2.11. Provisions, contingent liabilities and contingent as¬
sets
Provisions are recognised when the Company has a pres¬
ent obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embody¬
ing economic benefits will be required to settle the obliga¬
tion and a reliable estimate can be made of the amount of
the obligation. Provisions are measured at the best esti¬
mate of the expenditure required to settle the present obli¬
gation at the Balance Sheet date.
If the effect of the time value of money is material, provi¬
sions are discounted using a current pre-tax rate that re¬
flects, when appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed when there is a pos¬
sible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non-oc¬
currence of one or more uncertain future events not wholly
within the control of the Company or a present obligation
that arises from past events where it is either not probable
that an outflow of resources will be required to settle the
obligation or a reliable estimate of the amount cannot be
made.
Contingent assets are not recognised. They are disclosed
only when an inflow of economic benefit is probable from
such assets.
Provisions, contingent liabilities and contingent assets are
reviewed at each balance sheet date.
2.12. Revenue recognition
Revenue is recognised to the extent that it is probable that
the economic benefits will flow to the Company and the
revenue can be reliably measured, regardless of when the
payment is being made. Revenue towards satisfaction of a
performance obligation is measured at the amount of trans¬
action price (net of variable consideration) allocated to that
performance obligation. The trasaction price of goods sold
and services rendered is net of variable consideration on
account of various discount and the schemes offered of
the company as part of the contract.
The specific recognition criteria described below must
also be met before revenue is recognised.
Sale of Goods:
The company recognises revenue in accordance with Ind
AS 1154 - Revenue from Contracts with Customers by ap¬
plying the following five stemps:
* Identify the conctract with a customer
* Identify the performance obligations in the conract
* Determine the transaction price;
*Allocate the transation price to the performance obliga¬
tions in the contract; and
* Recognise revenue when (or as) the performance obliga¬
tions is satisfied
Revenue from the sale of goods is recognised when (or
as) control of the goods is transferred to the customer, i.e.
when the customer obtains the ability to direct the use of
and obtain substantially all of the remaining benefits from
the goods.
In case of goods supplied subject to installation and in¬
spection, revenue is recongnised when the installation and
inspection are completed and control tof the goods has
been transferred to the customer.
Subsidy:
Subsidy on Group Concession Price under Group Con¬
cession Scheme (GCS) and Freight are recognized in ac¬
cordance with the norms prescribed by the Government
of India - Fertiliser Industry Co-ordination Committee, with
adjustments for escalation / de-escalation in the prices of
inputs and other adjustments as estimated by the man¬
agement in accordance with known policy parameters in
this regard.
Rendering of services:
Revenue from sale of services is recognised as per the
terms of the contract with customers based on stage of
completion when the outcome of the transactions involv¬
ing rendering of services can be estimated reliably.
Interest income:
Interest income is recognized on a time proportion basis
taking into account the amount outstanding and the rate
applicable using effective interest method .
Dividends:
Revenue is recognised when the Company's right to re¬
ceive the payment is established, which is generally when
shareholders approve the dividend.
2.13. Employee benefits
(i) Gratuity:
In accordance with the Payment of Gratuity Act, 1972 the
Company provides gratuity as a defined benefit plan, to el¬
igible Employees. Liability with regard to gratuity is deter¬
mined by an independent actuary at every Balance Sheet
date using the projected unit credit method.
The Company recognizes the net obligation of a defined
benefit plan in the Balance Sheet as asset or liability.
Gains or losses on re-measurements are recognized in
Other Comprehensive Income (OCI). Remeasurement
recognised in other comprehensive income is reflected
immediately in retained earnings and is not reclassified to
Statement of Profit and Loss.
All expenses represented by current service cost, past ser¬
vice cost, if any, and net interest on the defined benefit
liability / (asset) are recognized in the Statement of Profit
and Loss.
(ii) Superannuation fund and provident fund:
Superannuation and Provident Fund are in the nature of
defined contribution plans.
The Company makes monthly contribution to approved
superannuation fund covered by a policy with LIC of India.
The Company has no further obligation beyond monthly
contribution. The obligations under the said policy are ac¬
counted for on accrual.
The Company makes monthly contribution to the Provi¬
dent Fund scheme and recognizes it as an expense, in
the year in which employee renders the related service.
