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Cera Sanitaryware Ltd.

BSE: 532443 Sector: Consumer
NSE: CERA ISIN Code: INE739E01017
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OPEN 5521.05
PREVIOUS CLOSE 5582.80
VOLUME 970
52-Week high 6430.45
52-Week low 3518.60
P/E 39.01
Mkt Cap.(Rs cr) 7,020
Buy Price 5400.05
Buy Qty 2.00
Sell Price 5412.00
Sell Qty 1.00
OPEN 5521.05
CLOSE 5582.80
VOLUME 970
52-Week high 6430.45
52-Week low 3518.60
P/E 39.01
Mkt Cap.(Rs cr) 7,020
Buy Price 5400.05
Buy Qty 2.00
Sell Price 5412.00
Sell Qty 1.00

Cera Sanitaryware Ltd. (CERA) - Auditors Report

Company auditors report

To

The Members of Cera Sanitaryware Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of CERASANITARYWARE LIMITED ("the Company") which comprise the Balance Sheet as at31st March 2022 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements") In our opinion and to the best of ourinformation and according to the explanations given to us the aforesaid standalonefinancial statements give the information required by the Companies Act 2013 ("theAct") in the manner so required and give a true and fair view in conformity with theIndian Accounting Standards prescribed under the section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended ("Ind AS") andother accounting principles generally accepted in India of the state of affairs(financial position) of the Company as at 31st March 2022 the profit (financialperformance including other comprehensive income) changes in equity and its cash flowsfor the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing ("SAs") specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India ("ICAI") together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence obtained by us is sufficient and appropriateto provide a basis for our opinion on standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below as thekey audit matters to be communicated in our report.

Sr. No. Allowance for Expected Credit Losses (ECL) in respect of Trade Receivables and Capital Advances
1. The Company has made provision for Expected Credit Losses in respect of trade receivables aggregating to Rs 1279.88 lakhs and that of capital advances aggregating to Rs 328.24 lakhs up to 31st March 2022 as against the gross doubtful / litigated amounts in respect of trade receivables of Rs 2282.23 lakhs and capital advances of Rs 468.91 lakhs. These are based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to entities the Company deals with. In calculating expected credit loss the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID-19. The Company has also determined allowance for ECL based on the information available with the Legal department of the Company. We identified allowance for credit losses as a key audit matter because the Company exercises significant judgement in calculating the expected credit losses.
Refer Notes No.811 36 and 40 to the standalone financial statements.
How our audit addressed the Key Audit Matter
Our Audit procedures related to the allowance for expected credit losses for trade receivables and capital advances included the following among others:
We tested the effectiveness of controls over the:
development of the methodology and model for the allowance for credit losses including consideration of the current and estimated future economic conditions;
completeness and accuracy of information used in the estimation of probability of default; and computation of the allowance for credit losses.
For a few customers we tested the input data such as credit reports past history of dealings with them and other credit related information used in estimating the probability of default by comparing them to external and internal source of information.
We carried out detailed analysis of balances of trade receivables and capital advances (i) where no legal actions have been taken so far by the Company and the reasons therefor (ii) where legal actions have been taken and the allowance for ECL has been partially/ fully made and considered the reasons therefor and (iii) where legal actions have been taken but no allowance for ECL has been made and the reasons therefor.
Assessed the adequacy of allowance for ECL recorded and evaluated disclosures in the standalone financial statements in relation to these items.
Verified Balance Confirmations directly received by us from few selected trade receivables and also examined reconciliations/ discrepancies if any.
We also reviewed the internal auditor's report for the history and current scenario of a few customers.
We carried out analysis of those trade receivables where there is significant increase in credit risk and also reviewed the ageing of the trade receivables pertaining to current and immediately preceding years.
2. Assessment of Carrying Value of Investments in Subsidiaries and an Associate
The Company has made investments in subsidiaries aggregating to Rs 3338.33 lakhs and has also made capital contributions aggregating to Rs 806 lakhs in one associate and are outstanding as at 31st March 2022 which are subject to impairment assessment. On an annual basis the management evaluates the existence of impairment indicators such as accumulated losses to the carrying values of these investments in its subsidiaries / associate.
The Company has entered into various agreements (MOU SPA and Share Escrow Agreement) with Anjani Vishnu Holding Ltd. (Joint Venture Partner and acquirer company) and Anjani Tiles Ltd. (subsidiary company) for the transfer / divestment of entire stake of the Company in equity and preference shares of ATL for a total consideration of Rs 2869.20 lakhs to be completed by 31st March 2023. These arrangements will result into impairment loss of Rs 573.80 lakhs. A separate detailed Note No.16 explains the entire arrangement including valuation and impairment loss of investments in this subsidiary company.
The processes and methodologies for assessing and determining the recoverable amount of these investments (other than investment in above referred subsidiary company) involve estimates assumptions and significant management judgment in particular with reference to forecasts of future cash flows relating to the terminal value as well as long-term growth rates discount rates etc.
The testing for impairment in these investments (other than investment in the subsidiary company) has been identified as a key audit matter in view of the significance of the amounts involved and as the determination of recoverable value for impairment assessment involves significant management judgment.
Refer Notes No. 3.17(f) 6 16 29 and 39 to the standalone financial statements.
How our audit addressed the Key Audit Matter
Our audit procedures for assessment of investments included the following :
Obtained an understanding from the management assessed and tested the design and operating effectiveness of the Company's controls over impairment assessment of its investments in subsidiaries / associates.
Evaluated the Company's process regarding impairment assessment in assessing the appropriateness of the impairment model including an independent assessment of the underlying assumptions relating to discount rate terminal value etc.
Assessed the carrying value of the investment in subsidiaries / associate (other than investment in the subsidiary company) to determine whether the valuations made by the Company were within an acceptable range and reasonable.
Checked the mathematical accuracy of the computations and agreed relevant data back to actual past results and other supporting documents.
Assessed the Company's sensitivity analysis and evaluated whether any reasonably foreseeable change in assumptions could lead to impairment.
Discussed with their auditors (wherever applicable) to develop an understanding of the operating performance and outlook used in their own valuation model and to assess consistency with the assumptions used in the model.
Evaluated the adequacy of the disclosures made in the standalone financial statements.
Based on the above procedures performed we did not identify any exceptions in the management's assessment in relation to the carrying value of investments in subsidiaries / associate (other than investment in the subsidiary Company).

