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Madras Fertilizers Ltd. Notes to Accounts
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You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (Rs.) 1304.92 Cr. P/BV -4.53 Book Value (Rs.) -17.88
52 Week High/Low (Rs.) 124/54 FV/ML 10/1 P/E(X) 7.04
Bookclosure 25/09/2023 EPS (Rs.) 11.50 Div Yield (%) 0.00
Year End :2023-03 

Rights, preferences and restriction relating to each class of share capital:

Equity shares: The Company has one class of equity shares having a face value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in the case of interim dividend.

In the event of liquidation of the Company, the shareholders will be eligible to receive remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.

Preference shares: The Company has a class of preference shares having face value of Rs.10 per share with such rights, privileges and conditions respectively attached thereto as may be from time to time confirmed by the regulations of the company.No such preference shares are issued and outstanding as of March 31, 2023 (2022: Nil)

Note :The procedure for release of subsidy has been revised with the introduction of Direct Benefit Transfer (DBT) Scheme in a phased manner for all fertilizers. The revised procedure entails 100% payment of subsidy under DBT scheme on the basis of actual sale by the retailers to the beneficiaries on weekly basis through POS machines.

Pursuant to above procedure, pending sale of Urea, P&K fertilizer and City Compost totalling 19,175.535 MT and 472.181 MT respectively through POS machine to beneficiaries as on March 31,2022, subsidy of ' 71.80 Cr which has accrued on sale to dealers but shall become due for payment under DBT upon sale through POS machines has been recognized in the current period (CPLY quantities 49059 MT, 8595 MT and 1401 MT respectively and subsidy ' 115.30 Cr).

a. The Company has withheld payments due toM/s Sri Krishna Lorry Service (SKLS) for non-supply of trucks. SKLS invoked arbitration proceeding and got an award in their favourfora sum of '1.96 Cr and interest @ 18% from the date of the award. The companyhasfiled a petition against this said award before the Hon'ble Madras High Court and the matter is pending for adjudication. As per Arbitration award, the probable outflow to the company as at 31st March,2023 works out to ' 6.33 Cr inclusive of interest of '4.37Cr(PY - M5.97Cr includes interest component of '4.01Cr).

b. The Company suspended the supply of Carbon di-oxide (CO2)toSICGIL India Limited,(SICGIL) since they defaulted in its payments as per the terms of the contract. SICGIL invoked arbitration proceedings and got an awardin their favourfor '3.25 Cr after adjusting the amount due to the Company of '0.03 Cr. Alongwith the interest @18%. Further the arbitrator has awarded the company to reimburse the cost of arbitration of '0.08 Cr with interest @ 6% to the SICGIL.

The company has filed anappealagainst the saidawardbeforeHon'ble Madras High Court, which got dismissed on 09.08.2021. The company had preferred an appeal before the Divisional Bench of the Hon'ble Madras High Court and the matter is pending for final disposal by divisional bench. As per Arbitration award, the probable outflow till 31st March,2023 works out to '6.87 Cr inclusive of interest of '3.53Cr (PY-'6.44 Cr inclusive of interest of '3.10 Cr).

c. M/s Davey Products a contractor for undertaking supply, erection and commissioning of RO Plant has invoked the arbitration proceedings and has been award of work for '4.380Cr to be paid by the company. After netting of ' 3.87Cr being the payment effected by the company to said contractor and the balance of ' 1.51 Cr together with the Interest of 18% payable in terms of the award and amounting to Rs. 1.33Cr is considered as a contingent Liablity.

d. In 2007 Pay Revision, GOI has increased the gratuity ceiling from '3.50 lakhs to '10.00 lakhs effective from 01.01.2007 whereas the Payment of Gratuity Act has amended only from 24.05.2010. In view of above, employees separated during the period from 01.01.2007 to 30.04.2010 were paid gratuity reckoning the ceiling as '3.50 lakhs. Some of the employees separated during the above period filed appeal before the High Court of Madras for the differential Gratuity amounting to '2.85 Cr (PY - '2.85Cr) and the matter is subjudice. The matter is stayed by the Hon'ble Madras High Court with an order that the enhanced Gratuity is not payable with retrospective effect based on SC order on the issue.