The Company's Contribution towards Provident Fund is
administered and managed by an approved trust. The
Company has no obligation, other than the contribution
payable to the Fund.
(iii) Compensated absences:
Liability for compensated absence is treated as a long
term liability and is covered by a policy with Life Insurance
Corporation (LIC). The estimated liability at each Balance
Sheet date is determined by an independent actuary using
the projected unit credit method and is recognised in the
accounts accordingly.
2.14. Taxes
(i) Current income tax:
Income tax expense is recognised in the statement of prof¬
it or loss except to the extent that it relates to items recog¬
nized directly in equity or Other Comprehensive Income
(OCI), in which case the tax is also recognized in equity or
Other Comprehensive Income (OCI).
The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted, at the
reporting date. Current income tax asset/liability is mea¬
sured at the amount expected to be recovered from or
paid to the taxation authorities.
(ii) Deferred tax:
Deferred tax is provided using the liability method on tem¬
porary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes at the reporting date.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset
is realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted
at the Balance Sheet date.
Deferred tax assets are recognised to the extent it is proba¬
ble that future taxable profit will be available against which
the deductible temporary differences and tax losses can
be utilised. The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the extent
there is no longer probable that the related tax benefit will
be realized. Unrecognised deferred tax assets are re-as¬
sessed at each reporting date and are recognised to the
extent that it has become probable that future taxable prof¬
its will allow the deferred tax asset to be recovered.
Deferred tax assets and deferred tax liabilities are offset if a
legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate
to the same taxable entity and the same taxation authority.
2.15. Government grants
Government grants are recognised where there is reason¬
able assurance that the grant will be received and all at¬
tached conditions will be complied with.
When the grant relates to an expense item, it is recognised
as income on a systematic basis over the periods that the
related costs, for which it is intended to compensate, are
expensed. When the grant relates to an asset, it is rec¬
ognised as income in equal amounts over the expected
useful life of the related asset.
In the case of a loan or assistance provided by government
or related institutions with an interest rate below the current
applicable market rate, the effect of this favourable interest
is regarded as a government grant. The Grant is initially
recognised and measured at fair value and subsequently
measured in accordance with the recognition and mea¬
surement principles of Ind AS 109, Financial Instruments
(financial liabilities). The government grant is measured as
the difference between the initial carrying value of the loan
and the proceeds received and recognised as income on
a systematic basis over the periods the related costs, for
which it is intended to compensate, are expensed.
2.16. Leases
The Company, at the inception of a contract, assesses
whether the contract is a lease or not. A contract is, or
contains, a lease if the contract conveys the right to control
the use of an identified asset for a time in exchange for a
consideration. This policy has been applied to contracts
existing and entered into on or after 1 April 2019.
The Company recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the ini¬
tial amount of the lease liability adjusted for any lease pay¬
ments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore
the underlying asset or the site on which it is located, less
any lease incentives received.
The right-of-use asset is subsequently amortised using the
straight-line method from the commencement date to the
end of the lease term.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commence¬
ment date, discounted using the Company's incremental
borrowing rate. It is remeasured when there is a change in
future lease payments arising from a change in an index
or rate, if there is a change in the Company's estimate of
the amount expected to be payable under a residual value
guarantee, or if the Company changes its assessment of
whether it will exercise a purchase, extension or termina¬
tion option. When the lease liability is remeasured in this
way, a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in profit
or loss if the carrying amount of the right-of-use asset has
been reduced to zero.
The Company has elected not to recognise rightof-use as¬
sets and lease liabilities for short-term leases that have a
lease term of 12 months or less and leases of low-value
assets. The Company recognises the lease payments as¬
sociated with these leases as an expense over the lease
term.
2.17. Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its in¬
tended use or sale are capitalised as part of the cost of the
asset in the period in which they are incurred, until such
time the assets are substantially ready for their intended
use or sale. All other borrowing costs are expensed in the
period in which they occur. Borrowing costs consist of in¬
terest and other costs that an entity incurs in connection
with the borrowing of funds. Borrowing cost also includes
exchange differences to the extent regarded as an adjust¬
ment to the borrowing costs. Interest earned on temporary
investments out of specific borrowings made for qualifying
assets is deducted from the borrowing costs eligible for
capitalisation to those assets.
