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Kesoram Industries Ltd.

BSE: 502937 Sector: Industrials
NSE: KESORAMIND ISIN Code: INE087A01019
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VOLUME 17369
52-Week high 78.20
52-Week low 44.25
P/E
Mkt Cap.(Rs cr) 1,789
Buy Price 57.55
Buy Qty 2.00
Sell Price 57.70
Sell Qty 201.00
OPEN 58.70
CLOSE 57.75
VOLUME 17369
52-Week high 78.20
52-Week low 44.25
P/E
Mkt Cap.(Rs cr) 1,789
Buy Price 57.55
Buy Qty 2.00
Sell Price 57.70
Sell Qty 201.00

Kesoram Industries Ltd. (KESORAMIND) - Auditors Report

Company auditors report

To

The Members of

KESORAM INDUSTRIES LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of KesoramIndustries Limited ("the Company") which comprise the Balance Sheet as at31 March 2022 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Cash Flows and the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2022 and its loss totalcomprehensive loss its cash flows and the changes in equity for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the

Audit of the Standalone Financial Statements section of our report. We are independentof the Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the standalone financial statements under the provisions of the Act and theRules made thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ICAI's Code of Ethics. We believe that theaudit evidence obtained by us is sufficient and appropriate to provide a basis for ouraudit opinion on the 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 to bethe key audit matters to be communicated in our report.

Sr. No. Key Audit Matter Auditor's Response
1 Impairment assessment of investment in and Loans and Advances to wholly owned subsidiary (Cygnet Industries Limited) Principal audit procedures performed
The Company's wholly owned subsidiary (Cygnet Industries Limited) involved in the business of manufacturing Rayon and Transparent paper is not performing well due to adverse business conditions. As on March 31 2022 the Company has an investment of RS 926.54 Crores and outstanding loans of RS 154.46 Crores in the said subsidiary and has recognised impairment loss on investment of RS 154.25 Crores during the year ended 31st March 2022 (Cumulative impairment loss recognised as on 31st March 2022 amounts to RS 620.32 Crores). Our audit procedures included validating the appropriateness of the impairment model and reasonableness of the assumptions used focusing in particular on the business projections of Cygnet Industries Limited through the following procedures:
• Obtained an understanding of controls performed by the management to assess impairment indicators and perform impairment assessment.
• Evaluated Design and Operating Effectiveness of the management controls over the impairment assessment process and preparation of impairment workings.
The management at each reporting date assesses if there are any indicators that the investments in and loans to the subsidiary is impaired and if indicators exist performs an impairment test on these investments and loans by making an estimate of recoverable amount being the higher of fair value less costs to sell and value in use. The recoverable amount of the investment in and loan to subsidiary is assessed based on complex assumptions that require the management to exercise their judgment such as future expected revenue future expected revenue growth rate EBIDTA (earnings before interest depreciation and tax) margins future cash flow determination of historical trends the most appropriate discount rate. • Benchmarked key market-related assumptions in the models including discount rates and long- term growth rates against external data using our valuation specialists.
• Involved our fair value specialists to assist in the evaluation of the appropriateness of the model for calculating value in use and reasonableness of significant assumptions like discount rate and industry specific long-term growth rates.
• Tested the mathematical accuracy and performed sensitivity analysis in order to assess the potential impact of changes in the inputs used on the recoverable amount.
We focused on this area due to significant carrying amount of the investment and loan to subsidiary and the significant management judgement and estimates involved in evaluation of recoverable amount. • Performed a detailed analysis of the revenue and cost projections and various assumptions relating to revenue growth for assessing the reliability of cash flow forecast compared the revenues projections EBIDTA (earnings before interest depreciation and tax) margins and coherence the forecast with market trend through a review of actual past performance and comparison to previous forecasts to understand the appropriateness of the management estimates.
Refer note 5 "Investments in subsidiary and joint venture" and note 7 "Loans" of the Standalone Financial Statements.
• Evaluated the adequacy of disclosures in the financial statements with respect to the assumptions and checked whether they were appropriately presented.
2 Recoverability of deferred tax assets (DTA) recognized on carry-forwards tax losses unabsorbed depreciation and provision for loans and advances Principal audit procedures performed
The Company has recognised RS 272.45 Crores as DTA as at 31st March 2022 relating to carry- forwards tax losses unabsorbed depreciation provision for doubtful loans and advances and capital losses. • We obtained an understanding of controls performed by the management to assess the recoverability of the DTA relating to carry-forwards tax losses unabsorbed depreciation and provision for loans and advances.
• We evaluated Design and Operating Effectiveness of the management controls over the process for determining the recoverability of the DTA relating to carry-forwards tax losses unabsorbed depreciation and provision for loans and advances which included amongst others controls over the assumptions and judgments used in the projections of future taxable income.
The Company exercises significant judgement in assessing the recoverability of DTA relating to these items. In estimating the recoverability of DTA management uses inputs such as internal business and tax projections over a 10 year period.
Recoverability of DTA on carry-forwards tax losses unabsorbed depreciation and provision for loans and advances is sensitive to the assumptions used by management in projecting the future taxable income the reversal of deferred tax liabilities which can be scheduled and tax planning strategies. • To assess the Company's ability to estimate future taxable income we compared the Company's previous forecasts to actual results.
• We involved our tax professionals with specialized skills and knowledge to assist in evaluating taxation related matters including the Company's tax planning strategies and interpretation of tax laws.
Refer note 2.12 "Taxes on Income" for accounting policies note 2.19 in "Use of estimates & critical accounting judgements" related to taxes note 18 "Deferred Tax Assets/ Liabilities" and note 30 "Income tax expense" for disclosures related to taxes of the Standalone Financial Statements. • We performed a sensitivity analysis over the key assumptions to assess their impact on the Company's determination that the DTA relating to carry-forwards tax losses unabsorbed depreciation and provision for loans and advances.
• We evaluated the adequacy of disclosures in the financial statements related to Deferred tax in notes 2.12 2.19 18 and 30 respectively of the standalone financial statements.