e. As per the DPE guidelines on wage revision effective 01.01.2017, the package includes higher gratuity of '20 lakhs from that date. However the Company has not till date implemented the wage revision, the question of higher gratuity does not arise. The Company is paying the enhanced gratuity to all the employees who are separated from the Company after the amendment made in the payment of Gratuity Act with effect from 29.03.2018. Some employees have gone to labour court for enhanced gratuity amounting to ' 5.70 Cr (PY - ' 5.70 Cr)for the period from 01.01.2017 to 28.03.2018 which was dismissed by the Labour Court and separated employees have filed an appeal in Hon'ble High Court of Madras.

f. Income tax department has raised a demand of '6.54 Cr (PY - '6.54Cr) on April 22,2021 for the A.Y 2018-19 for which the Company has filed an appeal before CIT(Appeals) Chennai. However, the Department has adjusted the refund of A.Y 2019-20 and A.Y 2020-21 towards the said demand amounting to '0.99 Cr (including interest thereon). Further, the Income Tax Department has initiated the penalty proceedings and levied penalty of '20,000/-.

g. I n respect of Tax deducted at source (TDS), department has raised a demand due to short-deduction and/or short payment of '0.30Cr(PY- '0.30 Cr), for which the company is in the process of rectification.

h. ESI Authorities raised Demand Notice of

• '0.62Cr(PY - '0.62 Cr) towards interest and damages for the belated payment of ESI dues arising out of increase in wage ceiling. Out of which the Company has preferred an Appeal before ESI Court and obtained a stay by depositing a sum of '0.07 Cr which is still pending.

• '0.12Cr (PY - '0.12 Cr) for belated payment of ESI dues of contract employees. The Company has obtained stay and the matter is pending before ESI Court.

i. One of the employees of the company Mr M V Seshachary (E.No.2226) was dismissed and reinstated after the Court Order. The employee went to Court for payment of back wages. The Court ordered the Company to pay an amount of '0.63 Cr(PY - '0.63Cr)alongwith the interest @ 6% p.a. Against the order of the Court, the company has preferred an appeal before the Hon'ble High Court of Telangana. As per the Court Order, the Company has deposited '0.35 Cr as a pre-condition for the appeal, which is still pending.

j. M/s Keerthana Enterprises having canteen contract with the Company has filed the petition before MSME Counsel by claiming a dues of principal '0.31 Cr(PY-'0.31 Cr)and interest of '0.09 Cr(PY - '0.09 Cr) for the non-payment of dues as per the provisions of MSMED Act 2006. The company is of the view that there is no such liability.

k. Department of Commercial Tax, Kerala has preferred an appeal against the Company for the AY 2009-10 and 2010-11 before the Hon'ble Supreme Court for considering the subsidy received from the Government as a part of turnover in order to levy the value added tax. The total tax demanded by the Department is '5.11 Cr inclusive of interest of '1.10 Cr (PY-'5.11 Cr). The case is pending before the Court.

l. Assistant Commissioner of Central Tax, West Division has issued a show-cause notice to the Regional Office in Bengaluru for excess availment of input tax credit for the period April-21 to September-21 amounting to Rs.1.11 cr. The Company is contesting the said demand.

m. Commissioner of Customs ordered the company for the differential customs duty of '65.86 Cr (inclusive of penalty and redemption fine of '32.88 Cr and '0.10 Cr) (PY-'65.86 Cr) against which the company has filed a case before the CESTAT, South Zone, Chennai by depositing '0.05 Cr. The CESTAT has set aside the demand and remanded the matter to the original adjudicating authority to first decide the issue of jurisdiction after availability of decision of Hon'ble Supreme Court in the case of M/s Mangli Impex. Against the said remanded order, Commissioner of Customs has filed Civil Miscellaneous Appeal (CMA) before Hon'ble High Court of Madras which is pending.