Information Other than Financial Statements and Auditor's Report Thereon

The Company's management and the Board of Directors are responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance Report and Shareholders' Information butdoes not include the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of standalone financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedduring 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 materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's and Board of Directors' Responsibilities for the Standalone FinancialStatements

The Company's Management and the Board of Directors are responsible for the mattersstated in section 134(5) of the Act with respect to the preparation and presentation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance (including other comprehensive income) changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards specified under section 133of the Act read with relevant Rules issued thereunder. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Management and the Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so. The Board of Directorsare also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate inthe circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management and the Board ofDirectors.

Conclude on the appropriateness of management's and Board of Directors' use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we are required todetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matter

We draw attention to Notes No. 16.1 to 16.5 to the standalone audited financial resultswhich describe the transfer / divestment of entire stake of the Company in Anjani TilesLimited a subsidiary of the Company consisting of Equity and Preference shares as under:16.1 Pursuant to the Resolution passed at the Board Meeting held on 5th August 2021 forconsideration of the proposal and in principle approval for divestment of the Company'sentire stake in Anjani Tiles Limited a subsidiary company a Memorandum of Understanding(MOU) was executed on 17th August 2021 by and amongst Cera Sanitaryware Limited (Cera)Anjani Vishnu Holdings Ltd (AVHL) (Joint Venture Partner and Acquirer Company) and AnjaniTiles Limited (ATL) (Subsidiary Company) for the transfer / divestment of entire stake inAnjani Tiles Limited consisting of 10200000 Equity shares of Rs 10/- each and24230000 1% Cumulative Redeemable Preference shares of Rs 10/- each on a fully dilutedbasis for a total consideration of Rs 2869.20 Lakhs.

16.2 The Company AVHL and ATL also entered in to Share Purchase Agreement (SPA) dated26th August 2021 pursuant to which the Company agreed to sell all the Equity andPreference Shares held by it in ATL to AVHL.