Information Other than the Financial Statements and

Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Reports of Director and thefollowing Annexures thereto (namely Management Discussion and Analysis Report ofCorporate Governance Annual Report on Corporate Social Responsibility Activities FormAOC-1 Conservation of Energy Technology Absorption and Exchange Earnings and Outgo) butdoes not include the consolidated financial statements standalone financial statementsand our auditor's report thereon.

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

• In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially 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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

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 inaccordance with SAs we exercise professional judgment and maintain professionalskepticism 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 control 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 the 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.

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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 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 Cash Flows and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.

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 31 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 controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.

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 on its financialposition in its standalone financial statements

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company except the amount pertaining toUnpaid dividend of RS 0.02 Crores and the related equity shares which has not beentransferred. Based on the information and records available with the Company all theserelates to the disputed matters with several shareholders.

iv. (a) The Management has represented that to the best of its knowledge and beliefas disclosed in the notes to the accounts no funds (which are material either individuallyor in the aggregate) have been advanced or loaned or invested (either from borrowed fundsor share premium or any other sources or kind of funds) by the Company to or in any otherperson(s) or entity(ies) including foreign entities ("Intermediaries") withthe understanding whether recorded in writing or otherwise that the Intermediary shalldirectly or indirectly lend or invest in other persons or entities identified in anymanner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") orprovide any guarantee security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented that to the best of its knowledge and belief asdisclosed in the notes to accounts no funds (which are material either individually or inthe aggregate) have been received by the Company from any person(s) or entity(ies)including foreign entities ("Funding Parties") with the understanding whetherrecorded in writing or otherwise that the Company shall directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party ("Ultimate Beneficiaries") or provide any guarantee securityor the like on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures that has been considered reasonable and appropriatein the circumstances nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (i) and (ii) of Rule 11(e) as provide under (a) &(b) above contain any material mis-statement. v. The company has not declared or paid anydividend during the year and has not proposed final dividend for the year.

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

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragrapRs 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 over financial reporting of KESORAMINDUSTRIES LIMITED ("the Company") as of March 31 2022 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to respective company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements 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 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 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 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 reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2022 based on the criteria forinternal financial control over financial reporting established by the respective 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.

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragrapRs 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

In terms of the information and explanations sought by us and given by the Company andthe books of account and records examined by us in the normal course of audit and to thebest of our knowledge and belief we state that

(i) (a) (A) The Company has maintained proper records showing full particularsincluding quantitative details and situation of Property Plant and Equipment and capitalwork-in-progress. (B) The Company has maintained proper records showing full particularsof intangible assets.