n. National Green Tribunal has “Suo Moto” filed an application based on the News item in New Indian Express Chennai edition dated May 16, 2020 and the Tamil Nadu Pollution Control Board imposed compensation of ' 0.96 Cr for which the Company has filed objection and the case is still pending.

o. The Company has requested GOI for waiver of Interest accrued and penal interest on GOI loans as a part of revival package. However, as per the office memorandum on 'Loans and Advances by the Central Govt.- interest rate and the other terms and conditions', in case of non-acceptance of revival package submitted by the Company, the Company is under obligation to pay penal interest of 2.75% p.a amounting to ' 311.40 Cr for the current year (PY - '275.35 Cr).

2. Tamil Nadu Pollution Control Board (TNPCB) has issued a Show cause Notice for non-compliance of emission norms by levying an environmental compensation of '0.37 Cr. u/s 5 of the Environment (Protection) Act, 1986. The Company has represented the matter before the appropriate authority. Decision of the TNPCB is yet to be received.

3. Disclosure of Contingent Asset

The Company filed a recovery suit against M/s Hastalloy India Ltd, having business transactions of supply of Uranus Rods amounting to '0.08 Cr together with interest of '0.04 Cr before Hon'ble Court of Principal District Judge at Tiruvallur . In 2007, the Court ordered the decree in favour of the company for an amount of '0.12 Cr, as claimed in the suit and to reimburse the cost of suit of '0.01 Cr along with the interest @ 18% from the date of decree to till date of realization. Subsequently for transfer of decree necessary executive petition papers were filed in the District Court, Tiruvallur. Since the jurisdiction of supplier lies in Visakhapatnam, the Company initiated to transfer the executive petition for the recovery. Due to non-availability of virtual certainty of inflow to the company, it is disclosed as contingent asset.

a. Interest Accrued but not due on GOI Loans amounted to '15.55 Cr and the same is classified under Other Financial Liabilities.

b. Interest on loan from GOI for FY 2022-23 amounted to '54.58 Cr

5. During the year, company has formed an internal committee for carrying out the physical verification of Property Plant & Equipment (PPE). Based on the recommendation of committee, the company has written off salvage value of Furniture amounting to '34/- from PPE

7. Inventories

As per Ind AS-2, 'Valuation of Inventories', raw materials and other supplies used in the production of inventories are not written down below the cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, when there has been a decline in the price of materials and it is estimated that the cost of the finished products will exceed net realizable value, the materials are written down to net realizable value.

The eligible subsidy claim realisable and calculated as per the policy parameters laid down by Fertilizer Industry Coordination Committee (FICC) is considered as a part of net realizable value (NRV) and accordingly reckoned for the valuation of finished goods of Urea, in accordance with accounting policy followed by the company.

8. Exchange rate fluctuation included in other expenditure is Nil (PY '1.68 Cr)

9. During the year 2021-22, the Company opted to exercise the option permitted under section 115BAA of the Income Tax Act, 1961 as promulgated by the GOI vide the Taxation Laws (Amendment) Ordinance, 2019 and has taken 25.17%

Deferred tax assets and liabilities have been offset wherever the company has a legally enforceable right to setoff current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.

The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the year in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and tax planning strategies in making the assessment.

Based on the level of historical taxable income and projections for future taxable income over the years in which the deferred income tax assets are deductible, management believes that the company will realize the benefits of those deductible differences. The amount of deferred income tax assets considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward periods are reduced.

