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Panyam Cements & Mineral Industries Ltd.

BSE: 500322 Sector: Industrials
NSE: PANYAMCEM ISIN Code: INE167E01029
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NSE 05:30 | 01 Jan Panyam Cements & Mineral Industries Ltd
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VOLUME 2297
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Mkt Cap.(Rs cr) 40
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OPEN 24.00
CLOSE 23.00
VOLUME 2297
52-Week high 75.00
52-Week low 22.00
P/E
Mkt Cap.(Rs cr) 40
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Panyam Cements & Mineral Industries Ltd. (PANYAMCEM) - Auditors Report

Company auditors report

To

The Members of

M/s. Panyam Cements & Mineral Industries Limited

(1) Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of M/s. Panyam Cements& Mineral Industries Limited Nandyal ("the Company") which comprise theBalance Sheet as at 31st March 2017 the Statement of Profit and Loss the Cash FlowStatement for the year then ended and a summary of significant accounting policies andother explanatory information.

(2) Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 (" the Act") with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Companies Act 2013 read withRule 7 of the Companies (Accounts) Rules 2014. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

(3) Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under. We conducted our audit inaccordance with the Standards on Auditing specified under section 143(10) of the Act.Those Standards require that we comply with ethical requirements\ and plan and perform theaudit to obtain reasonable assurance about whether the standalone financial statements arefree from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

(4) Basis for Qualified Opinion

Based on the information and explanations given to us the company has not provided foraccrued gratuity liability on actuarial valuation as required under the AccountingStandard 15 – Retirement Benefits to Employees and the amount of gratuity liabilityis not ascertained by the company and it is provided on retirement of employees as per theaccounting policy followed by the company.

(5) Qualified Opinion

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 (4) the Basisfor Qualified 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;

a) In the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2017;

b) In the case of the Statement of Profit and Loss of the Profit of the Company forthe year ended on that date; and c) In the case of the Cash Flow Statement of the cashflows of the Company for the year ended on that date.

(6) Report on Other Legal and Regulatory Requirements

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 A a statement on the matters specified in paragraphs 3and 4 of the Order. 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 and Cash Flow Statement dealt withby this report are in agreement with the books of account;

d) in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 and Companies (Accounting Standards) Amendment Rules2016 except the Accounting Standard 15-Retirement Benefits to Employees;

e) on the basis of written representations received from the Directors as on 31stMarch 2017 and taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2017 from being appointed as a director in terms ofSection 164 (2) of the Act;

f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and.

g) in our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014;

(i) the company has disclosed the pending litigations which would impact its financialposition. Refer Note No.25.2 attached to the standalone financial statements;

(ii) the company did not have any long term contracts including derivative contracts;as such there were no material foreseeable losses thereon;

(iii) there were no amounts which required to transfer during the year by the companyto the Investor Education and Protection Fund; (iv) the Company has provided requisitedisclosures in its standalone financial statements as to holdings as well as dealings inSpecified Bank Notes (SBN) during the period from 8th November 2016 to 30th December2016 and these are in accordance with the books of accounts maintain by the company. ReferNote No.25.19 attached to the standalone financial statements.

ANNEXURE - 'A' TO THE AUDITOR'S REPORT

Re: M/s. Panyam Cements & Mineral Industries Limited.

Referred to in paragraph (6) of our report of even date; (i) In respect of fixedassets; a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. b. As explained to us the Company hasa programme of physical verification of its fixed assets and have been physically verifiedby the management in a phased manner at reasonable intervals and no material discrepancieswere noticed on such physical verification. c. According to the information andexplanations given to us and on the basis of our examination of the records of theCompany the title deeds of immovable properties are held in the name of the Company.

(ii) In respect of 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 in our opinion the terms and conditions of loansgiven are prejudicial 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 the Company has complied with the provisions of section 185 and 186 of the Companies Act2013 in respect of loans investments guarantees and security.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public specified under the provisions ofsection 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rulesframed there under. No order has been passed by the Company Law Board or National CompanyLaw Tribunal or Reserve Bank of India or any Court or any other Tribunal. (vi) In ouropinion and according to the information and explanations given to us the CentralGovernment has prescribed for the maintenance of Cost records under sub section (1) ofSection 148 of the Companies Act 2013 in respect of the products manufactured by theCompany and such accounts and records have been made and maintained by the Company.