(b) Some of the Property Plant and Equipment and capital work-in-progress werephysically verified during the year by the Management in accordance with a program ofverification which in our opinion provides for physical verification of all the PropertyPlant and Equipment and capital work-in-progress at reasonable intervals having regard tothe size of the Company and the nature of its activities. According to the information andexplanations given to us no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed transfer deed conveyancedeed mutation of title papers provided to us we report that the title deeds of all theimmovable properties of land and buildings (other than the properties where the Company isthe lessee and the lease agreements are duly executed in favour of the Company) disclosedin the financial statements included in Property Plant and Equipment and capitalwork-in-progress are held in the name of the Company as at balance sheet date.

Immovable properties of land and buildings whose title deeds have been pledged assecurity for loans are held in the name of the Company based on the confirmations directlyreceived by us from lenders / custodian (Debenture Trustee).

(d) According to the information and explanations given to us the Company has notrevalued any of its Property Plant and Equipment (including Right of Use assets) andintangible assets during the year.

(e) To the best of our knowledge and according to the information and explanationsgiven to us no proceedings have been initiated during the year or are pending against theCompany as at March 31 2022 for holding any benami property under the Benami Transactions(Prohibition) Act 1988 (as amended in 2016) and rules made thereunder (ii) (a) Theinventories except for goods-in-transit and stock lying with third parties werephysically verified by the management at reasonable intervals during the year. In ouropinion and based on the information and explanation given to us the coverage andprocedure of such verification by Management is appropriate having regard to the size ofthe Company and nature of its operations. For stocks held with third parties at theyear-end written confirmations have been obtained and in respect of goods in transit thegoods have been received subsequent to the year-end or confirmations have been obtainedfrom the parties. No discrepancies of 10% or more in the aggregate for each class ofinventories were noticed on such physical verification of inventories / alternateprocedures performed as applicable when compared with books of accounts.

(b) According to the information and explanations given to us at any point of time ofthe year the Company has not been sanctioned any working capital facility from banks orfinancial institutions and hence reporting under clause (ii)(b) of the Order is notapplicable except for non-fund based limit bank guarantee received against lien on fixeddeposit for which no stock statement is required to be submitted.

(iii) (a) The Company has provided loans during the year and the outstanding balance ofloans as at March 31 2022 are given below:

Loan
(in RS Crores)
A. Aggregate amount granted / provided during the year
- Subsidiaries 9.54
- Joint Ventures -
- Others ** -
B. Balance outstanding as at balance sheet date in respect of above cases*
- Subsidiaries 154.46
- Joint Ventures@ 7.11
- Others# 525.97

*The amounts reported are gross amounts including accrued interest (whereverapplicable) without considering provision made. @Loan of RS 7.11 Crores given to JointVenture (Gondkhari Coal Mining Limited) has been fully provided for in the books.

#Includes loan (including interest) of RS 493.22 Crores given to Birla Tyres Limitedwhich has been fully provided for in the books.

**The Company has accrued interest on the Loan of RS 26.45 Crores which has beenprovided for on prudent basis as the loan is already impaired. This amount has not beenreported above.

The Company has not provided any guarantee or security to any other entity during theyear.

(b) In our opinion the terms and conditions of the loans granted by the Company toBirla Tyres Limited with a maximum amount of RS 519.67 Crores outstanding (includingaccrued interest) as on March 31 2022 and to Gondkhari Coal  Mining Limited (a JointVenture) with a maximum amount of RS 7.11 Crore outstanding as on March 31 2022 areprejudicial to the interest of the Company's interest on account of the fact that theloans were fully provided for in the books and no interest is being charged on loan toGondkhari Coal Mining Limited. Further in our opinion the terms and conditions of theloans granted by the Company to Cygnet Industries Limited (a wholly owned subsidiary) ofRS 9.54 Crores during the year with a maximum amount of RS 154.46 Crores outstanding as onMarch 31 2022 and to Mangalam Timber Products Limited with a maximum amount of RS 6.30Crores outstanding as on March 31 2022 in our opinion are not prejudicial to theCompany's interest.