10. In the opinion of the Management, the sum of ' 165.35 Cr being the input tax credit eligible and included under other current assets is eligible in full for the set-off against GST output liability arising out of sale of products in the future years. The management has made a provision of ' 1.77 Cr during the current financial year towards the probable ineligible GST ITC in books as a prudent measure. A sum of ' 46.56 Cr being the GST ITC which was written off in the financial year 2021-22 has been reversed and added to the provision retained for the probable ineligible GST input, resulting in the total provision retained for GST ITC being ' 48.33 Cr. The management is taking steps in undertaking the reconciliation which is an on-going process.

11. Entry tax of ' 2.52 Cr provided for payment during the years 2013-14 to 2017-18, has not been remitted, since the appeal filed by ITC Ltd. against the Tamil Nadu Government in this regard, has not been disposed off. The said amount is retained as provision in the books of accounts by the Company for payment, when demanded.

a. Entities under the control of same government:

Government of India (GOI) as on 31st March 2023 is holding 59.50% equity shares of the company, which is held by President of India through Ministry of Chemicals & Fertilizers. GOI controls the company through Ministry of Chemicals & Fertilizers.

The company has made various transactions with entities being controlled or jointly controlled or having significant influence of the Ministry of Petroleum & Natural Gas.

16. The Company has 70 acres of surplus land at Manali, which has been approved by the shareholders through special resolution during the FY 2019-20. Initially, CPCL has shown its interest to purchase the entire 70 acres of land. Later on, CPCL has conveyed its willingness to purchase 4.98 acres of land only. Accordingly, the company has classified the 4.98 acres of Manali land under “Assets held for Sale” amounting to '18,484/- (valued at cost price), whose fair value as on the March 31,2023 is ' 65.08 Cr.

For the remaining 65.02 acres of surplus land, the company has made communication to all the PSUs and Government of Tamil Nadu, the availability of land for sale. The company decided to classify the 65.02 acres of land under “Investment Property” due to lack of marketability of the land and the same was informed to DIPAM for further action.

Further, during the 310th Board Meeting, the Board of Directors approved for sale of Guindy property having an area of 19 grounds & 1064 sq.ft, subject to approval of Dept.of Fertilizers, Govt. of India and Shareholders. Pending approval from the shareholders, the same is retained under “Investment Property’. During the year, the Board has approved appointment of NBCC (India) limited as a land management agency for said property for which MOU is yet to be entered.

17. Employee Benefit Expenses Defined Benefit Plans:

The Company has floated the following defined benefit plans i) Gratuity, ii) Post-retirement medical benefits, iii) Compensated absences, iv) Service awards and v) Contribution to Provident Fund trust.

Funding:

Gratuity is the only defined benefit plan that is funded by the Company. The funding requirements are based on the fund's actuarial measurement framework set out in the funding policies of the plan. The funding of the plan is based on a separate actuarial valuation for funding purpose.

The Company has determined that in accordance with the terms and conditions of the defined benefit plan, and in accordance with statutory requirements, the present value of refunds or reductions in future contributions is not lower than the balance of the total fair value of the plan asset less the total present value of obligations.

Movement in net defined benefit (Asset) / Liabilities

Gratuity

The cost of providing such defined benefit is determined using the projected unit credit method of actuarial valuation made at the end of the year and is administered through a fund maintained by Life Insurance Corporation of India.

This defined benefit plan exposes the Company to actuarial risks, such as longevity risk, interest rate risk and market (investment) risk.

Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 * last drawn basic salary plus dearness allowance) for each completed year of service subject to a ceiling of ' 0.20 Cr on superannuation, resignation, termination, disablement or on death. The Company has carried out actuarial valuation of gratuity benefit considering the enhanced ceiling.

Other Benefits

Obligations on post - retirement medical benefits, compensated absences and service awards are provided using the projected unit credit method of actuarial valuation made at the end of the year. These are unfunded plans.

The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 10 years (31 March 2022: 10 years)

Obligations on post-retirement medical benefits, compensated absences and service awards are provided using the projected unit credit method of actuarial valuation made at the end of the year.

