We have audited the accompanying Ind AS Standalone Fi¬
nancial Statements of M/s NAGARJUNA FERTILIZERS AND
CHEMICALS LIMITED (“the company”), which comprise the
Balance Sheet as at 31st March, 2025, the Statement of Profit
and Loss (including Other Comprehensive Income), the State¬
ment of changes in equity and the Statement of Cash Flows for
the year then ended on that date and notes to financial state¬
ments including a summary of material accounting policies
and other explanatory information.

In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid Standalone finan¬
cial statements give the information required by the Companies
Act, 2013 (“the Act”) in the manner so required and give
a true and fair view in conformity with the Indian Accounting
Standards prescribed under section 133 of the Act read with
the Companies (Indian Accounting Standards) Rules, 2015, as
amended, (“Ind AS”) and other accounting principles gener¬
ally accepted in India, of the state of affairs of “the Company”
as at March 31,2025, its Profit including total comprehensive
income, its cash flows and the changes in equity for the year
ended on that date.

Basis for Opinion:

We conducted our audit of the financial statements in accor¬
dance 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 Responsibil¬
ities for the Audit of the Standalone Financial Statements sec¬
tion 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 there under, 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.

Emphasis of matter

a) Relating to Going Concern:

i Consequent to the settlement of Debt vide receipt of sale
proceeds from Core and Non-Core assets by ACRE, there
are no other assets including property plant and equip¬
ment left with the Company for operations. “No Dues and
Security release Certificate” from ACRE was received on
11th July 2024, thereby affecting the Going Concern of the
Company and accordingly drawn the Financial statements
for the year ended on March 31,2025." - Refer Note No. 29
to the Standalone Financials.

ii Without considering the energy and other claims from the
Government, the current liabilities exceed the current as¬
sets by Rs. 86,095.55 Lakhs.

b) There are claims against the company, which are not ac¬
knowledged as debts and are disputed in various forums,
courts, appeals, including arbitration awards amounting to
Rs 81,596.07 lakhs. - Refer Note No. 32 to the Standalone
Financials.

GAIL has recovered interest in the past and also raising
claims for interest on the amounts due which is being dis¬
puted by the company. The company is not accounting for
further interest from 1st July 2024 onwards.

c) Given the financial situation, NFCL has assigned its rights
in favor of AMPL to represent it in all legal forums/proceed-
ings to pursue claims from GAIL including Arbitration claim
in its name as an assignee along with agency coupled with
interest under the provisions of Indian Contract Act, 1872.
Should GAIL satisfy the award in the future, NFCL shall use
the award as it deems fit after clearing its liabilities. - Refer
Note No. 32.4 to the Standalone Financials.

d) De-escalation of Urea subsidy and De-escalation of Gas
Costs used as Raw material and generation of Power for
FY 2022-23.

The Subsidy income is recognised based on the notified
Gas Pool prices for the time being in force and upon final
notification of the prices the escalation / de-escalations are
accounted for in the year in which these notifications are
issued. During the 3rd quarter, the final Gas Pool price for
the year 2022-23 has been notified by the DOF (Annual cu¬
mulative Gas Pool price has come down) in line with which
GAIL has issued Credit note and NFCL has recognized
reduction in Gas Costs by Rs. 17,555.01 Lakhs and corre¬
spondingly NFCL has reduced its Urea Subsidy claim by
Rs. 16,879.16 Lakhs for FY 2022-23. Accordingly, the re¬
duction in cost of raw material / power and fuel and conse¬
quent de-escalation of the subsidy revenues, respectively,
belonging to FY 2022-23 have been accounted in line with
the said notification and continued accounting policy. Fur¬
ther adjustments required, if any, will be considered on no¬
tification of final prices. As there is no production from 4th
June 2024 onwards, there is no revenue from Operations
to be recognized from the second quarter. - Refer Note
No. 30 to the Standalone Financials.

e) The Government from time to time extended the present
energy norms which were valid till 31st March 2023. Ac¬
cordingly, Subsidy income is recognized based on Tar¬
get Energy Norms as per NUP-2015 policy for the Quarter
ended June 2024 and there is no production from June
2024 as the Plants were sold. - Refer Note No. 30 to the
Standalone Financials.

f) Claim from a related party asserting its right for Royalty for
the period from 29.01.1998 to 31.12.2021. The company
agreed without impairment and prejudice to the rights of
AMPL to settle the claims in a manner such that the dues
are secured and paid on a priority basis from the receipts
if any from claims against GAIL if and when GAIL satisfies
the award in relation to pipeline accident. - Refer Note No.
32.5 to the Standalone Financials.

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

V. 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.

Information Other than the Standalone Ind AS financial
statements and Auditor’s Report Thereon

The Company's management and Board of Directors are re¬
sponsible for the preparation of the other information. The
other information comprises the information included in the
Management Discussion and Analysis, Board's Report includ¬
ing Annexure to Board's Report, Business Responsibility Re¬
port, Corporate Governance and Shareholder's Information,
but does not include the financial statements and our auditor's
report thereon.

