We have audited the Financial Statements of Rama Phosphates Limited (“the Company”), which comprise of the Balance Sheet as at 31st March 2024, the Statement of Profit and Loss (including other comprehensive income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the Financial Statements, including a summary of material accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (”Ind AS”) and other 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, 2024;
(b) in the case of the Statement of Profit and Loss (including Other Comprehensive Income), of the Profit for the year ended on that date;
(c) in the case of the Statement of Changes in Equity, of the changes in equity for the year ended on that date; and
(d) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the
Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“the ICAI”) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Financial Statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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S.N.
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Key Audit Matters
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Auditor’s Response
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1
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Measurement of Arm's Length price for Related party transaction
Related party transactions pose a significant financial reporting risk due to the potential for transactions to be conducted at prices that deviate from the arm's length principle. Under Ind AS, related party transactions are required to be disclosed in the financial statements, and the determination of the arm's length price for such transactions requires careful consideration and scrutiny.
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1) We evaluate the company's processes for identifying related party transactions and assess the completeness and accuracy of related party disclosures in the financial statements. This includes understanding the nature of relationships between related parties and the significance of transactions with related parties to the company's financial performance and position.
2) We examine the appropriateness of transfer pricing methodologies used by the company to determine the arm's length price for related party transactions. This involves evaluating whether the methodologies comply with relevant Ind AS requirements and are consistent with industry practices and regulatory guidelines.
3) We assess the selection and comparability of comparable transactions used as benchmarks for determining the arm's length price. This includes evaluating the relevance and reliability of comparables, considering factors such as industry characteristics, geographical locations, and market conditions.
4) Review the adequacy of documentation supporting the determination of arm's length prices, including transfer pricing documentation required by tax authorities. Assess the effectiveness of internal controls over the identification, measurement, and disclosure of related party transactions.
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S.N.
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Key Audit Matters
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Auditor’s Response
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5) Evaluate compliance with Ind AS ret Ind AS 24 on Related Party Disclos implications of related party t compliance. Review the alignmer length prices with tax regulations t regulatory non-compliance and pot<
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luirements, including ures, and assess the ransactions on tax t of reported arm's o mitigate the risk of ential tax exposures.
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2
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Provision for Doubtful Advances and Recoverable:
The provision for doubtful advances and recoverables represents a critical area of audit focus due to the inherent uncertainty surrounding the collectability of these assets. Management's estimation of the allowance for doubtful advances and recoverables involves significant judgment and is subject to various risks, including changes in economic conditions, customer creditworthiness, and the effectiveness of collection efforts. This key audit matter encompasses the evaluation of the adequacy of the provision and the reasonableness of management's assumptions and methodologies used in determining the provision.
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1) Evaluate the reasonableness estimates used in determining the advances and recoverable. This in historical experience, economic co circumstances affecting the colle and recoverable amounts.
2) Test the adequacy of the prov analytical procedures, comparir historical bad debt experience, receivables, and external ecc Scrutinize the sufficiency of the pr< identified risks and uncertainties.
3) Review the documentation support the provision, including the an advances and recoverable am assessments, and correspondence Verify the existence and validity of a collateral, or guarantees securi amounts.
4) Assess the effectiveness of intern recognition, measurement, and dis for doubtful advances and recover and operating effectiveness of co assessment of credit risk, monitors review of impairment indicators.
5) Evaluate the adequacy and comple related to provisions for doub recoverable in the financial stat clarity and transparency of disclo nature, extent, and timing of the pr assumptions and uncertaintie estimation process.
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of management's provision for doubtful volves assessing the nditions, and specific ctibility of advances
sion by performing g the provision to aging analyses of >nomic indicators. ovision in light of any
ing the estimation of alysis of individual ounts, impairment with counterparties. ny legal agreements, ng the recoverable
al controls over the >closure of provisions able. Test the design ntrols related to the ig of receivables, and
teness of disclosures tful advances and ements. Assess the >sures regarding the ovision, including key s inherent in the
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3
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Accounting of Government Subsidy income
The accounting for government subsidy income is a significant area of focus due to its materiality and the potential impact on the financial statements. Government subsidies are often provided to support specific activities, such as research and development, investment in infrastructure, or export promotion. The recognition, measurement, and disclosure of government subsidy income require careful consideration of the conditions attached to the subsidies and compliance with relevant Ind AS
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1) Gain an understanding of the nature and terms of the government subsidy arrangements, including the purpose of the subsidies, eligibility criteria, and any conditions or restrictions imposed by the granting authorities. Assess the company's compliance with the terms of the subsidy agreements.
