash flows and the standalone 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 (herein after referred to as “standalone financial statements”).
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 Companies Act, 2013 (“the Act”) in the
manner so required and give a true and fair view in conformity with the Indian Accounting Standards (“IND
AS”) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards)
Rules, 2015, as amended, and other accounting principles generally accepted in India, of the state of affairs
of the company as at 31st March 2025, its Profit (including other comprehensive income), changes in
equity and its cash flows for the year ended on that date.
| Basis for Opinion |
We conducted our audit of the standalone financial statements in accordance with the standards on
auditing (“SAs”) 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 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 financial statements under the provisions of the Act and the Rules made
thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements
and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone financial statements.
| Emphasis of Matter |
We draw attention to:
(i) Note No. 37A(ii) of accompanying standalone financial statements regarding recognition of
revenue for adversity of subsidy amounting to ' 134.14 Crore on the basis of DOF letter for “No
Profit - No Loss” basis.
(ii) Note No. 37A(iii) of accompanying standalone financial statements which describes the
recognition of revenue of ' 323.92 Crore and recognition of disadvantage of ' 18.17 Crore in
inventory on account of advantage/disadvantage on upward/downward trend in CFR prices of
imported P&K Fertilizers.
(iii) Note No. 37A(iv) of accompanying standalone financial statements which describes the
recognition of subsidy of ' 174.54 Crore towards special package of ' 3,500 PMT of DAP to meet
'other cost' over and above the subsidy under Nutrient Based Subsidy Scheme.
Our opinion is not modified in respect of above matters.
| Key Audit Matters |
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the standalone financial statements of the current period. These matters were addressed in the
context of our audit of the standalone 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 to be communicated in our report. Summary of the same is mentioned
here under:
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S.No.
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Key Audit Matter
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Response to Key Audit Matter
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1
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Revenue recognition
Recognition of subsidy is made on the basis of
in-principle recognition / approval / orders
settlement of claims from Fertilizer Industry
Coordination Committee (FICC), Department of
Fertilizers (DoF), Government of India, while
finalizing the financial statements. Also the FICC
regulates such subsidy and the bills raised on
such notifications. Escalation/de-escalation in
notified rates is estimated taking into account the
effect of guidelines, policies, instructions and
clarifications given.
Since there is a time lag between actual
expenditure incurred and notification of
concession rates for the year, management
exercises significant judgment in arriving at the
income entitled on account of same for the year.
Therefore, there is a risk of revenue being
misstated on account of estimation of concession/
Import Parity Price (IPP) rates yet to be notified.
Regarding process of Collection, utilization and
retention of Retailer Margin.
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Principal Audit Procedures
The following principal audit procedures
have been performed by us in relation to
revenue recognition:
a) We have reviewed the company's
material accounting policies for
Revenue Recognition (Refer Note No.
1.2.3 (b) of the standalone financial
statements), relevant Notifications and
Circulars issued by the DoF,
Government of India.
b) We have carried out substantive
procedures on sample basis for
evaluation of operating effectiveness of
key controls over subsidy and each
income stream, basis of management
estimation and their corresponding
disclosure.
c) We have reviewed directions of FICC,
various Notifications/orders issued from
time to time and management
assessment in relation to retailer
margin.
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2
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Estimation of Provision & Contingent Liabilities
The company has its operations in various States
within India, exposing it to a variety of different
Central and State laws. Litigations and claims
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Principal Audit Procedures
Our audit process involved understanding
of identification process relating to
litigations, claims and contingent liabilities.
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may arise from direct and indirect tax
proceedings. Resolution of litigations and claims
proceedings may span over multiple years
beyond 31st March 2025.
The determination of a provision or contingent
liability requires significant judgement by the
company because of the inherent complexity in
estimating future liabilities.
The company has reported contingent liabilities
amounting to ' 454.40 Crores in Note No. 50 to
standalone financial statement.
The provisions and contingent liabilities are
subject to changes in the outcomes of litigations
and claims over time as new facts emerge as
each legal case progresses and positions taken
by the company. There is an inherent complexity
in estimations of magnitude of potential
exposures. Significant judgment is required to
estimate the likelihood amount of cash outflows,
timing based on interpretations of the legal
aspects, opinions, demand notices, relevant
judgements etc.
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We have evaluated the design and testing
the operating effectiveness of controls in
respect of process.
We have evaluated management's
assessment of the likely outcome and
potential exposures arising from significant
contingencies subject to ongoing court
cases and arbitration proceedings and
considered the requirements for any
provision as per the best estimate of the
possible expenditure.
In respect of significant claims, we
checked the amount of claim, nature of
issues involved, management submissions
and corroborated the same with external
evidence, where ever available.
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3
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Trade receivables
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Principal Audit Procedures
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Trade Receivables appearing in financial
statement consists of receivables from sale of
products as well as receivable from Government
of India in the form of subsidy. Trade
Receivables amounting to ' 3273.30 crores
including subsidy receivable of ' 3001.52 crores
were outstanding as at 31st March 2025.