2.18. Research and development costs
Expenditure relating to capital items is treated as fixed as¬
sets and depreciated at applicable rates. Revenue expen¬
diture during research period is charged to Statement of
Profit and Loss in the year in which it is incurred.
2.19. Foreign currency transactions
The Company's Financial Statements are presented in In¬
dian Rupees, which is its functional currency.
On initial recognition, transactions in foreign currencies
entered into by the Company are recorded in the function¬
al currency by applying to the foreign currency amount,
the spot exchange rate between the functional currency
and the foreign currency at the date of the transaction.
Exchange differences arising on foreign exchange trans¬
actions settled during the year are recognized in the State¬
ment of Profit and Loss.
Measurement of foreign currency items at reporting date:
Foreign currency denominated monetary assets and liabil¬
ities remaining unsettled at the end of the year are translat¬
ed into functional currency at exchange rates prevailing at
the Balance Sheet date. Exchange differences arising on
translation of monetary items are recognised in Statement
of Profit and Loss.
Non-monetary assets and liabilities denominated in for¬
eign currency and measured at historical cost are translat¬
ed using exchange rate prevalent on the date of transac¬
tion. Non-monetary assets and liabilities denominated in
foreign currency and measured at fair value are translated
using the exchange rates at the date when the fair value
was determined.
The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the rec¬
ognition of the gain or loss on the change in fair value of
the item (i.e., translation differences on items whose fair
value gain or loss is recognised in OCI or Statement of
Profit and Loss are also recognised in OCI or Statement of
Profit and Loss, respectively).
2.20. Earnings per share
Basic earnings per equity share is computed by dividing
the net profit for the year attributable to the Equity Share¬
holders by the weighted average number of equity shares
outstanding during the year.
Diluted earnings per share is computed by dividing the net
profit for the year, adjusted for the effects of dilutive poten¬
tial equity shares, attributable to the Equity Shareholders
by the weighted average number of the equity shares and
dilutive potential equity shares outstanding during the year
except where the results are anti-dilutive.
2.21. Investments
Investments are classified as Non Current and Current.
Non Current Investments are carried at cost less provision
for other than temporary diminution, if any, in value of such
investments. Current investments are carried at lower of
cost and fair value.
2.22. Exceptional Items
Exceptional items of income and expense within profit or
loss from ordinary activities are of such size, nature or in¬
cidence that their disclosure is relevant to explain the per¬
formance of the enterprise for the period, the nature and
amount of such items are disclosed separately as excep¬
tional items.
4.1. Jaiprakash Engineering and Steel Company Limited (JESCO), erstwhile subsidiary of the Company, went into Volun¬
tary Liquidation under IBC with effect from April 25, 2022.
Subsequently, the liquidator, basis the considered opinion that JESCO will not be able to pay its debts in full from the proceeds of
assets to be sold in the liquidation and as per Regulation 40(2) of the Insolvency and Bankruptcy Board of India (Voluntary Liqui¬
dation) Regulations 2016, filed, before the Hon'ble NCLT, Bengaluru, withdrawal memo for the withdrawal of the company petition
CP (IB) 164/59lBB,/2023, to suspend the process of liquidation. The Hon'ble NCLT, Bengaluru, was please to pass an Order dated
April 16, 2024, through which, the company has exited the liquidation process effective from April 16, 2024.
Consequent to assignment of debt by the Consortium Lenders to Assets Care and Reconstruction Enterprise Limited (ACRE),
Secured Creditor, the shares of JESCO held by the Company were sold as part of Non-core Assets on 12th June 2024, thereby
JESCO ceases to be a subsidiary of the Company effective from June 12, 2024.
These shares were pledged in favour of Banks / Financial Institutions for the term loans availed by the Company. The loans have
been repaid in full, awaiting release of pledge of shares.
7.1. Debts due by directors or other officers of the company or any of them either severally or jointly with any other person or debts
due by firms or private companies respectively in which any director is a partner or a director or a member.
7.2. Trade Receivables includes subsidy and other dues of Rs. 23,740.931 Lakhs (Previous Year Rs. 39,613.50 Lakhs) receivable
from Government of India and Rs. 780.19 Lakhs (Previous Year Rs.6,768.96 Lakhs) from State Governments.