(c) The Company has granted loans to Cygnet Industries Limited (a wholly ownedsubsidiary) and Mangalam Timber Products Limited which are payable on demand. During theyear the Company has not demanded such loan. Having regard to the fact that the repaymentof principal or payment of interest has not been demanded by the Company in our opinionthe repayments of principal amounts and receipts of interest are regular. (Refer reportingunder clause (iii)(f) below).

Further in respect of loans granted by the Company to Birla Tyres Limited includingaccrued interest of RS 519.67 Crores and Gondkhari Coal Mining Limited (a Joint Venture)of RS 7.11 Crores are fully provided for in the books and no interest is being charged onloan to Gondkhari Coal Mining Limited. (Refer reporting under clause (iii)(f) below).

(d) In respect of loans granted since the Company has granted loans which are payableon demand and during the year the Company has not demanded such loan and interest in thecase of Cygnet Industries Limited (a wholly owned Subsidiary Company) of RS 154.46 Croresand Mangalam Timber Products Limited of RS 6.30 Crores there are no amounts overdue formore than 90 days as at the balance sheet date. Further in respect of loans granted bythe Company to Birla Tyres Limited of RS 519.67 Crores and Gondkhari Coal  MiningLimited (a Joint Venture) of RS 7.11 Crores is fully provided for in the books as at thebalance sheet date. (Refer reporting under clause (iii)(f) below).

(e) No loans granted by the Company have fallen due during the year since as stated inclause (d) above loans are payable on demand and during the year the Company has notdemanded such loan and interest in the case of Cygnet Industries Limited (a SubsidiaryCompany) of RS 154.46 Crores and Mangalam Timber Products Limited of RS 6.30 Crores.

Further in respect to loan granted by the Company to Birla Tyres Limited of RS 519.67Crores and Gondkhari Coal Mining Limited (a Joint Venture) of RS 7.11 Crores are fullyprovided for in the books as at the balance sheet date. (Refer reporting under clause(iii)(f) below).

(f) The Company has granted loans which are repayable on demand or without specifyingany terms or period of repayment details of which are given below:

All Parties- Including Related Party* Promoters (in Rs Crores) Related Parties (in Rs Crores)
(in Rs Crores)
Aggregate of loans
- Repayable on demand (A) # 680.43 Nil 154.46
- Agreement does not specify any terms or period@ 7.11 Nil 7.11
Total (A+B) 687.54 Nil 161.57
Percentage of loans to the total loans 100% 0% 100%

*The amounts reported are gross amounts including interest accrued (whereverapplicable) without considering provision made.

#Includes loan of RS 493.22 Crores given to Birla Tyres Limited which has been fullyprovided for in the books

@Loan of RS 7.11 Crores given to Joint Venture (Gondkhari Coal Mining Limited) has beenfully provided for in the books.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of loans granted investments made and guarantees and securitiesprovided as applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposit or amount which are deemed to be deposit. Hence reporting underclause (v) of the order is not applicable.

(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the books of accountmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government for maintenance of cost records underSection 148(1) of the Companies Act 2013 and are of the opinion that prima facie theprescribed cost records have been made and maintained by the Company. We have howevernot made a detailed examination of the cost records with a view to determine whether theyare accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) Undisputed statutory dues including Goods and Service Tax Provident FundEmployees' State Insurance Income-tax duty of Customs cess and other material statutorydues applicable to the Company have generally been regularly deposited by it with theappropriate authorities expect for delays in respect of remittance of interest on Goodsand service tax relating to earlier years. There were no undisputed amounts payable inrespect of Provident Fund Employees' State Insurance Income-tax duty of Customs cessand other material statutory dues in arrears as at March 31 2022 for a period of morethan six months from the date they became payable except for interest on Goods and ServiceTax the details of which are given below:

Name of the Statute Nature of Dues Amount (R in Crores) Period to which the amount relates Due date Date of Payment
The Central State and Integrated Goods and Service Tax Act 2017 Interest on unpaid amount of goods and service tax 0.01 2019-20 Not Applicable Not paid till the date
The Central State and Integrated Goods and Service Tax Act 2017 Interest on unpaid amount of goods and service tax 0.70 2020-21 Not Applicable Not paid till the date