16.3 Total consideration as referred above will be received by the Company in one ormore tranches beginning from 30th September 2021 and completing on 31st March 2023through an escrow mechanism and as per the Payment Schedule set out in the MOU.Accordingly the first tranche of Rs 643.00 Lakhs has been received on 28th September2021 from the Acquirer Company and 6430000 Preference Shares of ATL have beentransferred (off market) to AVHL on 29th September 2021.

16.4 Further pursuant to the MOU and SPA the Share Escrow Agreement was executed bythe Company AVHL and ATL with Federal Bank Ltd. (Escrow Agent) jointly on 23rd November2021. Both Cera and AVHL have transferred their respective entire Equity shareholding andtheir respective balance Preference shareholding to the Escrow Account in January 2022with lien marked in favour of the Escrow Agent.

16.5 Company's shareholdings in Equity and Preference shares in ATL have been presentedas Non-current Assets classified as Held for Sale as on 31st March 2022 as per IndianAccounting Standard - 105 - "Non-current Assets Held for Sale and DiscontinuedOperations" measured at the lower of its carrying amount and fair value less coststo sell in respect of Equity shares and at fair value in respect of Preference shares asat 31st March 2022. The impairment loss of Rs 573.80 Lakhs on Equity Shares (Preferenceshares to be transferred at fair value which is equivalent to carrying amount) due toabove arrangements has been recognised in the Statement of Profit and Loss as ExceptionalItem.

Our report is not modified in respect of this matter.

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 subsection (11) of section 143 ofthe Companies Act 2013 we give in "Annexure A" a statement on the mattersspecified 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 bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome)the Statement of Changes in Equity and the Statement of Cash Flows(the standalonefinancial statements) dealt with by this Report are in agreement with the books ofaccount. (d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.

(e) On the basis of the written representations received from the directors as on 31stMarch 2022 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2022 from being appointed as a director in terms of Section164 (2) of the Act. (f) With respect to the adequacy of the internal financial controlswith reference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure B".Our report expresses an unmodified opinion on the adequacy and operating effectiveness ofthe Company's internal financial controls with reference to standalone financialstatements. (g) With respect to the matter to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand according to the information and explanations given to us the remuneration paid bythe Company to its directors during the current year is in accordance with the provisionsof Section 197 of the Act. The remuneration paid to any director is not in excess of thelimit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has notprescribed other details under Section 197(16) of the Act which are required to becommented upon by us.

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous: i. The Company has disclosed the impact of pending litigations as at 31st March 2022on its financial position in its standalone financial statements – Refer Note No. 45to the standalone financial statements. ii. According to the information and explanationsprovided to us the Company did not have any long term contracts including derivativecontracts for which there were any material foreseeable losses. iii. There has been nodelay in transferring amounts required to be transferred to the Investor Education andProtection Fund by the Company. iv. (a) The Company's Management and the Board ofDirectors have represented that to the best of their knowledge and belief no funds havebeen advanced or loaned or invested (either from borrowed funds or share premium or anyother sources or kind of funds) by the Company to or in any other person or entityincluding foreign entity ("Intermediaries") with the understanding whetherrecorded in writing or otherwise that the Intermediary shall whether directly orindirectly lend or invest in other persons or entities identified in any manner whatsoeverby or on behalf of the Company ("Ultimate Beneficiaries") or provide anyguarantee security or the like on behalf of the Ultimate Beneficiaries.

(b) The Company's Management and the Board of Directors have represented that to thebest of their knowledge and belief no funds have been received by the Company from anyperson or entity including foreign entity ("Funding Parties") with theunderstanding whether recorded in writing or otherwise that the Company shall whetherdirectly or indirectly lend or invest in other persons or entities identified in anymanner whatsoever by or on behalf of the Funding Party ("UltimateBeneficiaries") or provide any guarantee security or the like on behalf of theUltimate Beneficiaries; and (c) Based on the audit procedures that have been consideredreasonable and appropriate in the circumstances nothing has come to our notice that hascaused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e)as provided under (a) and (b) above contain any material misstatement. v. (a) Thedividend declared or paid during the year by the Company is in compliance with section 123of the Companies Act 2013.

