The Members of
M/s. Panyam Cements & Mineral Industries Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS financial statements of
M/s. Panyam Cements & Mineral Industries Limited Nandyal ("theCompany") which comprise the Balance Sheet as at 31 March 2018 the Statement ofProfit and Loss (including Other Comprehensive Income) the Cash Flow Statement and theStatement of Changes in Equity for the year then ended and a summary of significantaccounting policies and other explanatory information.
Management's Responsibility for the Standalone Ind AS 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 Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended and other accounting principles generallyaccepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these Standalone Ind AS financialstatements based on our audit. In conducting our audit we have taken into account theprovisions of the Act the accounting and auditing standards and matters which arerequired to be included in the audit report under the provisions of the Act and the Rulesmade thereunder and the Order issued under section 143(11) of the Act. We conducted ouraudit of the Standalone IndAS Financial Statements in accordance with the Standards onAuditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the Standalone IndAS Financial Statements are free from materialmisstatement. An audit involves performing procedures to obtain audit evidence about theamounts and the disclosures in the Standalone IndAS Financial Statements. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the Standalone IndAS Financial Statements whether due to fraudor error. In making those risk assessments the auditor considers internal financialcontrol relevant to the Company's preparation of the Standalone IndAS Financial Statementsthat give a true and fair view in order to design audit procedures that are appropriate inthe circumstances. An audit also includes evaluating the appropriate- ness of theaccounting policies used and the reasonableness of the accounting estimates made by theCompany's Directors as well as evaluating the overall presentation of the StandaloneIndAS Financial Statements.
We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone IndAS Financial Statements.
Basis for Qualified Opinion
a) Material uncertainty exists that may cast significant doubt on the entity's abilityto continue as a going concern and that the financial statements do not adequatelydisclose this matter.
b) The Company has invested 23.58% in equity share capital of M/s S.P.Y
Agro Industries Ltd which is not accounted as per Ind-AS 28 "Investments inAssociates and Joint Ventures" for the reason that there is no significant influenceover M/s S.P.Y Agro Industries Ltd as disclosed under Note 4 (a). We are unable to obtainsufficient appropriate audit evidence about the non-existence of the Company's significantinfluence over M/s S.P.Y Agro Industries Ltd. Consequently we are unable to determinewhether any adjustments were necessary.
c) Based on the information and explanations given to us the Company has not providedfor accrued gratuity liability on actuarial valuation as required under the Ind AS 19Employee Benefits and the amount of gratuity liability is not ascertained by the companyand it is provided/paid on cessation of employment as per the accounting policy followedby the company. We are unable to quantify the impact of the said liability on thefinancials of the year under report.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effect of the matter under paragraph the Basis forQualified Opinion the aforesaid standalone financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at March 31 2018 and its loss total comprehensive income the changes inequity and its cash flows for the year ended on that date.
The comparative financial information of the Company for the year ended 31st March2017 and the transition date opening balance sheet as at 1st April 2016 included in theseStandalone Ind AS financial statements are based on the previously issued FinancialStatements for the years ended 31st March 2017 and 31st March 2016 which have beenaudited by the predecessor auditor on which they have expressed an unmodified opinion. Wehave restated the comparative financial information to comply with Ind AS. Adjustmentsmade to the said financial information to comply with Ind AS which have been audited byus.
Our opinion on the Standalone IndAS Financial Statements and our report on Other Legaland Regulatory Requirements below is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. 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 Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and Cash Flow Statement dealt with by this reportare in agreement with the books of account;
d) in our opinion the aforesaid Standalone IndAS Financial Statements comply with theAccounting Standards prescribed under section 133 of the Act except the IndAS 19Employee benefits ;
e) on the basis of written representations received from the Directors as on 31stMarch 2018 and taken on record by the Board of Directors we report that Sreedhar ReddySajjala Vemuri Suresh Kumar Aravinda Rani Vemuri are disqualified from being appointedas directors in terms of section 164(2) of the Act; However Hon'ble High Court ofJudicature of Hyderabad has granted stay to file required documents under Condonation ofDelay Scheme 2018.
f) with respect to the adequacy of the internal financial controls with reference tofinancial Statements of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols with reference to financial Statements;
g) 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 in its StandaloneIndAS Financial Statements - Refer Note No.27 to the Ind AS financial statements;
ii) the company did not have any long-term contracts including derivative contracts; assuch there were no material foreseeable losses thereon;
iii) there are no amounts which are required to be transferred to the InvestorEducation and Protection Fund therefore delay in transferring such sums does not arise.
2. 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 B" a statement on the matters specified inparagraphs 3 and 4 of the Order.
ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on the Internal Financial Controls with reference to Financial Statements underClause (i) of Subsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls with reference to financial statementsof M/s. Panyam Cements & Mineral Industries Limited Nandyal ("theCompany") as of March 31 2018 in conjunction with our audit of the Standalone IndASFinancial Statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls withreference to financial statements 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 with reference to financial statements was established and maintainedand 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 system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls over financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the Standalone IndAS 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 Standalone IndAS Financial Statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial control with reference to financial statements includes those policies andprocedures 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 Standalone IndAS Financial Statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone IndAS Financial Statements.
Limitations of Internal Financial Controls with reference to Financial Statements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper management override 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 reporting 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 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 with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at March 31 2018 basedon the internal control with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
i) in respect of the Company's fixed assets:
a) the Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
b) the Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. 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 on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
ii) in respect of Company's inventory:
The physical verification of inventory has been conducted at reasonable intervals bythe management during the year and no material discrepancies were noticed on physicalverification and the small discrepancies if any have been properly dealt with in thebooks of account;
iii) The Company has granted loans to Companies covered in the register maintainedunder Section 189 of the Companies Act 2013 ('the Act').
a) In our opinion and according to the information and explanations given to us and asrepresented by the Company in respect of loans granted by the Company there are no suchagreements /arrangements having the terms and conditions for grant of such loans andtherefore we are unable to report whether the terms and conditions of loans given areprejudicial to the interest of the company;
b) In our opinion and according to the information and explanations given to us and asrepresented by the Company there are no such agreements / arrangements stipulating theschedule of repayment of principal and interest payment and therefore we are unable toreport on the regularity of repayment of principal and payment of interest;
c) In our opinion and according to the information and explanations given to us and asrepresented by the Company there are no such agreements / arrangements stipulating thedue dates for re-payment of principal and interest payment and therefore we are unable toreport the total amount of overdue for more than ninety days and no steps have been takenfor recovery of the principal or interest.
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 Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable;
v) the Company has not accepted deposits from public during the year and does not haveany unclaimed deposits as at March 31 2018 and therefore the provisions of the clause 3(v) of the Order are not applicable to the Company;
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 cost records maintained by the Company pursuant to theCompanies (Cost Records and Audit) Rules 2014 as prescribed by the Central Governmentunder sub-section (1) of Section 148 of the Companies Act 2013 and are of the opinionthat prima facie the prescribed cost records have been made and maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete;
vii) In respect of statutory dues;
a. According to the information and explanations given to us and on the basis ofrecords of the Company examined by us the Company is not regular in depositing withappropriate authorities undisputed statutory dues including Provident Fund Income TaxService Tax Sales Tax Value Added Tax Duty of Customs Duty of Excise Cess and otherstatutory dues as applicable to the company. As explained to us the Employees StateInsurance provisions are not applicable to the company.
According to the information and explanations given to us the following arrears ofundisputed statutory dues are outstanding as at 31st March 2018 for a period of more thansix months from the date they became payable and the due dates for payment of sales taxdues for July and August 2012 considered as per the installments granted by theDepartment.