Our opinion on the financial statements does not cover the oth¬
er information and we do not express any form of assurance
conclusion thereon.

In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsis¬
tent with the financial statements or our knowledge obtained
during the course of our audit or otherwise appears to be ma¬
terially misstated.

When we read the annual report, if we conclude that there is
a material misstatement therein, we are required to commu¬
nicate the matter to those charged with governance. We are
required to report that fact; we have nothing to report in this
regard.

Management and Board of Directors Responsibility for the Ind AS Standalone financial statements:

The Company's Board of Directors are responsible for the matters stated in section 134(5) of “the Act” with respect to the
preparation of these Ind AS Standalone financial statements that give a true and fair view of the financial position, financial
performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS
and other accounting principles generally accepted in India, including the accounting Standards specified under section 133
of “the Act”. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of
the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy
and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS Standalone financial
statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

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

Our objective is to obtain reasonable assurance whether the Standalone financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an audit 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 Standards on Auditing 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 our audit is conducted in accordance with Standards on Auditing, 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 appro¬
priate 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 disclo¬
sures made by management.

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

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and
whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entity or business activities of the Com¬
pany to express an opinion on the financial statements.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it
probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We
consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of
our work; and (ii) to evaluate the effect of any identified misstatements in the 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 regard¬
ing 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 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 cir¬
cumstances, 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 In¬
dia 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 the paragraph 3 and 4 of the order.

2. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and ex¬
planations 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 Balance Sheet, the statement of Profit and Loss (in¬
cluding Other Comprehensive Income), The statement of
Cash Flow and the Statement of changes in Equity dealt
with by this Report are in agreement with the books of ac¬
count;

(d) In our opinion, the aforesaid standalone financial state¬
ments comply with the Indian Accounting Standards spec¬
ified under Section 133 of the Act, read with Relevant Rules
issued there under.

(e) On the basis of the written representations received from
the management as on 31st March, 2025 taken on record
by the Board of Directors, none of the directors is disqual¬
ified as on 31st March, 2025 from being appointed as a
director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of internal financial controls
over financial reporting of the company and the operat¬
ing effectiveness of such controls, refer to our separate
report in “Annexure B”; Our report expresses an unmodi¬
fied opinion on the adequacy and operating effectiveness
of the Company's internal financial controls over financial
reporting.

(g) With respect to the other matters to be included in the
Auditor's Report in accordance with the requirements of
section 197(16) of the Act, as amended, in our opinion and
to the best of our information and according to the expla¬
nations given to us, “the Company” has paid remuneration
to its Managing Director during the year by obtaining the
prior approvals from the lenders in terms of third proviso to
sub-section (1) of section 197 of the Act.

(h) With respect to the other matters to be included in the Au¬
ditor's Report in accordance with Rule 11 of the Compa¬
nies (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”, as detailed in Note No. 32 in the stand¬
alone financial statements, has disclosed the impact of
pending litigations on its financial position in its standalone
financial statements as at 31st March, 2025.

ii. The Company did not have any long-term contracts in¬
cluding derivative contracts for which there were any ma¬
terial foreseeable losses.

iii. There were no amounts which were required to be trans¬
ferred to the Investor Education and Protection Fund by
“the Company” as at 31st March, 2025.

iv. 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 persons or entities, including
foreign entities (“Intermediaries”), with the understanding,
whether recorded in writing or otherwise, that the Inter¬
mediary shall, directly or indirectly lend or invest in other
persons or entities identified in any manner whatsoever
(“Ultimate Beneficiaries”) by or on behalf of the Company
or provide any guarantee, security or the like on behalf of
the Ultimate Beneficiaries.

v. 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 for¬
eign entities (“Funding Parties”), with the understanding,
whether recorded in writing or otherwise, that the Com¬
pany shall directly or indirectly, lend or invest in other per¬
sons or entities identified in any manner whatsoever (“Ulti¬
mate Beneficiaries”) by or on behalf of the Funding Parties
or provide any guarantee, security or the like on behalf of
the Ultimate Beneficiaries.

vi. Based on the audit procedures performed that have been
considered reasonable and appropriate in the circum¬
stances, 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) contain any material misstatement.

vii. The company has not declared or paid any dividend
during the year ending 31st March 2025.

viii. Based on our examination, which included test checks, the
Company has used accounting software for maintaining
its books of account for the financial year ended March 31,
2025 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 the audit trail feature being tampered with and
the audit trail has been preserved by the company as per
the statutory requirements for record retention.

For P. Murali& Co.,

Chartered Accountants
Firm Registration No: 007257S

A Krishna Rao

Partner

Date: 30.05.2025 Membership No.020085

Place: Hyderabad UDIN: 25020085BMILGG6809