Refer Note No. 13 to the Standalone Financial
Statements.
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Our audit approach was a combination of
test of internal controls and substantive
procedures which included the following:
a) In respect of Subsidy recoverable from
Government of India, as no
confirmation of balance is on record,
we have relied on the management's
assertion and estimates on the
recoverability.
As subsidy receivable is outstanding
from Department of Fertilizer,
Government of India (i.e. Sovereign
Authority) and is backed by the
approved claims generated from
MFMS (Mobile Fertilizer Management
System), amount outstanding as at
balance sheet date has been
considered as recoverable (net of
provisions).
b) In respect of receivables other than
subsidy receivables, management
have sent request for confirmation
from the parties. The response to the
request was checked together,
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subsequent realisation check was also
performed and long outstanding
balances have been reviewed.
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4
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Property, Plant and Equipment
Management judgment is applied for
determining the carrying value of property, plant
and equipment, intangible assets and their
respective depreciation/amortization rates.
These include the decision to capitalize or
expense costs; the annual asset life review; the
timelines of the capitalization/decapitalization of
assets and the measurement and recognition
criteria for assets retired from active use.
Refer material accounting policy no 1.2.9 to the
Standalone Financial Statements
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Principal Audit Procedures
a) Testing of controls in place over the
fixed assets cycle,
b) Evaluation of appropriateness of
capitalization process. Performed
tests to verify the capitalized costs,
c) Assessment of the timelines of the
capitalization of the assets and
assessed the derecognition criteria for
assets retired from active use.
d) The useful life of assets has been
assessed made by the management.
In performing these procedures, we
reviewed the judgments made by
management for the following:
(i) Identification of the nature of
underlying costs capitalized,
(ii) Determination of realizable value of
the assets retired from active use,
(iii) Appropriateness of asset lives
applied in the calculation of
depreciation/ amortization,
(iv) Useful lives of assets prescribed in
Schedule II of the Companies Act,
2013.
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5
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Implementation of SAP
Effective January 1, 2025, the Company
undertook a significant system transition, moving
from its previously used Oracle-based ERP to a
new SAP ERP system. This transition has
significant implications given the essential role of
ERP systems in ensuring the completeness,
accuracy, reliability, and integrity of financial data
and reports. The period from January 1, 2025,
to March 31, 2025, marked the initial
implementation phase, during which all business
transactions were exclusively processed through
various SAP ERP modules implemented in
phased manner. This transition required
substantial data migration, inherent complexities
involved in mapping financial data between two
different systems. Considering the extensive and
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Principal Audit Procedures Performed:
a. Conducted a detailed review of the
ERP implementation strategy and
governance framework established by
management, focusing on planning,
execution timelines, project
management, risk mitigation
strategies, and oversight mechanisms.
b. Evaluated the controls and processes
implemented for data migration from
Oracle ERP to SAP ERP, performing
detailed reconciliations of opening
balances, transaction records, and
account balances as at January 1,
2025, to the closing balances
recorded in Oracle ERP as at
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critical nature of this transition, along with the
potential risks associated with data migration
errors, system integration issues, and changes
in internal control activities, we identified this as
a key audit matter. Refer Note No. 63 to the
Standalone Financial Statements
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c.
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December 31, 2024, to ensure
completeness and accuracy along
with review of data migration audit
report by the external expert.
Assessed the adequacy and
effectiveness of training provided to
users responsible for operating the
SAP ERP system, reviewed training
attendance records, training materials,
and user feedback documentation to
ensure sufficient knowledge and
understanding for accurate ERP
usage.
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d.
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Evaluated the design and operating
effectiveness of internal controls
established within the SAP ERP
environment, including those controls
relating to authorization, transaction
initiation, data processing, segregation
of duties, and financial reporting.
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e.
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Conducted extensive substantive
testing on transaction data recorded
within the SAP ERP system during the
initial quarter post-implementation,
assessing for completeness,
accuracy, validity, classification, and
cutoff, by tracing transactions to
supporting documentation.
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f.
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Reviewed and validated key financial
data generated by the SAP ERP
system during the period from January
1, 2025, to March 31, 2025, ensuring
that the data presented was
consistent, accurate, reliable, and
adequately supported by underlying
accounting records and transaction
documentation.
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Ý Information Other than the Standalone Financial Statements and
Auditor's Report Thereon
The company's management and board of directors are responsible for the preparation of other
information. The other information comprises the Management Discussion and Analysis, Director's Report
including annexures to Director's Report, Business Responsibility Report, Corporate Governance,
Performance at a Glance and Chairman's Statement included in the annual report of the Company but does
not include the standalone financial statements and our auditor's report thereon.
Our opinion on the standalone 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 financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the standalone financial statements or our knowledge obtained during the course of audit,
or otherwise appears to be materially misstated. On reading the annual report, if we conclude that there is a
material misstatement therein, we are required to communicate the matter to those charged with
governance and take necessary actions as per applicable laws and regulations. We have nothing to report
in this regard.