Nature of Reserves
(a) Capital Reserve: During the composite scheme of arrangement and amalgamation, the excess of net assets taken over the
cost of consideration paid is treated as capital reserve.
(b) Securities Premium: The amount received in excess of face value of the equity shares is recognised in Securities Premium.
In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value
of share is accounted as securities premium.
(c) General Reserve: The Company has transferred a portion of its net profit before declaring dividend to general reserve pur¬
suant to the provisions of Companies Act 1956.
(d) Retained Earnings: Retained earnings are the profits earned or loss incurred by the Company till date including OCI, less
any transfers to general reserve, dividends or other distributions paid to shareholders.
14.6 Sales Tax Deferral Loan:
Sales Tax Deferral Loan: The Government of Andhra Pradesh sanctioned Sales Tax deferral facility to the Company with a final el¬
igibility of Rs 1,01,746.56 lakhs, subject to the restriction of loan to the actual Sales Tax collected on the sale of the products man¬
ufactured by the Company during the period of 14 years from 19.03.1998 to 18.03.2012. The Sales Tax deferred in a year should
be repaid at the end of 14th year without interest. Repayment of this loan was commenced on March 19, 2012. The deferred Sales
Tax outstanding as on March 31,2025 is Rs. 1,343.49 Lakhs (Previous Year Rs. 2,343.49 Lakhs).
20.1. Group Concession Scheme - (GCS) Subsidy
i. Nitrogenous fertilizers (Urea) are under the Group Concession Subsidy scheme of Government of India (GOI), Depart¬
ment of Fertilizers. GOI has notified New Urea Policy (NUP)-2015 from 1st June, 2015 to 31st March, 2019. GOI vide
its notification dated 14th May, 2019 has extended the duration of NUP-2015 from 1st April, 2019 till further orders. Gas
Pooling Policy applicable to Fertilizer industry effective from June 1,2015. Concession rates for Plant-1 and Plant 2 for
the period April 1,2024 to June 30, 2024 have been recognized based on notified rates as per respective policies.
Further De-escalations Rs.3,804.42 Lakhs (Previous year De-escalations Rs. 8,790.77 Lakhs), have been accounted for
during the year as per the gas pool prices and provisions applicable under NPS-III, Modified NPS-III, NUP-2015 and
Letter dated March 30, 2020 related to Modified NPS-III policy. Adjustments, if any, required will be considered on noti¬
fication of final prices.
ii. Government of India / Department of Fertilizers has implemented Direct Benefit Transfer (DBT) in Fertilizer Sector in all
the States of the Country from 1st March, 2018. The subsidy income for the period April, 2024 to March, 2025, has been
recognized in the accounts for the entire quantities received in the States under DBT scheme.
(c) During the year, the Company has not recognized any deferred tax assets or liabilities in the financial statements. This decision is
in line with Ind AS 12 - Income Taxes, which requires the recognition of deferred tax only to the extent that it is probable that sufficient
future taxable profits will be available against which deductible temporary differences and carry-forward losses can be utilized.
The primary reasons for the non-recognition of deferred tax are as follows:
1. Sale of Assets:
Assets Care Reconstruction Enterprise (ACRE), Secured Creditor, invoked SARFAESI Act 2002, took symbolic possession
of all assets on 12th Oct 2023, entered into an OTS agreement and had recovered debt from sale of core assets (Urea and
MI facilities), non-core assets (all assets other than Urea and MI assets) amounting to Rs.1685 Crores and Rs. 200 crores
respectively totaling to Rs. 1885 crores plus cutback pending and due till June 30, 2024, towards full and final settlement of
debt outstanding of Rs. 3858 Crores claimed by ACRE as of 10th December 2023.
The Board of Directors on May 31, 2024, took note of the of the issue of Sale Certificate by ACRE and handover of Physical
Possession of Core Secured Assets of NFCL to AM Green Ammonia (India) Private Limited, the buyer.
Consequently, ACRE has issued a No Due Certificate dated 11th July 2024, confirming that NFCL stands unconditionally
and irrevocably released and discharged of any liabilities, dues, demands or claims in respect of the outstanding debt, other
amounts due and payable to ACRE, including release of all security created in favour of ACRE, personal guarantees and
pledge of shares of NFCL held by promoter (Amlika Mercantile Private Limited). NFCL, as on 11th July, 2024, does not have
any term loans and working capital debt outstanding with the Banks.
