To the members of The KCP Limited Chennai
Report on Standalone Financial Statements:
We have audited the accompanying financial statements of THE KCP LIMITED ("thecompany") which comprise the Balance Sheet as at March 31 2021 the Statement ofProfit and Loss (including other comprehensive income) the Statement of Changes in Equityand the Statement of Cash Flows for the year ended on that date and a summary of thesignificant accounting policies and other explanatory information (herein after referredto as "the financial statements")
In our opinion and to the best of our information and according to the explanationsgiven to us the accompanying 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 Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standard) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 312021 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under Section 143(10) of the Act. Our responsibilities underthose standards are further described in the Auditors responsibility for the Auditof Financial Statements section of our report. We are independent of the companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit offinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the 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 financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report.
|S. No. Key Audit Matters ||Auditor's Response |
|Provision for Decommissioning cost ||Principal audit procedures |
|The company has an obligation to restore and rehabilitate the mining land used for cement production at the end of their use. ||Our audit procedures included the following - |
|This decommissioning liability is recorded based on estimates of the cost required to fulfil this obligation. The provision is based upon current cost estimates and has been determined on a discounted basis with reference to current legal requirements . || Evaluated the approach adopted by the company management in determining the expected costs of decommissioning |
|At each reporting date 1 the decommissioning liability is reviewed and re-measured in line with changes in observable assumptions timing and the latest estimates of costs to be incurred at reporting date. || Identified the cost assumptions used that have the most significant impact on the provisions and tested the appropriateness and these assumptions. |
|We have considered the measurement of decommissioning costs as Key Audit Matter as it requires significant management judgement including accounting calculations and estimates that involves high estimation uncertainty. || Reviewed the appropriateness of discount and inflation rates used in the estimation. |
| || Verified the unwinding of interest as well as understanding if any restoration was undertaken during the year |
| ||. Relied on the judgements of the internal experts for the use of technical evaluation. |
| || Performed a review to ensure that all key movements were understood corroborated and recorded correctly. |
| || Assessed the appropriateness of the disclosures made in the Financial Statements. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the standalone financialstatements 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 the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained 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 materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard
Management's Responsibility for the Standalone Financial Statements:
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the Indian Accounting Standards(Ind AS) prescribed under Section 133 of the Companies Act 2013 read with relevant rulesissued there under and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the companyand for preventing and detecting the frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofstandalone Ind AS financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors is responsible forassessing the company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the company or to cease operations orhas no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibility 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act 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 reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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 determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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 the Companies (Auditor's Report) Order2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified inthe paragraph 3 and 4 of the Order to the extent applicable.
2) As required by Section 143(3) of the Companies Act 2013 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) i n 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 Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account
d) In our opinion the aforesaid financial statements comply with the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Companies Act 2013 read with Rule7 of Companies (Accounts) Rules 2014.
e) on the basis of written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in termsof Section 164(2) of the Act
f) with respect to the adequacy of internal financial controls over financial reportingof the Company and the operating effectiveness of such controls refer to our separatereport in "Annexure B". Our report expresses an unmodified opinionon the adequacy and operating effectiveness of the company's internal financial controlsover financial reporting.
g) With respect to Managerial Remuneration to be included in the Auditor's report underSection 197(16)
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented 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 in our opinionand 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 financialposition in its standalone Ind AS financial statements - Refer Note 37 to the standaloneInd AS financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contracts but did nothave derivative contractsRefer Note 53to the Ind AS financial statements
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company
| ||for K.S.RAO & CO Chartered Accountants Firm Regn.No.003109S |
|Place : Hyderabad ||(P.GOVARDHANA REDDY) |
|Date :25th June 2021 ||Partner Membership No. 029193 UDIN21029193AAAAJA5170 |
Annexure A to the Independent Auditor's Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of The KCP LIMITED of even date)
We report that:
(i) a. the company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets;
b. the Fixed Assets are physically verified by the management according to a phasedprogram designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the company and the nature of itsassets. Pursuant to the program during the year under report the management hasphysically verified its fixed assets situated at Muktyala and Macherla units and nomaterial discrepancies have been noticed on such verification;
c. according to the information and explanations given to us and on the basis of ourexamination of the records of the company the title deeds of the immovable property areheld in the name of the company.
(ii) the inventory has been physically verified by the management at reasonableintervals during the year under report and the discrepancies noticed during such physicalverification of inventories as compared to book records have been properly dealt with inthe books of account.
(iii) the company has not granted any loans to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Therefore the provisions of clause 3(iii)(a) 3(iii) (b) &3(iii)(c) of the said Order are not applicable for the year under report.
(iv) in our opinion and according to the information and explanations given to us thecompany has not granted any loans guarantees and security in accordance with theprovisions of section 185 of the Companies Act 2013. The company has complied with theprovisions of Section 186 of the Companies Act 2013 in respect of investments made by thecompany.