Responsibilities of Management and those charged with Governance for the
Standalone Financial Statements
The Company's management and board of directors is responsible for the matters stated in section 134(5)
of 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 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 prescribed under section 133 of the Act read with relevant rules issued thereunder.
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 standalone 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 financial statements, management is responsible for assessing the
Company's ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
The board of directors is also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements |
Our objectives are to obtain reasonable assurance about whether the standalone 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 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 financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal financial controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also
responsible for expressing our opinion on whether the company has adequate internal financial controls
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 and the board of directors.
• Conclude on the appropriateness of the management and the board of directors' 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 ability of the company to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the Statement or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause the company to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the standalone financial statements,
including the disclosures, and whether the standalone financial statements represent the underlying
transactions and events in a manner that achieve 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 financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements |
1. As required by the Companies (Auditor's Report) Order, 2020 (“the Order”) issued by the Central
Government of India in terms of section 143(11) 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. As required by Section 143(5) of the Act, we have considered the directions issued by the Comptroller
& Auditor General of India. We give our report in the attached “Annexure B”.
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.
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it
appears from our examination of those books.
(c) The standalone balance sheet, the standalone statement of profit and loss, the standalone statement
of cash flows and the standalone statement of changes in equity 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 Indian Accounting
Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended.
(e) Notification number G.S.R. 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs,
section 164(2) of the Act regarding disqualifications of directors is not applicable to the company, since
it is a Government Company.
(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 C”. Our
report expresses an unmodified opinion on the adequacy and operating effectiveness of the
company's internal financial controls over financial reporting.
(g) Notification number G.S.R. 463 (E) dated 5 June 2015 issued by the Ministry of Corporate Affairs,
section 197 of the Act regarding remuneration to director is not applicable to the company, since it is a
Government Company; and
(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 Auditor's) 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
standalone financial statements - Refer Note No. 50 to the standalone financial statements.
ii. The company did not have any long-term contract including derivative contracts for which there
were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor
Education and Protection Fund by the company.
iv. (a) The management has represented that, to the best of its knowledge and belief, no funds have
been advanced or loaned or invested (either from borrowed funds or share premium or any
other sources or kind of funds) by the company to or in any other person or entity, 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”);
• 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 have
been received by the company from any persons or entities, including foreign entities (“Funding
Parties”), with the understanding, whether recorded in writing or otherwise, that the company
shall, 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; and
(c) Based on the audit procedures that have 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 mis-statement.
v. The final dividend paid by the Company during the year ended 31st March 2025 in respect of
dividend declared for the previous year is in accordance with section 123 of the Act to the extent it
applies to payment of dividend. The Company has not declared and paid interim dividend during
the year ended 31st March 2025.
vi. As required, maintenance of audit trail in accounting software under Rule 11(g) of the Companies
(Audit and Auditor's) Rules, 2014, we have to report as under;
a. Based on our examination which included test checks, except for the instances mentioned in
Para b and c below, the Company has used Oracle System (Accounting Software for recording
financial transactions) till 31st December 2024 and sAp ErP System w.e.f 1st January 2025 for
maintaining its books of account, which have a feature of recording audit trail (edit log) facility
and the same has operated throughout the year for all relevant transactions recorded in the
respective software.
Further, for the periods where audit trail (edit log) facility was enabled and operated throughout
the year for the respective accounting software, we did not come across any instance of the
audit trail feature being tampered with. Additionally, the audit trail has been preserved by the
company as per the statutory requirements for record retention.
b. The Company was using different software/application for recording Payroll, sales transactions
and for maintaining price store ledgers for stores and spares items till 31.12.2024. The data
generated through these systems do not auto feed to the Oracle System and its summary is
manually posted in Oracle System till 29th June 2024. Audit trail (edit logs) for any changes
made at the application level in the aforesaid systems was not enabled till 29th June 2024 and
w.e.f 30th June 2024 till 31st December, 2024 the audit trail features of the said systems was
enabled and operated in the Oracle system. Subsequently, w.e.f. 1st January 2025, the
Company has fully migrated these functions to SAP ERp, wherein audit trail (edit log) features
have been incorporated and remain enabled for the period from 1st January 2025 to 31st March
2025.
c. Beside this, the Company has maintained an audit trail feature at the database level throughout
the year. However, for the period from 1st April 2024 to 31st December 2024, the said audit log
doesn't have the feature what data was changed. Subsequent to the implementation of SAP
ERP from 1st January 2025, the said feature has been enabled
For Dhawan & Co. For R S P H & Associates
Chartered Accountants Chartered Accountants
Firm’s Registration No.: 002864N Firm’s Registration No.: 003013N
Deeksha Kapoor Tarun Kumar Batra
Partner Partner
M. No.: 460453 M. No.: 094318
UDIN No. : 25460453BNUIFG2563 UDIN No.: 25094318BMNATM9560
Place: Noida
Date: 30-05-2025
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