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Auditor Report of National Fertilizers Ltd.

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of National Fertilizers Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting principles generally accepted in India including the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on auditor''s judgment, including assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 (“the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e. Central Government has directed vide notification number G.S.R. 829 (E) dated 21st October 2003 that clause (g) of sub section (1) of section 274 of the Act is not applicable to Government Company.

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to in paragraph 1 of our report of even date)

(i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of the available information.

b) As explained to us, the Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of fixed assets has been carried out by the management during the year. We are informed that discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.

c) In our opinion, the company has not disposed off substantial part of its fixed assets during the year.

(ii) a) The physical verification of the inventory has been carried out by the management in accordance with the perpetual inventory programme, at regular intervals during the year. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and the nature of its business.

b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of account.

(iii) a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, Clauses 4(iii)(b), (c) and (d) of the Order are not applicable to the Company.

b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, Clauses 4(iii) (f) and (g) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods & services. During the course of audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v) According to the information and explanations given to us, the Company has no contracts or arrangements that need to be entered into the register maintained in pursuance of Section 301 of the Companies Act, 1956. Therefore, Clause 4 (v) (b) of the Companies (Auditor''s Report) Order 2003 is not applicable to the Company.

(vi) The Company has not accepted any deposit from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and rules framed thereunder.

(vii) In our opinion, internal audit system of the Company is generally commensurate with the size and nature of its business, which however further requires more indepth coverage.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records in respect of certain products under Section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of such records.

(ix) (a) According to information and explanations given to us and on the basis of our examination of the records of the Company, the Company is generally regular in depositing, with the appropriate authorities, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State

Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and other statutory dues. According to the information and explanations given to us, no undisputed amounts remain payable in respect of such statutory liabilities as at 31st March, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the particulars of the disputed dues as at 31.03.2013 which have not been deposited on account of matters pending in appeal before appropriate authorities are as under:

Name of the Statute Nature of Amount the Dues Involved (Rs. Crore)

Income Tax Act''1961 Income Tax 63.17

12.85

132.06

Central Excise Act''1944 Excise Act 1.04 2.94

2.90

FInance Act 1994 Service Service Tax 0.31

Tax

Punjab VAT Act''2005 VAT 0.30

MP Commercial Tax Purchase Tax 1.30 Act''1994

Haryana Local Area Entry Tax 6.72

Development Tax Act''2000

Total 223.59

NAME Period to which Forum where the dispute amount relates is pending

Income Tax Act''1961 AY 1998-99 to AY High Court 2004-05

Income Tax Act''1961 AY 2003-04 Income Tax Appellate Tribunal

Income Tax Act''1961 AY 2006-07 to AY Commissioner of Income 2010-11 Tax (Appeals)

1997-98 to 1999-00 Central Excise Service Tax Appellate Tribunal

2005-06 to 2011-12 Additional Commissioner Central Excise, Chandigarh

Income Tax Act''1961 2010-11 to 2012-13 Commissioner Central Excise, Chandigarh

Income Tax Act''1961 2003-04 to 2006-07 Additional Commissioner Central Excise, Indore

2006-07 to 2008-09 Dy. Excise and Taxation Commissioner (Appeal), Patiala

2001-02 Commercial Tax Appellate Board, Bhopal

Income Tax Act''1961 2000-01 to 2002-03 Joint Excise Taxation Commissioner Rohtak

(x) The company has incurred cash losses during the year, however, no cash loss was incurred by the company in the immediately preceding financial year. The Company has no accumulated losses as at the end of the current financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any bank or bonds/debenture holders as at the Balance Sheet date. There were no dues to financial institutions.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The provisions of any special statues applicable to a chit fund/nidhi/mutual benefit fund/society are not applicable to the company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) As per the information and explanations given to us on an overall basis the term loans taken by the company have been applied for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flow Statement of the Company, in our opinion, no funds raised on short term basis have been used for long term investments.

(xviii) The Company has not made any preferential allotment of shares to any parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year.

(xix) Company has not issued any debenture during the year.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given by the management, no fraud on or by the Company has been noticed or reported during the year.