Provident Fund and Superannuation Fund:

The amount expended in respect of employer's contribution to the provident fund and superannuation fund during the year, are ' 5.85Cr (Previous year ' 5.76 Cr) and ' 7.09 Cr (Previous year ' 6.60 Cr) respectively.

18. The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its Standalone financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.

19. Financial Instruments - Fair Value Disclosures

Some of the Company's financial assets and financial liabilities are measured at fair value at the end of the reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation techniques and inputs used):

Unquoted Equity shares

The fair value of the unquoted equity shares has been estimated at Net Book Value model based on the latest available audited consolidated financial statements of M/s Indian Potash Limited and Standalone Financial Statements of M/s Fortune Biotech Limited (FBL) for the year ended 31st March 2022.

Fair value of financial assets and financial liabilities that are equivalent to it carrying amount which are subsequently measured at amortized cost:

The Management assessed that trade receivables, cash and cash equivalents, trade payables, borrowings and other financial assets and liabilities, fair values approximate their carrying amounts largely due to the short-term maturities of these instruments.

i. Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.

20. Capital Management:

For the purpose of the Company's Capital management, capital includes equity capital and all other reserves. The Company's capital management objective is to maximize the total shareholder return by optimizing cost of capital through flexible capital structure that supports growth.

The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings less cash and short-term deposits.

21. Financial Risk Management

I n course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company's business and operational / financial performance. These include market risk (including currency risk, interest rate risk and equity risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimize potential adverse effects and achieve greater predictability to earnings.

Borrowings, trade payables and other financial liabilities constitute the Company's primary financial liabilities and investment in unquoted equity shares, trade receivables,loans, cash and cash equivalents and other financial assets are the financial assets.

a. Credit Risk Trade receivables

Credit risk refers to the risk of default on the receivables to the Company that may result in financial loss. The maximum exposure from trade receivables is amounting to ' 503.61 Cr as of March 31, 2023 (' 983.64 Cr as of March 31, 2022).

Trade receivables mainly constitute subsidy receivable from Government of India and from sale of manufactured and traded fertilizers to dealers.As far as Government portion of receivables is concerned, risk of default is nil or insignificant, subject to approval of subsidy rate by Government of India.In the case of dealers, credit risk is being managed through credit approvals, establishing credit limits and monitoring the creditworthiness of customers to allow credit terms in the normal course of business. In the case of the Company, the credit period offered varies between 30 to 60 days. There have been few cases of impairment historically for which the Company has made requisite provisions.

Investment in unquoted equity shares

The Company has investments in unquoted equity shares of Indian Potash Limited and Fortune Bio-Tech Limited. The Company does not expect any losses from non-performance by the investee companies and hence no impairment is recognizedin the Statement of Profit and Loss.

Loans and Advances

The company provides loans / advances to its employees on concessional or interest free basis. The company manages its credit risk in respect of such loans to employees through recovery of the same in a number of predetermined installments.

Cash and cash equivalents, deposits with banks and other financial Assets

The credit risk on cash and bank balances is limited because the counterparties are banks with high credit ratings. Therefore, the risk of default is considered to be insignificant.

In case of other financial Assets, there are certain credit impaired cases mainly due to breach of contract arising due to default or bankruptcy proceedings.

Provision for expected credit losses

Financial assets for which loss allowance is measured using life time expected credit losses

The Company's customer base is the Government of India and a number of dealers.Historically the risk of default is very low. Further, management believes that the unimpaired amounts that are past due by more than 60 days are still collectible in full, based on historical payment behavior and extensive analysis of customer credit risk.

b. Liquidity risk

The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk through cash credit limits and undrawn borrowing facilities by continuously monitoring forecast and actual cash flows. The Company invests its surplus funds in bank fixed deposit which carry minimal mark to market risks.

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 three types of risk: currency risk, interest rate risk and equity risk.