(b) The Board of Directors of the Company have proposed final dividend and specialdividend for the year which is subject to the approval of the members at the ensuingAnnual General Meeting. The amount of dividend proposed is in accordance with section 123of the Act as applicable.

FOR N. M. NAGRI & CO.
Chartered Accountants
Firm Regn. No.106792W
N. M. NAGRI
PROPRIETOR
Place : Ahmedabad Membership No. 016992
Date : 10th May 2022 UDIN: 22016992AIRRMO6700

ANNEXURE-A TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in ‘Report on Other Legal and Regulatory Requirements' section of ourreport to the Members of CERA SANITARYWARE LIMITED of even date for the year ended31st March 2022) Based on the audit procedures performed by us for the purpose ofreporting a true and fair view on the financial statements of the Company and taking intoconsideration the information and explanations provided to us by the Company and the booksof account and other records examined by us in the normal course of audit and to the bestof our knowledge and belief we state that: (1) In respect of the Company'sProperty Plant and Equipment and Intangible Assets: (a) (A) The Company hasmaintained proper records showing full particulars including quantitative details andsituation of Property Plant and Equipment.

(B) The Company has maintained proper records showing full particulars ofintangible assets.

(b) The Company has a regular program of physical verification of its propertyplant and equipment by which the property plant and equipment are verified in a phasedmanner. In our opinion the periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its assets. No material discrepancieswere noticed on such verification during the year. (c) The title deeds of allimmovable properties (other than properties where the company is the lessee and the leaseagreements are duly executed in favour of the lessee) disclosed in the financialstatements under the head "Property Plant and Equipment" are held in the nameof the Company.

(d) The Company has not revalued any of its Property Plant and Equipment(including right-of-use assets) and intangible assets during the year.

(e) No proceedings have been initiated during the year or are pending against theCompany as at 31st March 2022 for holding any benami property under the BenamiTransactions (Prohibition) Act 1988 (as amended in 2016) and rules made thereunder.

(2) (a) The inventory has been physically verified by the management during theyear. In our opinion the frequency of such verification is reasonable. The Company hasmaintained proper records of inventory. In our opinion the coverage and procedure of suchverification by the management is appropriate. The discrepancies noticed on verificationbetween the physical stock and the book records were less than 10% in the aggregate foreach class of inventory as stated in the financial statements. Such discrepancies havebeen properly dealt with in the books of account.

(b) During the year the Company has been sanctioned working capital limits inexcess of rupees five crore in aggregate from State Bank of India on the basis ofsecurity of current assets. The quarterly returns / statements filed by the Company withSate Bank of India are in agreement with the books of account of the Company.

(3) (a) During the year the Company has not provided any guarantee or security orgranted any loans or advances in the nature of loans secured or unsecured to companiesfirms Limited Liability Partnerships or any other parties and hence reporting underclauses 3(iii)(a) (c) (d) (e) and (f) of the Order are not applicable for the yearunder report.

(b) In our opinion the investments made during the year are prima facie notprejudicial to the Company's interest.

(4) In our opinion the Company has complied with the provisions of Sections 185and 186 of the Companies Act 2013 with respect to the investments made. The Company hasnot given any loans provided any guarantee or security during the year.

(5) The Company has not accepted any deposits from the public within the meaning ofthe directives issued by the Reserve Bank of India provisions of Sections 73 to 76 of theAct or any other relevant provisions of the Act and the rules framed thereunder. Hencereporting under clause 3(v) of the Order is not applicable.

(6) We have broadly reviewed the cost records maintained by the Company pursuantto the Companies (Cost Records and Audit) Rules 2014 as amended prescribed by theCentral Government under section 148(1) of the Companies Act 2013 and are of the opinionthat prima facie the prescribed cost records have been made and maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate and complete.

(7) (a) The Company has generally been regular in depositing undisputed statutorydues including Goods and Service Tax provident fund employees' state insuranceincome-tax salestax value added tax duty of customs duty of excise service tax cessand any other statutory dues as applicable to the appropriate authorities. Further noundisputed amounts payable in respect thereof were outstanding at the year end for aperiod of more than six months from the date they became payable.