2) Evaluate the company's application of the recognition criteria for government subsidy income as per Ind AS. This involves assessing whether the subsidies meet the definition of income, whether there is reasonable assurance of receipt, and whether any conditions for recognition have been met.
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S.N.
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Key Audit Matters
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Auditor’s Response
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standards. This key audit matter encompasses the assessment of the appropriateness, accuracy, and completeness of the recognition and disclosure of government subsidy income in accordance with Ind AS.
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3) Assess the measurement of government subsidy income, including the determination of the fair value of non-monetary subsidies and any subsequent measurement considerations, such as amortization or recognition as a deduction from related expenses.
4) Review the documentation supporting the recognition and measurement of government subsidy income, including subsidy agreements, correspondence with granting authorities, and calculations prepared by management. Verify the accuracy and completeness of subsidy income recognized in the financial statements.^
5) Assess the effectiveness of internal controls over the recognition, measurement, and disclosure of government subsidy income. Test the design and operating effectiveness of controls related to the assessment of eligibility criteria, monitoring of subsidy receipts, and review of compliance with subsidy agreements.
6) Evaluate the adequacy and completeness of disclosures related to government subsidy income in the financial statements. Assess the clarity and transparency of disclosures regarding the nature, extent, and accounting treatment of subsidies, including any significant judgments or estimates involved.
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4
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Revaluation of freehold land
The company has carried out a revaluation of its land during the financial year in accordance with IND AS 16 - Property, Plant, and Equipment. This revaluation requires significant judgment and estimation by management, particularly in selecting the appropriate valuation methodology, applying key assumptions, and determining the fair value of the land. Given the material nature of the revaluation and its significant impact on the financial statements, this was identified as a key audit matter.
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1) Assessed the appropriateness of the valuation methodology used by management, ensuring it is consistent with industry standards and relevant accounting principles.
2) Verified the credentials and independence of the external valuers engaged by the company.
Evaluated the scope of work and the terms of engagement of the valuers to ensure it was conducted in accordance with the applicable professional standards.
3) Reviewed the key assumptions and inputs used in the valuation process, such as market prices, location, size, and usage of the land.
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Information Other than the Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises of the information included in the Management Discussion and Analysis, Draft Board's Report including Annexures to the said Board's Report, Corporate Governance and Shareholder's Information, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act, with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate implementation and maintenance of accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Company's Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing(“SAs”) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures
that are appropriate in the circumstances. Under section 143(3)(I) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or cond tions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements may be influenced.
We consider quantitative materiality and qualitative factors (i) in planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Financial Statements
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order, 2020 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure A statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
As required by Section 143(3) of the Act based on our audit, we report that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid Financial Statements have been kept so far as it appears from our examination of those books except for the matters stated in paragraph (i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account.
d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the directors as on 31st March, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2024 from being appointed as a director in terms of Section 164(2) of the Act.
f) With reference to maintenance of accounts and other matter therewith, reference is invited to paragraph (b) above on reporting under section 143(3)(b) and paragraph (i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 as amended.
g) With respect to the adequacy of the internal financial controls with reference to Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls with reference to Financials Statements.
h) With respect to the matter to be included in the Auditors' Report under Section 197(16) of the Act,
in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 read with Schedule V to the Act.
i) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements in Note 39 of the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. (a) The management has represented that, to
the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever (“Ultimate Beneficiaries”) by or on behalf of the Company or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(b) The management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever (“Ultimate Beneficiaries”) by or on behalf of the Funding Party or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on such audit procedures as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (iv) (a)
and (iv) (b) contain any material misstatement.
v. The Company declared and paid dividend for the year ended 31st March 2023 amounting to ' 176.93 lakhs during the year in accordance to section 123 of the Act. Board of Directors of the Company has not proposed any dividend during the year
vi. Based on our examination, which includes test checks, it is observed that the company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended on March 31, 2024.
For Khandelwal & Mehta LLP
Chartered Accountants
Firm Regn. No. W100084
S. L. Khandelwal
(Partner)
M. No. : 101388
UDIN :24101388BKEBCE8068
Place : Mumbai
Date : 30th May, 2024.
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