There were no PPE available for operations in view of recovery from sale of Assets by the Lenders. Ammonia/Urea plants
operated up to 4th June 2024, i.e., one plant till 31st May 2024 and the other plant till 04th June 2024, Micro Irrigation Plants
operated till 31st May 2024.
Post the recovery by ACRE there are no physical assets (which includes all Property, Plant, and Equipment (PPE) ) remining
with the company.
As there are no remaining physical assets including PPE assets, there is no difference between the Income Tax Block and the
Company's Act Block, which would otherwise give rise to temporary differences that need to be recognized for deferred tax
purposes.
2. Reduction in Operations:
Following the recoveries by ACRE, the Company does not have any revenue generating activities and operations have sig¬
nificantly reduced. The company is currently focusing mainly on recovery of its remining claims and dues and settlements of
operating debt. Given the current status of operations and levels of net current liabilities, there is no expectation of continuing
operations or generating taxable profits in the near future.
3. Set-off of Carry-forward Losses:
The Company has carry-forward losses under the Income Tax Act, 1961, which, in the view of the management, will likely be
set off against future taxable profits, if any. However, in light of the reduced operations and the absence of foreseeable taxable
profits, the Company does not anticipate being able to utilize the deferred tax assets.
As a result, the Company has not recognized any deferred tax assets or liabilities for the year.
(d) The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets
and current tax liabilities and the deferred tax assets and deferred tax liabilities as they relate to income taxes levied by the
same tax authority.
29. Material Uncertainty on the Company's ability to continue as a going concern and appropriateness of use of going concern
basis of accounting in preparation of financial statements.
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 equipment 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.
ii) Without considering the energy and other claims from the Government, the current liabilities exceed the current assets
by Rs. 86,095.55 Lakhs.
Accordingly, Financial Statements for the FY 2024-25 has been prepared on not a going concern basis
30. (i) Government of India announced New Urea Policy (NUP)-2015 and Gas Pooling Policy for Fertilizer (Urea) Sector which are
effective from 1st June 2015 to 31st March 2019. Government of India extended the NUP -2015 from 1st April 2019 until fur¬
ther orders. Income from Urea Operations has been recognised in accordance with the said policies. Income towards freight
subsidy, Reimbursement claims towards additional fixed cost, Input escalation / de-escalation, have been recognized for the
year ended on March 31,2025 in terms of the said policies.
(ii) 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 cumulative 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 correspondingly NFCL has reduced its Urea Subsidy claim by Rs. 16,879.16 Lakhs for FY 2022-23. Accordingly,
the reduction in cost of raw material / power and fuel and consequent 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. Further ad¬
justments required, if any, will be considered on notification of final prices. As there is no production from 4th June 2024 there
is no revenue from Operations to be recognised from 2nd quarter.
(iii) The Government extended the preset energy norms which were valid till 31st March 2023. Accordingly, Subsidy income
is recognized based on Target Energy Norms as per NUP-2015 policy for the Quarter ended June 2024 and there is no pro¬
duction from June 2024 as the Plants were sold.
GAIL has recovered interest n the past and also raising claims for interest on the amounts due which is being disputed by the
comany. The company is not accounting for further interest from 1st July 2024 onwards.
32.1 (a) There are various claims against the company which are in dispute in various forums, courts, appeals, including arbitra¬
tion awards.
(b) In relation to some of the contracts for purchase of fertilisers, an international Arbitration Award has been passed against the
Company in September 2016 for USD 14,398,188 and GBP 690,630 and interest as applicable apart from costs based on a
claim filed by one of the Suppliers of Fertilizers to the Company.
The Company is of the view that the Award has been obtained based on documents tampered with and mis-representations
of facts by said supplier. The Company is contesting the enforcement of the Award in the Courts in India and has also filed a
Criminal Complaint before the Metropolitan Magistrate of Hyderabad against the supplier and its officials. Judgement came in
favour of the Company, aggreived by the Judgement, supplier made an appeal to the Supreme Court of India. Matter yet to
be heard.