(b) The Statutory dues of income-tax sales-tax service-tax duty of customs dutyof excise value added tax and GST (as applicable) which have not been deposited as at31st March 2022 on account of any dispute are given below:

Sr. Name of Statute No. Nature of Dues Amount (Rs in Lakhs) Period to which the amount relates (F.Y.) Forum where dispute is Pending
1 Income Tax Act 1961 Income Tax 29.38 2017-18 CIT-Appeals
2 Income Tax Act 1961 Income Tax 690.65 2016-17 CIT-Appeals
3 Income Tax Act 1961 Income Tax 680.38 2015-16 CIT-Appeals
4 Central Excise Act 1944 Central Excise 2.77 1991-92 Supreme Court
5 Central GST and Central Service Tax 75.31 2014-15 2015-16 Tribunal Appeal in the process of
Excise Act1944 and 2016-17 being filed
6 Punjab Value Added Tax Central Sales Tax 10.24 2010-11 The Deputy Excise and Taxation
Act 2005 (VAT) Chandigarh and Value Added Tax Commissioner (Appeal) Chandigarh
7 Central Sales tax Central Sales tax 23.05 2016-17 Department of Trade and Taxes
Act 1956 Delhi Delhi (Appeal)

(8) There were no transactions relating to previously unrecorded income that havebeen surrendered or disclosed as income during the year in the tax assessments under theIncome Tax Act 1961 (43 of 1961).

(9) (a) The Company has not defaulted in repayment of loans or otherborrowings or in the payment of interest thereon to any lender.

(b) The Company has not been declared wilful defaulter by any bank or financialinstitution or other lender.

(c) The Company has not taken any term loans during the year and there are nooutstanding term loans at the beginning of the year and hence reporting under clause3(ix)(c) of the Order is not applicable for the year under report.

(d) On an overall examination of the financial statements of the Company fundsraised on short-term basis have prima facie not been used during the year for long-termpurposes by the Company.

(e) The Company has not taken any funds from any entity or person on account of orto meet the obligations of its subsidiaries associate or joint ventures and hencereporting under clause 3(ix)(e) of the Order is not applicable for the year under report. (f)The Company has not raised any loans during the year on the pledge of securities heldin its subsidiaries associate or joint ventures and hence reporting on clause 3(ix)(f)of the Order is not applicable for the year under report.

(10) (a) The Company has not raised any money by way of initial public offer orfurther public offer (including debt instruments) during the year. Hence reporting underclause 3(x)(a) of the Order is not applicable to the Company for the year under report.

(b) During the year the Company has not made any preferential allotment or privateplacement of shares or convertible debentures (fully partially or optionally convertible)and hence reporting under clause 3(x)(b) of the Order is not applicable for the yearunder report.

(11) (a) No fraud by the Company or any fraud on the Company has been noticed orreported during the year.

(b) No report under sub-section (12) of section 143 of the Companies Act has beenfiled by the auditors in Form ADT-4 as prescribed under rule 13 of Companies (Audit andAuditors) Rules 2014 with the Central Government during the year and upto the date ofthis report.

(c) No whistle blower complaints were received by the Company during the year.

(12) The Company is not a Nidhi Company. Accordingly provisions of paragraph3(xii) (a) (b) and (c) of the Order are not applicable. (13) In our opinion andaccording to the information and explanations given to us the Company is in compliancewith Sections 177 and 188 of Companies Act 2013 where applicable in respect of alltransactions with the related parties and the details of related party transactions havebeen disclosed in the standalone financial statements as required by the applicable IndianAccounting Standards. (14) (a) In our opinion the Company has an adequate internalaudit system commensurate with the size and the nature of its business.

(b) We have considered the internal audit reports for the year under audit issuedto the Company in determining the nature timing and extent of our audit procedures.

(15) In our opinion the Company has not entered into any non-cash transactionswith directors or persons connected with them covered under section 192 of the CompaniesAct 2013. Accordingly paragraph 3(xv) of the Order is not applicable to the Company forthe year under report.

(16) (a) The Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934. Accordingly paragraph 3(xvi)(a) (b) and (c) of theOrder is not applicable to the Company.