(b) Details of statutory dues referred to in sub clause (a) above which have not beendeposited as on March 31 2022 on account of disputes are given below:

Name of the Statute Nature of Dues Forum where dispute is pending Period Amount Amount Deposited
(Rs In Crores)
(Rs In Crores)
Andhra Pradesh VAT Act Sales Tax High Court 2006 – 2010 0.54 0.22
The CGST Act 2017 Education & High Education Cess High Court 2017 0.09 -
Central Excise Act 1944 Central Excise High Court 2010 0.08 -
Central Sales Tax Act 1956 Sales Tax The Appellate DY. Commissioner (CT) 2015-16 0.15 0.09
Central Excise Act 1944 Central Excise High Court Addl. 1994 2010 & 2017 0.12 -
Central Excise Act 1944 Central Excise Commissioner of Central Excise 2005-2007 1974-75 to 1997-981999- 2000 2000-2004 2005-06 0.38 -
Central Excise Act 1944 Central Excise CESTAT 2006-07 & 2007-08 2008- 09 2009-10 2010-11 & 2011-12. 10.35 0.85
Central Sales Tax Act 1956 Sales Tax CESTAT 2016-17 0.06 0.01
Central Sales Tax Act 1956 Sales Tax High Court 2001-02 2003-04 0.18 0.47
Central Excise Act 1944 Central Excise Central Excise & Service Tax Appellate Tribunal Bangalore 2006-07 & 2009-10 0.06 -
Finance Act 1994 Service Tax Central Excise & Service Tax Appellate Tribunal Bangalore 2005-06 & 2016-17 45.67 3.70
Goods and Service Tax Act Interest on unpaid amount of goods service tax and penalty Commissioner (Appeals) 2018-19. 2019-20. 2020-21 70.08 13.07
Andhra Pradesh General Sales Tax Act 1957 Sales Tax Tribunal 2003-04 0.11 0.02
Bombay Sales Tax Act Sales Tax Deputy Commissioner of Sales Tax (Appeals) Amravati Division 2003-05 0.32 0.05
Central Excise Act 1944 Central Excise Superintendent of Central Excise 1979-81 1980-81 1982- 83 1992-93 1995-96 1996-97 1997-98 1999- 00 2001-02 2002-03 2004-05 2005-06 2011- 12 2012-13 2013-14 2014-15 & 2015-16 0.45 0.03
Central Excise Act 1944 Central Excise Commissioner Assistant 1985-90 1995-1996 1999 - 2000 2000 - 2001 2002-03 2003 - 2005 2010-11 & 2012-13 0.71 0.02
Central Excise Act 1944 Central Excise Commissioner 1986-89 1991-94 1995-96 1996-97 1998-99 1999-102002-03 2003-04 2004-05 2005-06 & 2016-17 4.73 -
Finance Act 1994 Service Tax Superintendent of Central Excise 2013-14 & 2014-15 0.11 -
Tamil Nadu General Sales Tax Act 1959 Sales Tax High Court 1999-2000 0.18 -
West Bengal VAT Act 2003 Sales Tax West Bengal Appellate & Revisional Board 2004-05 2006-07 2007-08 2008-09 2009-10 1.95 -
Central Excise Act 1944 Central Excise Commissioner (Appeals) 1998 2002-03 2003 - 2007 2007 – 2011 1.44 0.02
Central Excise Act 1944 Central Excise Deputy Commissioner 2004 0.03 -
West Bengal Sales Tax Act1994 Sales Tax West Bengal Taxation Tribunal 1998-99 0.99 0.06
West Bengal Taxation
West Bengal VAT Act 2003 Sales Tax Tribunal West Bengal 2006-07 & 2010-11 2004-05 2005-06 2006-07 0.17 0.00*
Central Sales Tax Act 1956 Sales Tax Appellate & Revisional Board 2007-08 2009-10 2010-11 6.17 -
Central Excise Act 1944 Central Excise Additional Commissioner 2005-10 0.11 -
Customs Act 1962 Customs Duty Supreme Court 2012-13 - 1.06
Electricity Duty Act 1939 Electricity Duty Supreme Court 2003 – 2013 23.11 -
Motor Vehicle Act 1988 Motor Vehicle High Court 2012 0.64 -
Andhra Pradesh Forest Act 1967 Permit Fees High Court 2009 -2019 & 2020 - 2021 8.51 -
Andhra Pradesh Entry tax Entry Tax Employee High Court Dy. Director 2007-09 0.41 0.05
Employee State Insurance Act 1948 State Insurance ESI Corporation Gulbarga Karnataka Electricity 1995-98 0.22 -
The Karnataka Electricity Act 1999 Power Regulatory Commission (KERC) 2015-16 6.25 -
Forest Land Permit Tax 2010-11 Permit Tax High Court 2009 and 2011 3.67 -
Environment Protection Fees Order Environment protection fee Karnataka High Court 2009-10 and 2010-11 4.03 4.03
Tamil Nadu Municipal Corporation Act 1920 Municipal Corporation Tax District Court 2002-2003 to 2017-2018 8.37 -
Investor Education and Protection Fund Unpaid Dividend IEPF Authority 1995 to 2013 0.02 -