(c) The Company entered into two Contracts dated December 15, 2012 on Early Works, Offshore and Onshore towards certain
engineering drawings to be utilised towards its plant for third ammonia and urea project on conditions that balance amounts
payable only upon (a) the anouncement of a fertilizer policy and (b) that the fertilizer policy being found favorable for the Proj¬
ect of the Company. The Company could not proceed further as the policy was not conducive for the project.
The service provider raised invoices for the balance amounts claiming that the work carried out was per contract. As the
amounts were not paid the service provider invoked arbitration. The arbitral Tribunal passed an award on October 23, 2017
for USD 877,500, GBP 52,314, EUR 455,000 and INR 221.39 Lakhs and interest as applicable apart from costs in favour of
the claimant. NFCL challenged the Awards by filing two petitions separately for each case under section 34 of Arbitration &
Conciliation Act as the tribunal ignored vital evidence such as Govt communication dt 9th May 2013 where in the industries
we're asked not to proceed further without necessary approvals from Govt, amongst other grounds. Matter yet to be listed for
hearing.
Based on the current legal progress, the management has provided for 25% of the claim made on the Offshore contract and
deposited 15% of the onshore contract value with the court . The Company continues to proceed legally and hence the bal¬
ance claims have been disclosed as contingent liabilities.
32.2 Various other Cases / Petitions filed against the company in NCLT / Courts / Other Tribunals:” Few other creditors have filed
petitions against the company in various Courts / Tribunals for recovery of dues / claims for compensation for their services
/ supplies and all these matters are at various stages in the respective courts. The legal counsels opinioned that these cases
/ petitions filed against the company are not tenable and are of the view that these cases may not have any impact on the
financials of the company.
Basis the legal opinion the management is of the view that the other pending litigations may not have any adverse impact on
the financial position of the company as at the year end. If and when this assumption changes and they do become material
and adversely it will be appropriately reported as per the extant guidelines.
32.3 Amlika Mercantile Private Limited (AMPL), Core Promoter of the Company had preferred an appeal before Hon'ble National
Company Law Appellate Tribunal (NCLAT), Chennai, against the Order' dated 27.08.2021, passed by the ‘National Company
Law Tribunal', Hyderabad Bench, admitting the Nagarjuna Fertilizers and Chemicals Limited (NFCL) into Corporate Insolven¬
cy Resolution Process (CIRP) under Insolvency and Bankruptcy Code, 2016.
Basis the appeal of AMPL, Hon'ble NCLAT, Chennai, vide order dated October 05, 2023, has allowed the appeal by setting
aside the impugned order dated August 27, 2021, passed by Hon'ble NCLT, Hyderabad Bench. Thereby, the Company exited
CIRP under IBC, 2016 effective October 05, 2023.
AMPL has claims the legal expenses for the NCLAT appeal filed on behalf of the Company and the company is liable to reim¬
burse the legal expenses to AMPL.
32.4 Claim by GAIL and against GAIL
i) Claim by GAIL
GAIL has filed a petition under section 9 of Arbitration and Conciliation Act, 1996, in Hon'ble Hight Court of Delhi, seeking
relief for their outstanding dues. The Company is contesting the case disputing the total claim of GAIL stating that GAIL has
stopped supplies in 2018 as the company was unable to comply with the gas supply agreement terms (as regards security
and payment terms) and GAIL resumed supplies after intervention of DoF, MoCF, GoI assuring GAIL on payments and pay¬
ment security via Office Memorandum (OM). The Government did not agree to pay GAIL within a specified period nor did
it agree to reimburse GAIL of any interest as can be clearly seen in the Office Memorandum (OM) of DOF, basis of which
resumed the gas supply. GAIL was fully aware of the impossibility of the company complying with the security and payment
terms in gas supply and has communicated in writing in various legal forums and with DoF that it started supplies only after
security and assurances of payment from DoF. Despite this GAIL has adjusted payments/recovered interest since 2018 and
also raising claims for interest post the sale of assets on the amounts due. The company is disputing interest being claimed
by GAIL with GAIL, with DoF and in Legal Forums.
ii) Claims Against GAIL
The company had lost the GAIL arbitration case in 2023. The company filed an application under section 34 of Arbitration and
Conciliation Act 1996 which is pending adjudication in Delhi High Court since 2023. All the assets of NFCL have been sold
basis the secured creditor invoking SARFAESI. The company's accounts have been drawn up accordingly as a non-going
concern. Given the financial situation NFCL assigned its rights in favour of AMPL to represent it in all legal forums/proceedings
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, from the net proceeds, NFCL
shall use the award as it deems fit after clearing its liabilities.