(v) in our opinion the company has complied with the provisions of section 73 to 76 andother applicable provisions of the Companies Act 2013 and Companies (Acceptance ofDeposits) Rules 2014 with regard to the deposits accepted from the public. According tothe information furnished to us no Order has been passed on the company by the CompanyLaw Board or National Company Law Tribunal or Reserve Bank of India or any Court or anyother Tribunal for non-compliance with the provisions of Sections 73 to 76 of theCompanies Act 2013.
(vi) we have broadly reviewed the books of account and records maintained by thecompany at its cement engineering and electric power generation units pursuant to theRules made by the Central Government for the maintenance of Cost Records under section148(1) of the Companies Act 2013 and we are of the opinion that prima facie theprescribed accounts and records have been made and maintained.
(vii) (a) according to the information and explanations given to us and on the basis ofour examination of the records of the company in our opinion the company is regular indepositing with the appropriate authorities the undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Sales Tax Goods and Service TaxService Tax duty of Customs duty of Excise Value added tax Cess and other materialstatutory dues applicable to it; and according to the information and explanations givento us no undisputed amounts payable in respect of Provident Fund Income Tax Sales TaxGoods and Service Tax Service Tax duty of customs duty of Excise value added tax cessand other material statutory dues were in arrears as at 31st March 2021 for aperiod of more than six months from the date they became payable;
(b) according to the information and explanations given to us there were no amounts ofSales Tax duty of Customs Goods and Service Tax duty of Excise Cess Income TaxService Tax that have been disputed by the company and hence were not remitted to theconcerned authorities at the date of the Balance Sheet under report except the duesmentioned hereunder
|No Nature of dues ||Name of the statute ||Period ||Amount in Rs. Lakhs ||Amount paid under protest (Rs. in Lakhs) ||Forum where the dispute is pending |
|1 Excise duty and related demands ||Central Excise Act 1944 ||1996 2017 ||2115.96 ||- ||At various Appellate forums |
|2 Sales tax and related demands ||AP Sales Tax Act 1957 ||19962001 and 2011-12 ||237.77 ||103.23 ||AP High Court |
|3 Sales tax and related demands ||Tamilnadu Sales Tax Act ||2007-08 ||8.70 ||6.87 ||Addl. Commissioner of Commercial taxes |
|4 Royalty ||MMDR Act1957 ||1986-87 ||0.93 ||- ||ADMG - Guntur |
|5 Net Present Value of Safety Zone Area ||Forest Conservation Act1980 ||2014-15 ||17.87 ||- ||DFO - Guntur |
|6 District Mineral Foundation ||District Mineral Foundation ||2015-16 ||35.87 ||- ||Hon'ble High Court of Telangana & State of Andhra Pradesh |
|7 State Load Despatch Centre charges ||AP Electricity Duty Act 1938 ||2010-11 ||35.51 ||- ||Hon'ble High Court of Andhra Pradesh |
(viii) according to the records of the company examined by us and the information andexplanations given to us there were no defaults in repayment of loans or borrowings tobanks during the year under report;
(ix) in our opinion and according to the information and explanations given to us theterm loans taken by the Company have been applied for the purpose for which they wereraised. The Company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments) during the year;
(x) during the course of our examination of the books and records of the companycarried out in accordance with the Generally Accepted Auditing Practices in India andaccording to the information and explanations given to us we have neither come across anyinstances of material fraud by the company or any fraud on the company by its officers oremployees noticed or reported during the year nor we have been informed of any such caseby the management;
(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 themanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V of the Companies Act 2013;
(xii) the company is not a chit fund or a nidhi/mutual benefit fund/society and hencethe requirement of clause 3(xii) of the Order is not applicable to the company during theyear under report;
(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 sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards;
(xiv) according to the information and explanations given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year;
(xv) according to the information and explanations given to us and based on ourexaminations of the records of the company the company has not entered into non-cashtransactions with directors or persons connected with them. Therefore the provision ofclause 3(xv) of the Order is not applicable;
(xvi) the Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
|Place : Hyderabad ||for K.S.RAO & CO Chartered Accountants Firm Regn.No.003109S (P.GOVARDHANA REDDY) |
|Date :25th June 2021 ||Partner |
| ||Membership No. 029193 UDIN21029193AAAAJA5170 |
Annexure - B to the Independent Auditors' Report
(Referred to in paragraph 2 (f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of The KCP LIMITED of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to financial statementsof The KCP Limited ("the Company") as of 31st March 2021 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the 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 with reference to financial Statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to 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 financial statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial Statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31st March 2021 based on the internal control with reference to financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.
|Place : Hyderabad ||for K.S.RAO & CO Chartered Accountants Firm Regn.No.003109S (P.GOVARDHANA REDDY) |
|Date :25th June 2021 ||Partner |
| ||Membership No. 029193 UDIN21029193AAAAJA5170 |