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Orient Cement Ltd.

BSE: 535754 Sector: Industrials
NSE: ORIENTCEM ISIN Code: INE876N01018
BSE 00:00 | 10 Aug 70.30 -0.50
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OPEN 72.95
PREVIOUS CLOSE 70.80
VOLUME 19343
52-Week high 99.90
52-Week low 35.25
P/E 25.56
Mkt Cap.(Rs cr) 1,440
Buy Price 70.30
Buy Qty 75.00
Sell Price 70.30
Sell Qty 25.00
OPEN 72.95
CLOSE 70.80
VOLUME 19343
52-Week high 99.90
52-Week low 35.25
P/E 25.56
Mkt Cap.(Rs cr) 1,440
Buy Price 70.30
Buy Qty 75.00
Sell Price 70.30
Sell Qty 25.00

Orient Cement Ltd. (ORIENTCEM) - Auditors Report

Company auditors report

To

The Members of Orient Cement Limited

Report on the Audit of the Ind AS financial statements

Opinion

We have audited the accompanying Ind AS financial statements of Orient Cement Limited("the Company") which comprise the Balance Sheet as at March 31 2020 theStatement of Profit and Loss including other comprehensive income the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and notes to theInd AS financial statements including a summary of significant accounting policies andother explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2020 its profitincluding other comprehensive income its cash flows and the changes in equity for the yearended on that date.

Basis for Opinion

We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the ‘Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements' section of our report.We are independent of the Company in accordance with the ‘Code of Ethics' issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the Ind AS financial statements under the provisions ofthe Act and the Rules thereunder and we have fulfilled our other ethical responsibilitiesin accordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the Ind AS financial statements.

Emphasis of Matter

We draw attention to Note 47 to the Ind AS financial statements which describes theuncertainties and the impact of Covid-19 pandemic on the Company's operations and resultsas assessed by the management. The actual results may differ from such estimates dependingon future developments. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements for the financial year endedMarch 31 2020. These matters were addressed in the context of our audit of the Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. For each matter below our description of how ouraudit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the Ind AS financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind AS financial statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Ind AS financial statements.

Key audit matters How our audit addressed the key audit matter
Revenue from sale of goods (as described in note 2.1 (i) to the Ind AS financial statements)
The Company recognizes revenues when control of the goods is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. In determining the sales price the Company considers the effects of rebates and discounts (variable consideration). Our audit procedures included the following:
• Evaluated the Company's revenue recognition policy and its compliance in terms of Ind AS 115 ‘Revenue from contracts with customers';
The Company's Statement of Profit and Loss for the year ended March 31 2020 included Sales of Rs 241925.76 lacs. The terms of sales arrangements including the timing of transfer of control the nature of discount and rebates arrangements and delivery specifications create complexity and judgment in determining revenues. • Assessed the design and tested the operating effectiveness of internal controls related to sales and related rebates and discounts;
• Performed sample tests of individual sales transaction and traced to sales invoices sales orders and/or other related documents. In respect of the samples selected tested that the revenue has been recognized as per sales agreements;
Revenue from sale of goods (as described in note 2.1 (i) to the Ind AS financial statements)
The risk is therefore that revenue is not recognised in accordance with Ind AS 115 ‘Revenue from contracts with customers' and accordingly it was determined to be a key audit matter in our audit of the Ind AS financial statements. • Selected samples of sales transactions made pre- and post-year end and agreed the period of revenue recognition to underlying documents;
• Obtained details of all the rebate and discount schemes (variable consideration) rolled out by the Company. Selected samples of rebates and discounts during the year compared them with the supporting documents and performed re-calculation of those variable considerations as per scheme documents.
• Assessed the relevant disclosures made within the Ind AS financial statements.
Pending litigations including litigation for electricity duty (as described in Note 38 to the Ind AS financial statements)
The Company is subject to number of claims and litigations mainly related to taxes and electricity duty which is pending at Supreme Court and other indirect taxes. The assessment of the likelihood and quantum of any liability in respect of these matters can be judgmental due to the uncertainty about the outcome. Our audit procedures included the following:
• Understood and assessed the internal control relating to the identification recognition and measurement of provisions for disputes potential claims and litigation and contingent liabilities;
This area is significant to our audit since the amounts involved are material to the Ind AS financial statements and involves estimation of outcome. • Read through the legal opinion obtained by the Company on the possible outcome of litigation relating to the Electricity duty matter from legal counsel;
• Analysed responses obtained from the Company's tax advisors who deal with the court cases tax and administrative proceedings in which their status and possible expected outcome of proceeding were described;
• Held discussions with specialists related to material ongoing tax proceedings; and
• Assessed the management's assumptions and estimates related to the recognized provisions for disputes and disclosures of contingent liabilities in the Ind AS financial statements.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the Ind ASfinancial statements and our auditor's report thereon.

Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether such other information ismaterially inconsistent with the Ind AS financial statements or our knowledge obtained inthe audit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management for the Ind AS 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 Ind AS 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 accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

In preparing the Ind AS financial statements management is responsible for assessingthe Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative 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 Ind AS financial statements

Our objectives are to obtain reasonable assurance about whether the Ind AS 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 Ind AS 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 Ind AS 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 todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 Ind AS 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 Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent 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 Ind AS financial statements forthe financial year ended March 31 2020 and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("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 1" a statement on the matters specified inparagraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act 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 Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;

(d) In our opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct;

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these Ind AS financial statements and theoperating effectiveness of such controls refer to our separate Report in "Annexure2" to this report;

(g) In our opinion the managerial remuneration for the year ended March 31 2020 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to 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 Ind AS financial statements – Refer Note 38 to the Ind AS financialstatements;

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

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Sanjay Kumar Agarwal
Partner
Place of Signature: Kolkata Membership Number: 060352
Date: May 22 2020 UDIN: 20060352AAAABS7587

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF ORIENT CEMENT LIMTED

Report on the Companies (Auditor's report) Order 2016 (‘the Order') undersub-section (11) of section 143 of the Act

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification once in three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipment are held in thename of the Company.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to usthere are no loans investments guarantees and securities given in respect of whichprovisions of section 185 and 186 of the Companies Act 2013 are applicable and hence notcommented upon.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to the manufacture of cement and areof the opinion that prima facie the specified accounts and records have been made andmaintained. We have not however made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax goods and service tax duty of custom cess and other statutorydues have generally been regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax goods andservice tax cess and other statutory dues were outstanding at the year end for a periodof more than six months from the date they became payable.

(c) According to the records of the Company the dues outstanding in respect ofincome-tax sales-tax service tax goods and service tax duty on custom duty of exciseand value added tax on account of any dispute are as follows:

Name of the statute Nature of dues Amount Period to which the amount relates (Financial Year) Forum where dispute is pending
(Rs in Lacs)
Central Excise Act 1944 Excise Duty and Penalty 565.14 Apr-2003 to Jul-2009 Telangana High Court
Customs Act 1962 Customs and Penalty 84.35 Jul-2012 & Nov-2012 Commissioner
A.P. Sales Tax & Central Sales Tax Act 1956 Sales Tax and CST 169.16 @ 1990-1991 1993-2002 & 2004- 2005 Commissioner / Appellate Dy. Commissioner / Sales Tax Appellate Tribunal / Telangana High Court
Tamil Nadu / Karnataka / Maharashtra / Telangana VAT Act VAT and Penalty 57.42$ 1996-1997 2004-05 2008-2009 & 2014-15 Joint Commissioner / Assistant Commissioner
Income Tax Act 1961 Income Tax Interest and Penalty 759.32* 2013-2014 to 2016-2017 Commissioner (Appeals)

@ net of amounts paid under protest amounting to Rs 175.79 lacs

$ net of amounts paid under protest amounting to Rs 0.52 lacs

* net of amounts paid under protest amounting to Rs 34.61 lacs

(viii) According to the information and explanations given by the management we are ofthe opinion that the Company has not defaulted in repayment of loans and borrowings duesto banks and government. The Company did not have any outstanding dues in respect ofdebenture holders and on account of loans and borrowings in respect of financialinstitutions during the year.

(ix) According to the information and explanations given by the management the Companyhas not raised any money by way of initial public offer / further public offer / debtinstruments and term loans hence reporting under clause (ix) is not applicable to theCompany and hence not commented upon.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the Ind-AS financial statements and according to the information andexplanations given by the management we report that no fraud by the Company or nomaterial fraud on the Company by the officers and employees of the Company has beennoticed or reported during the year.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe Ind-AS financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon.

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Sanjay Kumar Agarwal
Partner
Place of Signature: Kolkata Membership Number: 060352
Date: May 22 2020 UDIN: 20060352AAAABS7587

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE IND AS FINANCIALSTATEMENTS OF ORIENT CEMENT LIMTED

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 over financial reporting of OrientCement Limited ("the Company") as of March 31 2020 in conjunction with ouraudit of the Ind-AS financial statements of the Company for 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 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 the 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 with reference to these Ind-AS financial statementsbased on our audit. We conducted our audit in accordance with the Guidance Note on Auditof Internal Financial Controls Over Financial Reporting (the "Guidance Note")and the Standards on Auditing as specified under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls and both issuedby the Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting with reference to these Ind-AS financial statements was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to these Ind-ASfinancial statements and their operating effectiveness. Our audit of internal financialcontrols over financial reporting included obtaining an understanding of internalfinancial controls over financial reporting with reference to these Ind-AS financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the Ind-AS financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls over financialreporting with reference to these Ind-AS financial statements.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to theseInd-AS Financial Statements

A company's internal financial control over financial reporting with reference to theseInd-AS financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of Ind-AS financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial control over financial reporting with referenceto these Ind-AS financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofInd-AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the Ind-ASfinancial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting WithReference to these Ind-AS Financial Statements

Because of the inherent limitations of internal financial controls over financialreporting with reference to these Ind-AS financial statements including the possibilityof collusion or improper management override of controls material misstatements due toerror or fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls over financial reporting with reference to these Ind-ASfinancial statements to future periods are subject to the risk that the internal financialcontrol over financial reporting with reference to these Ind-AS financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these Ind-AS financial statements andsuch internal financial controls over financial reporting with reference to these Ind-ASfinancial statements were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Sanjay Kumar Agarwal
Partner
Place of Signature: Kolkata Membership Number: 060352
Date: May 22 2020 UDIN: 20060352AAAABS7587