32.5 The Company has been using the Nagarjuna Brand I Trademarks for its urea and other products under a license agreement
Dt 29/01/1998 with the grantor, a related party. The company, during the period ended on 31 .12.2021 , received a claim from
the grantor asserting its right to royalty for the period from 29/01/1998. The company agreed without impairment and prejudice
to the rights of AMPL in any manner whatsoever to settle the claims i n a manner such that the dues are secured and paid/
deducted on a priory basis from the receipts if any from claims against GAIL if and when GAIL satisfies the award in relation
to pipeline accident The Dolaramud.; trademark/mascot being used by the Group and by NFCL In urea packaging. After the
government letter dated August 18, 2023, on One Nation One Fertilizers by introducing Single Brand for fertilizers and Logo
under fertilizer subsidy scheme, the company has discontinued use of trademark and did not renew the trademark. The group
agreed to continue the trademark. Based on the agreed terms with NACL the company has written to NACL to stop utilising
the Nagarjuna name, group logo or trademarks vide letter dated 28th May 2025 after hearing news that there is a change in
company's ownership and management.
33. Disclosure under Ind AS 24, Related Party Disclosures
33.1. List of related parties and their relationships
Subsidiaries
(i) Jaiprakash Engineering and Steel Company Limited (JESCO)
Ceased to be Subsidiary from 12th June 2024
Associates
(i) KVK Raju International Leadership Limited
Key Management Personnel
(i) Mr.K.Rahul Raju, Managing Director
(ii) Mr. Chanda Sreekanth, Company Secretary
(iii) Mr. Sudhakara Rao Annam, Chief Financial Officer
(iv) Mr. K Srirama Raju, Chief Financial Officer
Relatives of Key Management Personnel.
(i) Smt. K Lakshmi Raju (Sister of Shri K Rahul Raju)
(ii) Smt. K. Veda Raju (Wife of Shri K Rahul Raju)
Non - Executive Directors
(i) Mr.Uday Shankar Jha, Chairman
(ii) Mr. Chandra Pal Singh Yadav, Nominee director of KRIBHCO
(iii) Ms.Lalitha Raghuram, Independent Director
(iv) Mr. Rajendra Mohan Gonela, Independent Director
(v) Mr. Sudhakar Kudva, Independent Director
Enterprises which have significant influence
(i) Amlika Mercantile Private Limited
Enterprises significantly influenced by Key Management personnel or their relatives
(i) Nagarjuna Educational Trust
33.5 Terms and conditions of transactions with related parties
Transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding
balances at the yearend are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided
or received for any related party receivables or payables. For the Nine months ended December 31,2024, the Company has not
recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2024: Rs. Nil). This assessment
is undertaken each financial year through examining the financial position of the related party and the market in which the related
party operates.
34. Segment Reporting
The financial results comprise the combined operations of the Company relating to the Fertilizer and Micro Irrigation businesses.
The financial results of Micro Irrigation being below the reportable thresholds, and since they do not have similar economic charac¬
teristics and do not share any of the aggregation criteria, are neither disclosed as separate segments nor combined as "all other
segments" for the purpose of disclosures under Ind AS 108 - Operating Segments.
37. Financial risk management objectives and policies
Financial Risk Management Framework
The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables.
The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets
include loans and advances, trade and other receivables, and cash and cash equivalents that derive directly from its operations.
The Company is exposed primarily to Credit Risk, Liquidity Risk and Market risk (fluctuations in foreign currency exchange rates
and interest rate), which may adversely impact the fair value of its financial instruments. The Company's senior management
oversees the management of these risks. The Company assesses the unpredictability of the financial environment and seeks to
mitigate potential adverse effects on the financial performance of the Company based on the policies agreed by the Company's
senior management. The same are summarised below:
A. Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a
financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as
concentration of risks. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from
its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial
instruments. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, invest¬
ments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. None of the financial
instruments of the Company result in material concentration of credit risk except trade receivables where more than 50% is due
from Governemnt of India and various State Governments. The same are realisable in due course.
To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condi¬
tion, current economic trends, and analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set
accordingly.
