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Deccan Cements Ltd.

BSE: 502137 Sector: Industrials
NSE: DECCANCE ISIN Code: INE583C01021
BSE 12:48 | 22 Jun 581.00 16.10
(2.85%)
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585.00

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585.00

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571.70

NSE 12:39 | 22 Jun 579.90 14.15
(2.50%)
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578.80

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584.45

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OPEN 585.00
PREVIOUS CLOSE 564.90
VOLUME 6475
52-Week high 598.00
52-Week low 221.00
P/E 7.07
Mkt Cap.(Rs cr) 813
Buy Price 580.35
Buy Qty 1.00
Sell Price 581.00
Sell Qty 20.00
OPEN 585.00
CLOSE 564.90
VOLUME 6475
52-Week high 598.00
52-Week low 221.00
P/E 7.07
Mkt Cap.(Rs cr) 813
Buy Price 580.35
Buy Qty 1.00
Sell Price 581.00
Sell Qty 20.00

Deccan Cements Ltd. (DECCANCE) - Auditors Report

Company auditors report

To

The Members of Deccan Cements Limited Report on the Audit of the Financial StatementsOpinion

We have audited the financial statements of Deccan Cements Limited ("theCompany") which comprise the Balance Sheet as at 31st March 2020 and theStatement of Profit and Loss (including Other Comprehensive

Income) the Statement of Changes in Equity and Cash Flow Statement for the year thenended and notes to the financial statements including a summary of significant accountingpolicies and other explanatory information (hereinafter referred to as "the financialstatements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs st March 2020 and its profittheCompanyasat31 (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of

Ethics issued by the Institute of Chartered Accountants of India. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Sr. No. Key Audit Matter Auditor's Response
Principal Audit Procedures
1. Adequacy of the estimated provision made for wheeling charges for the energy generated at wind farm and hydel power unit to the cement plant as per the orders of the Hon'ble Supreme Court of India. Refer Note 28 of the financial statements. We have performed the following audit procedures:
Given the significance of the matter there is a risk that provision made for wheeling charges could significantly vary from what is being estimated. Reviewed the wheeling agreement entered by the Company with Electricity Companies.
Reviewed the wheeling chargestarifforders of Andhra Pradesh Electricity Regulatory Commission (APERC).
Verified the workings such as number of units generated by the wind farm and hydel power plant wheeling charges tariff considered etc. in the respective years.
Verified the adequate disclosures made as per Ind AS 1 and Schedule III of the Companies Act 2013
We have obtained reasonable assurances from the key management of the Company on the basis of above workings.
2. The Company has material litigations which involve significant judgement to determine the possible outcome of these litigations. Refer Note 30 of the financial statements. Principal Audit Procedures
Obtained details of litigations for the year ended 31 st March 2020 from management. We have relied upon our internal experts to challenge the management's underlying assumptions in estimating the possible outcome of the disputes.
Our internal team also considered the status of the disputes legal precedence and other rulings in evaluating management's position on these matters. We have also relied on assurances and opinions provided by the various agencies representing the company.
3. Inventories as disclosed in Note 6 to the financial statements includes: Principal Audit Procedures
Raw materials comprising iron-ore gypsum limestone laterite and flyash; Work-in-progress mainly comprising clinker Coal The Company performs annual inventory counts at the year end and issues prior notification of procedures to be performed for such inventory counts. Our audit procedures to assess the existence of such items of inventory included the following:
The above items of inventory are stored in sheds stockpiles and silos. As the weighing of these inventories is not practicable management assesses the reasonableness of the quantities on hand by obtaining measurements of stockpiles and converting these measurements to unit of volumes by using angle of repose and bulk density. The Company involves its team in the inventory count process. Assessed the management's process of measurement of stockpiles and the determination of values using conversion of volumes and density to total weight and the related yield. Obtained and reviewed the inventory count report of the management's team and assessed its accuracy on a sample basis.
Due to the significance of inventory balances and related estimations involved this is considered as a key audit matter.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report ManagementDiscussion & Analysis and Report on Corporate

Governance but does not include the financial statements and our auditor's reportthereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial our knowledge obtained in the audit orotherwise appears to be materially misstated. If based on the work we have performed weconclude that there is a material misstatement of this other information we are requiredto report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statementsperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; 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 financial free from material misstatement whether dueto fraud or error.

In preparing the financial statements the Board to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process. Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

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

? Identify and assess the risks of material misstatement of the 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 design auditprocedures that are appropriate in the circumstances. Under section 143(3)(i) of the Actwe are also responsible for expressing our opinion on whether the company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols.

? Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management. ? Conclude onthe appropriateness of management's use of the going concern basis of accounting andbased on the audit evidence obtained whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Company's ability to continueas a going concern. If we conclude that a material uncertainty exists we are required todraw attention in our auditor's report to the related disclosures in the financialstatements or if such disclosures are inadequate to modify our opinion. Our conclusionsare based on the audit evidence obtained up to the date of our auditor's report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern.

? Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and any significant deficiencies in internal control that wetimingoftheauditandsignificant identify during our audit. We also provide those chargedwith governance with a statement that we have complied with relevant ethical requirementsregarding independence and to communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence and where applicable relatedsafeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report that: a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b) In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books. c) The Balance Sheet the Statement of Profitand Loss (including Other Comprehensive Income)

Statement of Changes in Equity and the Cash Flow Statement dealt with by this Reportare in agreement with the books of account. d) In our opinion the aforesaid financialstatements comply with

133 of the Act read with Rule 7 of Companies (Accounts) Rules 2014. e) On the basis ofthe written representations received from the directors as on 31st March 2020taken on record by the Board of Directors none of the directors is disqualified as on 31 stMarch 2020 from being appointed as a director in terms of Section 164 (2) of the Act. f)With respect to the adequacy of the internal financial controls over financial and theoperating effectiveness of such controls refer to our separate Report in"AnnexureA". g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Act asamended: In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provision of section 197 of the Act. h) With respect to theother matters to be included in the Auditor's Report in accordance with Rule 11 of theCompanies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us: i. The Company has disclosedthe impactofpendinglitigationsonits financial position its statements (Refer Note30 of the financial statements); ii. The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses; iii.There has been no delay in transferring the amounts which were required to be transferredto the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143 (11) of the Act we givein "Annexure B" a statement on the matters specified in paragraphs 3 and 4 ofthe Order.

For M.Anandam & Co.

Chartered accountants (Firm Registration No.000125S)

Sd/-

M.V.Ranganath

Partner Membership No.028031 UDIN: 20028031AAAAFZ3479

Place: Hyderabad Date: 25th June 2020

Annexure "A" to the Independent Auditor's Report

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of

Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls Company") as of 31stMarch 2020 in conjunction with our audit of the financial statements of the Company forthe year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting 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 (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls. 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 overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial controls system over financialreporting and their operating effectiveness. Our audit of internal financial controls overfinancial reporting included obtaining an understanding of internal financialcontrols overfinancial reporting 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 systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions andcompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or dispositionofthecompany'sassetsthatcouldhaveamaterialeffecton thefinancial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial financial controls over financial reporting were operatingeffectively as at 31 st March 2020 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For M.Anandam & Co.

Chartered accountants (Firm Registration No.000125S)

Sd/-

M.V.Ranganath

Partner Membership No.028031 UDIN: 20028031AAAAFZ3479

Place: Hyderabad Date: 25th June 2020

Annexure "B" to the Independent Auditor's Report

With reference to Paragraph 2 under ‘Report on Other Legal RegulatoryRequirements' section of our report to the Members of the Company we report that

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) The property plant and equipment have been physically verified by the managementin a periodical manner which in our opinion is reasonable having regard to the size ofthe Company and the nature of its business. No material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company all the title deeds of immovable properties areheld in the name of the Company.

(ii) The inventories have been physically verified during the year by the management.The discrepancies noticed on verification between the physical stocks and book recordswere not material. (iii) The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability

Partnerships or other parties covered in the register maintained under section 189 ofthe Act. Accordingly paragraph 3 (iii) (a) to (c) of the Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us theCompany has made investments which are in compliance with Section 186 of the Act. TheCompany has not granted loans not provided guarantees and securities.

(v) According to the information and explanations given to us the Company has notaccepted deposits within the meaning of Sections 73 to 76 of the Act and the rules framedthereunder.

(vi) We have broadly reviewed the cost records maintained by the Company as prescribedunder sub-section (1) of section 148 of the Act and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. We have however notmade a detailed examination of the cost records with a view to determine whether they areaccurate or complete.

(vii) (a) According to the information and explanations given to us and the records ofthe Company examined by us the Company is regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax goods and services taxcess and any other statutory dues as applicable with the appropriate authorities and therewere no arrears of outstanding statutory dues as at the last day of the financial yearconcerned for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and records of theCompany examined by us the particulars of income tax sales tax value added tax goodsand services tax and any other statutory dues as at 31st March 2020 which havenot been deposited on account of any dispute pending are as under:

Name of the statute Nature of the dues Amount (Rs. in lakhs) Period to which the amount relates Forum where the dispute is pending
11.52 1993-94 Hon'ble High Court of
Andhra Pradesh General 85.68 1999-00 & 2000-01 Telangana
Sales Tax Act 1957 / AP VAT Act 2005 Sales tax / VAT 51.61 2002-03 to 2004-05 Deputy Commissioner
137.24 2006-07 (Appeals) Hyderabad VAT Appellate Tribunal
Telangana VAT Act 2005 VAT 1.62 2014-15 Hyderabad
AP Electricity Duty Electricity Duty 316.23 2003-04 to 2008-09

Hon'ble High Court of

Amendment Act 2003 Telangana
Telangana Tax on Entry of Goods into Local Areas Act 2001 Entry Tax 21.89 2012-13 To 2016-17 Appellate Joint Commissioner Hyderabad

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to financialinstitutions banks and government. The

Company has not issued any debentures.

(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) during the year. In our opinion and according to theinformation and explanations given to us the term loans have been applied for the purposefor which the loans were obtained.

(x) To the best of our knowledge and belief and according to the information andexplanations given to us no fraud on or by the Company was noticed or reported during theyear.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3 (xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the

Act where applicable and details of such transactions have been disclosed in thefinancial statements as required by the applicable accounting standards.

(xiv) During the year the Company has not made preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underparagraph 3 (xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3 (xv)of the Order is not applicable (xvi) The Company is not required to be registered undersection 45-IA of the Reserve Bank of India Act 1934.

For M.Anandam & Co.

Chartered accountants (Firm Registration No.000125S) Sd/-

M.V.Ranganath

Partner Membership No.028031 UDIN: 20028031AAAAFZ3479

Place: Hyderabad Date: 25th June 2020