Financial instruments affected by market risk include borrowings, trade payables in foreign currency and investment in unquoted equity shares. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

d. Currency risk

The Company executes import agreements for the purpose of purchase of raw materials. These are not hedged by the Company owing to the materiality of such foreign exchange gain / loss values.

Fair value sensitivity analysis for fixed-rate instruments

The company's fixed rate instruments are carried at amortized cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

f. Equity price risk

Equity price risk is related to the change in market reference price of the investments in quoted equity securities. In the case of the Company, the sole investment in equity shares is unquoted and therefore, the Company is not exposed to equity price risks. However there can be changes in fair value of equity investments based on valuations done at different reporting periods owing to the operations and general business environment in which the investee operates. In general, the investment is not held for trading purposes.

Contract Liabilities in the Balance Sheet constitutes advance payments and billings in excess of revenue recognized. The Company expects to recognize such revenue in the next financial year. There were no significant changes in contract liabilities during the reporting period except amount as mentioned in the table and explanation given above. Under the payment terms generally applicable to the Company's revenue generating activities, prepayments are received only to a limited extent. Typically, payment is due upon or after completion of delivery of the goods.

23. Subsidy under New Pricing Scheme (NPS) for Urea

a. Subsidy on Urea Sales for FY 2022-23 has been recognized at ' 3044.54 Cr in accordance with the policy parameters prescribed by Fertilizer Industry Coordination Committee(FICC) for escalation claim whereas subsidy for escalation claims provisionally approved by FICC amounts to ' 3105.97 Cr, the difference being an amount of ' 61.46 crores. The effect for the difference in the subsidy accounted will be considered as and when the final notification is received based on the escalation / de-escalation of claims for FY 2022-23 to be submitted by the Company.

b. Freight subsidy of ' 70.58 Cr considered under Revenue from Operations includes a sum of '15.06 Cr relating to differential freight subsidy of earlier accounting years starting from FY 2016-17 for which notification was received during the FY 2022-23.

24. The company has made a request to Dept. of fertilizers, for granting additional subsidy of ' 64.97 Cr in order to compensate the higher cost of production of “N” due to usage of Naphtha as captive ammonia in production of complex fertilizers under Nutrient Based Subsidy (NBS) for the extended period from FY 2012-13 to till the conversion of feedstock to RLNG i.e. July,2019. The Additional Compensation will be considered as income, only when final order is received by the company from the Dept. of Fertilizers, Government of India.

25. Disclosure as per Ind AS 108 ‘Operating segments’

Basis for segmentation

In the case of the Company, Chairman & Managing Director(CMD) is considered to be the Chief Operating Decision Maker (CODM). The CMD reviews the performance of the Company and allocate resources based on the various management information reports provided by the respective departments of the Company.

The CODM reviews the performance of the Company primarily as two segments:

a. Fertilizers (Urea and NPK);

b. Other activities (Trading activities and Bio fertilizers);

However, since the revenue from other activities constitutes less than 5% of the reported revenue and no significant assets are employed for these activities, the management is of the view that the Company has only one reportable segment that relates to manufacture of sale of fertilizers.

Geographical information

The Company is in the operation of manufacture and sale of fertilizers within India, the entire revenue is domestic and all non-current assets are situated in India only.

Revenue from major customer

There is no single customer that accounts for more than 10% of the Company's revenue.

28. The Sick Industrial Companies (Special Provisions) Act (SICA) has been repealed from December 01, 2016 and the Board for Industrial and Financial Restructuring (BIFR) stand dissolved from that date. The Company is pursuing legal options to file the Revival proposal to the National Company Law Tribunal (NCLT). However, based on PDIL report, The Company has submitted financial restructuring proposal with D.F, G.I for their consideration.