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

(ix) (a) In our opinion the Company has not defaulted in the repayment of loans orother borrowings or in the payment of interest thereon to any lender during the year.

(b) The company has not been declared willful defaulter by any bank or financialinstitution or government or any government authority.

(c) The Company has not taken any term loan during the year and there are no unutilizedterm loans at the beginning of the year and hence reporting under clause (ix)(c) of theOrder is not applicable.

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

(e) On an overall examination of the financial statements of the Company the Companyhas not taken any funds from any entity or person on account of or to meet the obligationsof its subsidiary or joint venture.

(f) The Company has not raised loans during the year on the pledge of securities heldin its subsidiary or joint venture.

(x) (a) The Company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments) during the year and hence reporting under clausex(a) of the Order is not applicable.

(b) During the year the Company has not made any preferential allotment or privateplacement of shares or convertible debentures (fully or partly or optionally) and hencereporting under clause (x)(b) of the Order is not applicable to the Company.

(xi) (a) To the best of our knowledge no fraud by the Company and no material fraud onthe Company has been noticed or reported during the year.

(b) To the best of our knowledge no report under subsection (12) of section 143 of theCompanies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Auditand Auditors) Rules 2014 with the Central Government during the year and upto the dateof this report.

(c) As represented to us by the Management there were no whistle blower complaintsreceived by the Company during the year and upto the date of this report.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii)of the Order is not applicable.

(xiii) In our opinion the Company is in compliance with Section 177 and 188 of theCompanies Act where applicable for all transactions with the related parties and thedetails of related party transactions have been disclosed in the financial statements etc.as required by the applicable accounting standards.

(xiv)(a) In our opinion the Company has an adequate internal audit system commensuratewith the size and the nature of its business.

(b) We have considered the internal audit reports issued to the Company during theyear and covering the period upto 31st March 2022.

(xv) In our opinion during the year the Company has not entered into any non-cashtransactions with any of its directors or directors of it's holding company subsidiarycompany or persons connected with such directors and hence provisions of section 192 ofthe Companies Act 2013 are not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934. Hence reporting under clause (xvi)(a) (b) (c) &(d) of the Order is not applicable.

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

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

(xix) On the basis of the financial ratios ageing and expected dates of realization offinancial assets and payment of financial liabilities other information accompanying thefinancial statements and our knowledge of the Board of Directors and Management plans andbased on our examination of the evidence supporting the assumptions nothing has come toour attention which causes us to believe that any material uncertainty exists as on thedate of the audit report indicating that Company is not capable of meeting its liabilitiesexisting at the date of balance sheet as and when they fall due within a period of oneyear from the balance sheet date. We however state that this is not an assurance as tothe future viability of the Company. We further state that our reporting is based on thefacts up to the date of the audit report and we neither give any guarantee nor anyassurance that all liabilities falling due within a period of one year from the balancesheet date will get discharged by the Company as and when they fall due.

(xx) The Company has at aggregate level net losses during the immediately precedingthree financial years and hence it is not required to spend any money under sub-section(5) of section 135 of the Act. Accordingly reporting under clause (xx) of the Order isnot applicable to the Company for the year.

For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm's Registration No. 302009E)
Abhijit Bandyopadhyay
Partner
Place: Kolkata Membership No. 054785
Date: 11th April 2022 UDIN: 22054785AGTZZV3840

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