Forming an Opinion and Reporting on Financial Statements

For THAKUR, VAIDYANATH AIYAR & CO For DSP & ASSOCIATES

CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS

FIRM REGD. NO. 000038N FIRM REGD. NO.006791N

(ANIL K. THAKUR) (SANJAY JAIN)

PARTNER PARTNER

(MEMBERSHIP NO. 88722) (Membership no. 84906)

Place: New Delhi Date: 29th May, 2013


Mar 31, 2012

We have audited the accompanying financial statements of National Fertilizers Limited, which comprise the Balance Sheet as at March 31,2012, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FORTHE FINANCIAL STATEMENTS

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on auditor's judgment, including assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2012;

(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e. Central Government has directed vide notification number G.S.R. 829 (E) dated 21st October 2003 that clause (g) of sub section (1) of section 274 of the Act is not applicable to Government Company.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 1 of our report of even date)

(i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of the available information.

b) As explained to us, the Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. Accordingly, the physical verification of fixed assets has been carried out by the management during the year. We are informed that discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.

c) There was no disposal of a substantial part of fixed assets during the year.

(ii) a) The physical verification of the inventory has been carried out by the management in accordance with the perpetual inventory programme, at regular intervals during the year. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and the nature of its business.

b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of account.

(iii) a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, Clauses 4(iii)(b), (c) and (d) of the Order are not applicable to the Company.

b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, Clauses 4(iii) (f) and (g) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods & services. During the course of audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v) According to the information and explanations given to us, the Company has no contracts or arrangements that need to be entered into the register maintained in pursuance of Section 301 of the Companies Act, 1956. Therefore, Clause 4 (v) (b) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company.

(vi) The Company has not accepted any deposit from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and rules framed thereunder.

(vii) In our opinion, internal audit system of the Company is generally commensurate with the size and nature of its business, which however further requires more indepth coverage.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records in respect of certain products under Section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of such records.

(ix) (a) According to information and explanations given to us and on the basis of our examination of the records of the Company, the Company is generally regular in depositing, with the appropriate authorities, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other statutory dues. According to the information and explanations given to us, no undisputed amounts remain payable in respect of such statutory liabilities as at 31st March, 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the particulars of the disputed dues as at 31.03.2012 which have not been deposited on account of matters pending in appeal before appropriate authorities are as under:

Name of the Statute Nature of the Amount Forum where the dispute Dues Involved is pending (Rs.Crore)

Income Tax Act'1961 Income Tax 83.26 High Court since 2008-09

9.32 Income Tax Appellate Tribunal since 2008-09

114.73 Commissioner of Income Tax (Appeals) since 2008-09

Central Excise Excise Act 1.04 Central Excise Service Tax Act'1944 Appellate Tribunal since 2008-09

2.47 Adll Commissioner Central Excise, Chandigarh since 2011-12

2.55 Commissioner Central Excise, Chandigarh since 2011-12

Finance Act 1994 Service Tax 0.58 Adll Commissioner Central Excise, Service Tax Indore since 2006-07

Punjab VAT Act'2005 VAT 0.14 Dy. Excise and Taxation Commissioner (Appeal), Patiala since 2011-12

MP Commercial Purchase Tax 59.23 Supreme Court of India Tax Act'1994 since April 2012

1.30 Commercial Tax Appellate Board, Bhopal since 2006-07

Haryana Local Area Entry Tax 6.72 Joint Excise Taxation Commissioner Development Tax Act'2000 Rohtak since 2004-05

Total 281.34

(x) The Company has no accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any bank or bonds/debenture holders as at the Balance Sheet date. There were no dues to financial institutions.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The provisions of any special statues applicable to a chit fund/nidhi/mutual benefit fund/society are not applicable to the company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) As per the information and explanations given to us on an overall basis the term loans taken by the company have been applied for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flow Statement of the Company, in our opinion, no funds raised on short term basis have been used for long term investments.

(xviii) The Company has not made any preferential allotment of shares to any parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year.

(xix) Yes. The Company has issued debenture during the year and security has been given and charge has been created in respect of debenture issued.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given by the management, no fraud on or by the Company has been noticed or reported during the year.