(b) In our opinion there is no core investment company within the Group (asdefined in the Core Investment Companies (Reserve Bank) Directions 2016) and accordinglyreporting under clause 3(xvi)(d) of the Order is not applicable.

(17) The Company has not incurred cash losses during the financial year covered byour audit and in the immediately preceding financial year.

(18) There has been no resignation of the statutory auditors of the Company duringthe year.

(19) On the basis of the financial ratios ageing and expected dates of realisationof financial assets and payment of financial liabilities other information accompanyingthe financial statements and our knowledge of the Board of Directors and Management plansand based on our examination of the evidence supporting the assumptions nothing has cometo our attention which causes us to believe that any material uncertainty exists as onthe date of the audit report indicating that Company is not capable of meeting itsliabilities existing at the date of balance sheet as and when they fall due within aperiod of one year from the balance sheet date. We however state that this is not anassurance as to the future viability of the Company. We further state that our reportingis based on the facts up to the date of the audit report and we neither give any guaranteenor any assurance that all liabilities falling due within a period of one year from thebalance sheet date will get discharged by the Company as and when they fall due.

(20) (a) There are no unspent amounts towards Corporate Social Responsibility (CSR)on other than ongoing projects requiring a transfer to a Fund specified in Schedule VII tothe Companies Act in compliance with second proviso to sub-section (5) of Section 135 ofthe said Act. Accordingly reporting under clause 3(xx)(a) of the Order is not applicablefor the year.

(b) In our opinion there are no ongoing projects towards Corporate SocialResponsibility (CSR) requiring a transfer to special account in compliance with theprovision of sub-section (6) of section 135 of the said Act. Accordingly reporting underclause 3(xx)(b) of the Order is not applicable for the year.

(21) Our reporting on the matters specified in paragraphs 3(xxi) and 4 read withthe proviso to paragraph (2) of the Companies (Auditor's Report) Order 2020 has beenmade in paragraph (2) of Other Legal and Regulatory Requirements section of our Auditor'sReport on the consolidated audited financial statements.

FOR N. M. NAGRI & CO.
Chartered Accountants
Firm Regn. No.106792W
N. M. NAGRI
PROPRIETOR
Place : Ahmedabad Membership No. 016992
Date : 10th May 2022 UDIN: 22016992AIRRMO6700

ANNEXURE-B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph (f) under "Report on Other Legal and RegulatoryRequirements" section of our report to the Members of CERA SANITARYWARE LIMITEDof even date for the year ended 31st March 2022)

Independent Auditor's Report on the Internal Financial Controls with reference to thestandalone financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 ("the Act") Opinion

In conjunction with our audit of the standalone financial statements of CERASANITARYWARE LIMITED (‘the Company') as of and for the year ended 31st March2022 we have audited the internal financial controls with reference to the standalonefinancial statements of the Company as of that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to the standalone financial statements and such internal financialcontrols were operating effectively as at 31st March 2022 based on the internalfinancial controls with reference to the standalone financial statements criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India.

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to the standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India ("ICAI"). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls over Financial Reporting (the "Guidance Note") and the Standards onAuditing issued by ICAI and deemed to be prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlswith reference to the standalone financial statements. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to the standalone financial statements were established and maintained and ifsuch controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to the standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tothe standalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemwith reference to the standalone financial statements.

Meaning of Internal Financial Controls with Reference to the Standalone FinancialStatements

A Company's internal financial controls with reference to the standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A Company's internalfinancial controls with reference to the standalone financial statements includes thosepolicies and procedures that: (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the Company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of standalone financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of theCompany are being made only in accordance with authorizations of management and directorsof the Company; and (3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the Company's assets thatcould have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls with Reference to the StandaloneFinancial Statements

Because of the inherent limitations of internal financial controls with reference tothe standalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to the standalone financial statements to future periods aresubject to the risk that the internal financial controls with reference to the standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

FOR N. M. NAGRI & CO.
Chartered Accountants
Firm Regn. No.106792W
N. M. NAGRI
PROPRIETOR
Place : Ahmedabad Membership No. 016992
Date : 10th May 2022 UDIN: 22016992AIRRMO6700

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