29. Being a Sick Company, the company has not implemented the pay revision of employees in pursuance of DPE OM No. W-02/0028/2017-DPE(WC)-GL-XIII/17 dated August 03, 2017 with effective from January 01, 2017 for Board Level and Below Board level Executives and Non-Unionized supervisors of CPSEs dated 3 August 2017 due to pending approval of revival / financial restructuring proposal. Accordingly, the amount of Arrears is not quantifiable at this stage.

30. The Company has agreed to allot Land for erecting of 400 KV DC Transmission line by TANTRANSCO, as the project is conceived by TANTRANSCO for public purpose. The Tower is erected inside the Company premises and approximately 410 meters transmission line crossing through the company premises.

31. Penalty on Non-Compliance of Composition of Board:

The company is not having the required number of Independent Directors on its Board due to vacancy arising out of expiry of term from 6th June, 2019 onwards. Accordingly, National Stock Exchange (“NSE”) has levied a penalty of ' 1.03 Cr on the said non-compliance, which has been duly paid by the company.

Being a public sector undertaking, appointment of independent directors on the board lies in the hands of the Govt. of India, which is to be treated as Impossibility of compliance. The company has shown the said amount under “Other Financial Assets - Current”, as the same can be claimed back once the said non-compliance is being rectified by the company.

32. Other Statutory Information:

a. The title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date. For immovable properties given as collateral for loans from banks and financial institutions, the title deeds were deposited with the said banks/ financial institutions.

In respect of immovable properties of land and building that have been taken on lease and disclosed as Right to use assets in the financial statements, the lease agreements are in the name of the Company except for CMWSSB land, for which MOU is yet to sign.

b. The Company has not revalued its Property, Plant and Equipment (including Right-of-Use Asset) since the Company has adopted cost model as its accounting policy to an entire class of Property, Plant and Equipment in accordance with Ind AS 16.

c. The Company has not granted any loan or advance in the nature of loan to promoters, directors, KMPs and other related parties that are repayable on demand or without specifying any terms or period of repayment.

d. The Company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken as at the reporting date.

e. Registration, Modification and Satisfaction of charges relating to the year under review, had been filed with the Registrar of Companies, within the prescribed time. However, in respect of certain Modification and Satisfaction of charges relating to the year under review, the Company is in the process of filing the necessary forms with the Registrar of Companies.

f. There are no proceedings initiated or are pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

h. The Company is not declared as willful defaulter by any bank or financial Institution or other lenders.

i. The Company did not have any transactions with Companies struck off under Section 248 of Companies Act, 2013 or Section 560 of Companies Act, 1956 considering the information available with the Company.

j. The Company do not have any parent company and accordingly, compliance with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017 is not applicable for the year under consideration.

k. There is no Scheme of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013 during the year.

l. 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 understanding (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.

m. The company has also 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.

n. The Company do not have any transactions which are not recorded in the books of accounts that has been surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 during any of the years.

o. The Company did not trade or invest in Crypto Currency or virtual currency during the financial year. Hence, disclosures relating to it are not applicable.

33. The Company is in the process of signing MOU with DOF for the FY 2023-24 and is yet to be signed.

34. Balances shown under trade receivable, advances and trade payables are subject to confirmation / reconciliation/ adjustment, if any. The company has been sending letters for confirmation to parties. However, the Company does not expect any material dispute with respect to the recoverability/payment of the same.

In the opinion of the management, the value of current assets, current liabilities, loans and advances on realization in the ordinary course of business, will not be less than the value at which these are stated in the balance sheet.

35. The Company is engaged in manufacturing and trading of fertilizers, which is an essential input for agriculture. Central and State Governments are giving top most priority on agriculture activities during Covid19 situation also.The Company expects to continue the normal operations and does not expect any impact of Covid19 in its operations which is evident from the fact that the production of Urea during the year 2022-23 is at 106.79% capacity with 5,19,800 MT of Urea production.

37. The figures for the previous year have been regrouped/reclassified to correspond with the current year's classification and disclosure.


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