Forming an Opinion and Reporting on Financial Statements

For THAKUR, VAIDYANATH AIYAR & CO For DSP & ASSOCIATES

CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS

FIRM REGD. NO. 000038N FIRM REGD. N0.006791N

(ANIL K.THAKUR) (SANJAY JAIN)

PARTNER PARTNER

(MEMBERSHIP NO. 88722) (Membership no. 84906)

Place: New Delhi

Date: 28th May, 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of National Fertilizers Limited as at 31st March, 2011, the Profit & Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure hereto a statement on the matters specified in paragraph 4 and 5 of the said Order.

4. Furtherto our comments in the Annexure referred to in paragraph 3 above, we report that:

i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of ouraudit;

ii) in our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;

iii) the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) in our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub Section (3C) of section 211 of the Companies Act, 1956, to the extent applicable;

I v) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the "Significant Accounting Policies and Notes on Accounts", give the information as required by the Companies Act, 1956, in the manner so required and gives a true and fair view in conformity with the accounting principles generally accepted in India:

a) in case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;

b) in case of the Profit & Loss Account, of the profit for the year ended on that date; and

c) in case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Anexture to the Auditors' Report

(Referred to in paragraph 3 of our report of even date)

(i) a) The Company has maintained proper records showing full particulars including quantitative details and

situation of fixed assets on the basis of the available information.

b) As explained to us, the Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. We are informed that discrepancies noticed on verification were not material and have been properly dealt with in the books of account.

c) There was no disposal of a substantial part of fixed assets during the year.

(ii) a) The physical verification of the inventory has been carried out by the management in accordance with the perpetual inventory programme, at regular intervals during the year. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and the nature of its business.

b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of account.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/or from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, Clauses 4(iii)(b), (c), (d), (f) & (g) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets, sale of goods & services. During the course of audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v) According to the information and explanations given to us, the Company has no contracts or arrangements that need to be entered into the register maintained in pursuance of Section 301 of the Companies Act, 1956. Therefore, Clause 4 (v) (b) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company.

(vi) The Company has not accepted any deposit from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956.

(vii) In our opinion, the Company's internal audit system is generally commensurate with the size and nature of its business, which however further requires more indepth coverage.

(viii)We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records in respect of certain products under Section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records.

(ix) (a) According to information and explanations given to us and on the basis of our examination of the records of the Company, the Company is generally regular in depositing, with the appropriate authorities, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other statutory dues. According to the information and explanations given to us, no undisputed amounts remains payable in respect of such statutory liabilities as at 31st March, 2011 for a period of more than six months from the date they became payable.

There were no dues on account of cess under Section 441A of the Companies Act, 1956 since the date from which the aforesaid section comes into force has not yet been notified by the Central Government. (b) According to the information and explanations given to us, the particulars of the disputed dues as at 31.03.2011 which have not been deposited on account of matters pending in appeal before appropriate authorities are as under:

Name of Statute Nature Amount involved Forum/Period where the of Dues (Rs. in Lakhs) dispute is pending

Income Tax Act Income Tax 257.56 Supreme Court since 2009-10

5529.01 High Court since 2008-09 and 2009-10

1353.72 ITAT since 2008-09 and 2009-10

3103.13 CIT(A) since 2008-09 and 2009-10

Central Excise Act Excise Duty 104.24 CESTAT since 2008-09

200.00 Commissioner (Appeals) since 2009-10

Finance Act 1994 Service Tax Service Tax 29.36 Addl. Commissioner,Central Excise Indore since 2006-07

MP. Commercial Tax Act Purchase Tax 130.07 Commercial Tax Appellate Board, Bhopal since 2006-07

Haryana Local Area Entry Tax 671.94 Joint Excise Taxation Commissioner, Development Tax Act Rohtak since 2004-05

TOTAL 11379.03

(x) The Company has no accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any bank. There were no dues to financial institutions.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi/mutual benefit fund/society.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) As per the information and explanations given to us, the Company has taken certain short term loans during the year which have been utilized for the purposes forwhich they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flow Statement of the Company, in our opinion, no fund raised on short term basis have been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to any parties and companies covered in the

Register maintained under Section 301 of the Companies Act, 1956, during the year. (xix) The Company does not have any outstanding bonds/ debentures at the end of the year. (xx) The Company has not raised any money by way of public issue during the year. (xxi) According to the information and explanations given by the management, no fraud on or by the Company has been noticed or reported during the year.