The company considers the probability of default upon initial recognition of asset and whether there has been a significant in¬
crease in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in
credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at
the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as :
(i) Actual or expected significant adverse changes in business,
(ii) Actual or expected significant changes in the operating results of the counterparty,
(iii) Financial or economic conditions that are expected to cause a significant change to the counterparty's ability to meet its obli¬
gations,
(iv) Significant increases in credit risk on other financial instruments of the same counterparty,
(v) Significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit
enhancements.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repay¬
ment plan with the company. The company categorises a loan or receivable for write off when a debtor fails to make contractual
payments greater than 2 years past due. Where loans or receivables have been written off, the Company continues to engage in
enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
Excessive risk concentration
Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geo¬
graphical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected
by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company's perfor¬
mance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the Company's policies and procedures include specific guidelines to focus on
the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance
with the Company's policy. Investments of surplus funds are made only with approved authorities. Credit limits of all authorities
are reviewed by the Management on regular basis.
B. Liquidity Risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management
is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.
The table below summarises the maturity profile of the Company's financial liabilities based on contractual undiscounted pay¬
ments.
C. Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risk for the entity comprises two types of risk: interest rate risk and currency risk. Financial instruments affected by
market risk include loans and borrowings and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at March 31,2024 and March 31,2023
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates
of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant in place at March 31,
2024.
The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement
obligations; provisions; and the non-financial assets.
The following assumptions have been made in calculating the sensitivity analysis:
- The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on
the financial assets and financial liabilities held at March 31,2024 and March 31,2023.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's
long-term debt obligations with floating interest rates.
The company's interest rate exposure is mainly related to variable interest rates debt obligations. The company uses a mix of
interest rate sensitive loan facilties from the lenders to manage the liquidity and fund requirement for its day to day operations like
working capital, short term loans and suppliers / buyers credit etc.,
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and
borrowings with floating rate of interest affected, after the impact of hedge accounting. With all other variables held constant, the
Company's profit before tax is affected through the impact on floating rate borrowings, as follows:
38. Capital Management
For the purpose of the Company's capital management, capital includes issued equity capital, securities premium and all other
equity reserves attributable to the equity holders of the Company. The primary objective of the Company's capital management is
to maximise the shareholder value. The Company monitors capital using a gearing ratio, which is net debt divided by total capital
plus net debt.
Reasons for Variance in Ratios: Reasons for change in the ratios by more than 25% as compared to the preceeding year are in¬
crease in - cost of production, interest costs, debt due to non-repayment of loans and the resulting increase in loss.
(xv) The company has not undertaken any scheme of arrangements in terms of section 230 to 237 of the Companies Act 2013
during the year.
(xvi) (A) The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other
sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the under¬
standing (whether recorded in writing or otherwise) that the Intermediary shall (i) 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
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(B) The company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party)
with the understanding (whether recorded in writing or otherwise) that the company shall (i) 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 (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(xvii) During the year, the company has not surrended or disclosed any transaction in the Income tax assessments under the
Income Tax Act 1961, which was not recorded in the books of account
(xviii) The Company is not covered under section 135 of the Companies Act 2013.
(xix) The company has not traded or invested in crypto currency or virtual currency during the financial year
46. Balances in the accounts of various parties appearing in these statements are subject to confirmations and reconciliations.
47. The figures of the previous year have been reclassified / regrouped, wherever necessary, to make them comparable with that
of Current Year.
Notes 1 to 47 above form an integral part of the Financial Statements
As per our report of even date attached For and on behalf of the Board
for P. Murali & Co Uday Shankar Jha K. Rahul Raju
Chartered Accountants Chairman Managing Director
F R N. 007257S DIN: 00056510 DIN:00015990
A. Krishna Rao Chanda Sreekanth
Partner Company Secretary
Membership No. 020085
Hyderabad
30th May 2025
1
Includes Rs.59.57 lakhs due from SFAC on account of implementation of eNAM project. The company had closed the iKi-
san division operations due to severe financial constraints. As the Company is unable to perform the contractual obligations
with SFAC for eNAM Project due to closure of iKisan division , the remaining contract work had been outsourced to a vendor
who invested their resources to fulfil the contractual obligations of NFCL. As agreed, the entire amount receivable from eNAM
project is payable to the vendor.
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