(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 2017 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.

Statement of arrears of statutory dues outstanding as at 31.03.2017 for more than sixmonths:

Name of the Nature of the Dues Amount Rs. Lakhs Period to which the amount relates
Statute
1 CST Act1956 Central Sales Tax 7.22 2009-10
24.93 2010-11
2 A.P.VAT Act 2005 Value Added Tax and Interest 586.12 July 2012 to August 2013
31.21 2011-12 and 2012-13
3 T.N.G.S.T Act Tamilnadu Sales Tax 51.88 March 1999 to Feb 2000
4 Goa G.S.T Act 1956 Goa Sales Tax 13.87 Feb.1999 to Feb 2000
5 A.P.G.S.T.Act 1956 (Consignment Agents in Different States) Consignment Sales Tax 16.82 1998-99 to 2003-04
6 CST Act 1956 Central Sales Tax 11.51 2008-09
4.15 2011-12
7 Profession Tax Act Profession Tax Collections 1.04 October 2000 to August 2005
8 Income Tax Act 1961 I.T.D.S from Interest 16.50 2004-05 to 2005-06 2013-14 Apr'15 to Aug'16
9 Income Tax Act 1961 I.T.D.S from Professional 16.93 2004-05 2013-2014
Apr' 2015 to Aug' 2016
10 Income Tax Act 1961 I.T.D.S from Contractors 2.13 2000-01 & 2001-02 and
April 2016 to August 2016.
11 Income Tax Act 1961 I.T.D.S from Contractors 3.78 2004-05 & Apr 2013 to
August 2013
14.98 Apr'16 to Aug'16
12 Income Tax Act 1961 I.T.D.S from Employees 0.14 April 2016 to August 2016
13 Income Tax Act 1961 T.C.S. on Royalty 38.08 July 2010 to August 2016
14 Income Tax Act 1961 Income Tax 11.22 2008-09
0.83 2010-11
227.18 2012-13
15 E.P.F Act 1952 P.F. Recoveries and contributions 201.72 April 2005 to August 2016
P.F.Penal damages 78.70 Upto 2005
16 The Central Excise Act 1944 Excise Duty & Cess 1834.15 August 2015 to May 2016
17 The Finance Act-1994 Service Tax & Cess 194.07 upto August 2016
18 Panchayat Tax Act Property Tax 4.62 2004-2005.
19 Mines and Minerals Act Royalty on Limestone 760.47 Upto August 2016.
20 Mines and Minerals Act Cess on Royalty 59.85 Upto August 2016.
21 Mines and Minerals Act Welfare Cess on Limestone 7.84 Upto March 2016.
22 Revenue Act Non Agriculture Land Tax 0.59 1999-2000

(b) According to the information and explanations given to us the following are thestatutory dues which have not been deposited on account of dispute:

Name of the Statute Nature of the Dues Amount Rs. Lakhs (Net of Payments) Period to Which the amount relates Forum where dispute is pending
1 TNGST Act 1956 Tamilnadu Sales Tax 5.56 1994-95 Remanded to Assessing Officer by the Appellate Tribunal
2 The Central Excise Act 1944 CENVAT credits availed on D.G.Sets disallowed by the Dept. 232.35 Feb.97 to June 1999 Commissioner (Appeals) Tirupathi
3 .do. CENVAT credit availed on refractory bricks 4.37 1994-95 A.P. High Court
4 .do. CENVAT credit availed on HR Coils Plates disallowed by the Dept. 56.80 2011-12 Appeal in CESTAT Hyderabad
5 .do. CENVAT credit availed on service tax paid on outward freight 24.52 Dec. 06 to Aug. 07 Commissioner Tirupati
6 .do. CENVAT credit availed on service tax paid on outward freight 28.54 Sep. 2007 to Feb. 2008 Commissioner Tirupati.
7 .do. CENVAT credit availed on service tax paid on outward freight 12.88 Apr. 2009 to Oct. 2009 Commissioner Tirupati.
8 .do. Differential Duty for Supplies made to Direct parties 40.63 Mar. 2007 to Feb. 2008 Appeal in CESTAT Hyderabad
9 The Central Excise Act1944 Duty on captive consumption 1.46 2007-08 Appeal in CESTAT Hyderabad
10 .do. Duty on captive Consumption 0.87 2008-09 Appeal in CESTAT Hyderabad
11 .do. Differential Duty on D.G.Set 42.37 2007-08 Appeal in CESTAT Hyderabad
12 .do. Differential Duty on D.G.Set 10.24 2004-05 A.P.High Court
13 .do. Differential Duty on Supplies 129.14 Apr. 2015 Commissioner Tirupati.
made to Direct Parties to Sept 2015
14 .do. Differential Duty on Supplies made to Direct Parties 205.08 Oct 2015 to Mar 2016 Commissioner Tirupati.
15 do. Differential Duty on high 34.32 August 2012 Addl. Commissioner Guntur
Seas imported coal
16 do. CENVAT on Service Tax on outward GTA 35.18 Nov 2009 to Dec. 2010 Addl. Commissioner Tirupathi
17 do. Duties levied based on documents of transporters(Paid under protest Rs.150.23 lakhs) 150.23 2014-15 Settlement Commission Chennai
18 do. Differential Duty on Supplies made to Direct parties 246.81 Nov 2011 to Dec 2013 Commissioner Tirupati
19 do. Differential Duty on Supplies made to Direct parties 46.85 Aug 2014 to Mar 2015 CommissionerTirupati
20 do. Default in payment of Central Excise Duty 413.38 2006-07 Appeal in CESTAT Hyderabad
21 Income Tax Act 1961 Capital Gains Tax on Land Development Agreements 3150.40 2005-06 CIT Appeals Hyderabad
22 Income Tax Act 1961 MAT on Book Profit of Sick company 979.77 2007-08 CIT Appeals Kurnool
23 Income Tax Act 1961 Capital Gain Tax on Land Development Agreements 1541.50 2012-13 CIT Appeals Kurnool
24 AP VAT Act 2005 Penalty for delay in Payment of Tax before Due dates 198.25 2011-12 to 2015-16 Request for waiver before the Govt. of A.P.
25 Mines & Minerals Act Penal Interest on Royalty dues 1783.27 May 2006 to March 2017 Revision application for waiver before the Dept Ministry of Mines
26 The Electricity Act 2003 Fuel Surcharge Adjustment (FSA) Charges 30.08 2008-09 Supreme Court of India
23.48 Apr 2009 to June 2009 High Court of A.P. Hyderabad
Voltage Surcharge 30.64 Sept.1983 to Nov.1984 High Court of A.P. Hyderabad

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to FinancialInstitutions Banks Government or dues to debenture holders as at 31st March 2017.

(ix) In our opinion and according to the information and explanations given to us theterm loans received during the year were applied for the purposes for which the loans wereraised and the company has not raised money by way of initial public offer or furtherpublic offer (including debt instruments) during the year.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.

(xi) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the managerial remuneration hasbeen paid or provided in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Companies Act2013.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3 (xii) of the CARO 2016 is notapplicable.

(xiii) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company all transactions with the relatedparties are in compliance with sections 177 and 188 of Companies Act 2013 whereapplicable and the details have been disclosed in the Financial Statements as required bythe applicable Accounting Standards.

(xiv) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review.

However the company has made preferential issue/ allotment of share warrants andissue/ allotment of Secured Rated Listed Non-Convertible Redeemable Debentures duringthe year under review. The requirements of Section 42 of the Companies Act 2013 have beencomplied with and the amounts raised have been used for the purposes for which the fundswere raised.

(xv) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intoany non-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the CARO2016 is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

ANNEXURE - B TO THE AUDITORS' REPORT

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 M/s. M/s.Panyam Cements & Mineral Industries Limited Nandyal ("the Company") as of31 March 2017 in conjunction with our audit of the standalone financial statements of theCompany 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 (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2017 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 Brahmayya & Co.
Chartered Accountants
Firm's Registration No.000514S
Place: Nandyal B. DAIVADHEENAM REDDY
Date 30th May 2017 Partner
M.No.026450