For S.P.CHOPRA & CO., For DSP & ASSOCIATES CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS

(ANKUR GOYAL) (ATUL JAIN) PARTNER PARTNER (Membership no. 99143) (Membership no. 91431) FIRM REGD. NO. 000346N FIRM REGD. NO.006791 N

Place: New Delhi Date: 30th May, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of National Fertilizers Limited as at 31s1 March, 2010, the Profit & Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure hereto a statement on the matters specified in paragraph 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii) in our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;

iii) the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) in our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub Section (3C) of section 211 of the Companies Act, 1956, to the extent applicable;

v) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the "Significant Accounting Policies and Notes on Accounts", give the information as required by the Companies Act, 1956, in the manner so required and gives a true and fair view in conformity with the accounting principles generally accepted in India:

a) in case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

b) in case of the Profit & Loss Account, of the profit for the year ended on that date; and

c) in case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors Report (Referred to in paragraph 3 of our report of even date)

(i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of the available information.

b) As explained to us, the Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. We are informed that discrepancies noticed on verification were not material and have been properly dealt with in the books of account.

c) There was no disposal of a substantial part of fixed assets during the year.

(ii) a) The physical verification of the inventory has been carried out by the management in accordance with the perpetual inventory programme, at regular intervals during the year. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and the nature of its business.

b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of account.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/or from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, Clauses 4(iii)(b), (c), (d), (f) & (g) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets, sale of goods & services. During the course of audit, we have not observed any continuing failure to correct major weakness in internal controls.

(v) According to the information and explanations given to us, the Company has no contracts or arrangements that need to be entered into the register maintained in pursuance of Section 301 of the Companies Act, 1956. Therefore, Clause 4 (v) (b) of the Companies (Auditors Report) Order 2003 is not applicable to the Company.

(vi) The Company has not accepted any deposit from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956.

(vii) In our opinion, the Companys internal audit system is generally commensurate with the size and nature of its business, which however further requires more indepth coverage.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records in respect of certain products under Section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records.

(ix) (a) According to information and explanations given to us and on the basis of our examination of the records of the Company, the Company is generally regular in depositing, with the appropriate authorities, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other statutory dues. According to the information and explanations given to us, no undisputed amounts remains payable in respect of such statutory liabilities as at 31st March, 2010 for a period of more than six months from the date they became payable.

There were no dues on account of cess under Section 441A of the Companies Act, 1956 since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

(b) According to the information and explanations given to us, the particulars of the disputed dues as at 31.03.2010 which have not been deposited on account of matters pending in appeal before appropriate authorities are as under:

Name of Statute Nature of Dues Amount involved Forum/ Period where the (Rs. in Lakhs) dispute is pending

Income Tax Act Income Tax 257.56 Supreme Court since 2009-10

5,529.01 High Court since 2008-09 and 2009-10

1,353.72 ITAT since 2008-09 and 2009-10

3,103.13 CIT(A) since 2008-09 and 2009-10

Central Excise Act Excise Duty 104.24 CESTAT sinace 2008-09

200.00 Commissioner (Appeals) since 2009-10

Finance Act 1994 Service Tax 29.36 Addl. Commissioner, Central Excise, Indore Service Tax since 2006-07

MP. Commercial Purchase Tax 130.07 Commercial Tax Appellate Board, Bhopal Tax Act since 2006-07

Haryana Local Area Entry Tax 671.94 Joint Excise Taxation Commissioner, Rohtak Development Tax Act since 2004-05

TOTAL 11,379.03

(x) The Company has no accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any bank. There were no dues to financial institutions.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi/mutual benefit fund/society.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) As per the information and explanations given to us, the Company has taken certain short term loans during the year which have been utilized for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flow Statement of the Company, in our opinion, no fund raised on short term basis have been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to any parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year.

(xix) The Company does not have any outstanding bonds/ debentures at the end of the year.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given by the management, no fraud on or by the Company has been noticed or reported during the year.

For S.P.CHOPRA & CO., For KPMC & ASSOCIATES

CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS

(ANKUR GOYAL) (ANKUR GOEL)

PARTNER PARTNER

(Membership No. 99143) (Membership. No.512648)

Place: New Delhi Date: 27th May, 2010

 
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