Panyam Cements & Mineral Industries Ltd.
|BSE: 500322||Sector: Industrials|
|NSE: PANYAMCEM||ISIN Code: INE167E01029|
|BSE 00:00 | 22 Oct||Panyam Cements & Mineral Industries Ltd|
|NSE 05:30 | 01 Jan||Panyam Cements & Mineral Industries Ltd|
|BSE: 500322||Sector: Industrials|
|NSE: PANYAMCEM||ISIN Code: INE167E01029|
|BSE 00:00 | 22 Oct||Panyam Cements & Mineral Industries Ltd|
|NSE 05:30 | 01 Jan||Panyam Cements & Mineral Industries Ltd|
M/s. Panyam Cements & Mineral Industries Limited
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of Panyam Cements & MineralsIndustries Limited ("the Company") which comprise the balance sheet as at 31March 2021 the statement of profit and loss (including Other Comprehensive Income)statement of changes in equity and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the 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 accounting principles generally accepted in India ofthe state of affairs of the Company as at March 312021 and its loss including othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Qualified Opinion
a) Attention is invited to Note no 7(d) of the financial statements the Company hasRs.10482.91 Lakhs outstanding inter-corporate loans as at 31 March 2021. In the absenceof external confirmations from the parties as on reporting date and owing to theuncertainty associated with the recoverability of the Intercorporate loans we are unableto comment on the consequential impact if any on the financial statements. Attention isalso invited to Note No 30 of financial statements in respect of details Related PartiesTransactions which are not disclosed in accordance with the requirements of Ind AS 24.
b) Attention is invited to Note no 7(a) of the financial statement the company hasRs.2348.97 Lakhs outstanding trade receivables as on 31st March 2021 whichare classified as doubtful. In the absence of external confirmations from the parties ason reporting date and owing to the uncertainty associated with the recoverability of thetrade receivables we are unable to comment on the consequential impact if any on thefinancial statements.
c) We did not receive physical verification reports for the Inventory as on reportingdate. Hence we are unable to comment on the condition existence and impairment impactif any on carrying value of Inventory as at 31 March 2021.
d) We did not receive physical verification reports for the Property Plant &Equipment and Capital work in progress as on reporting date. Hence we are unable tocomment on the condition existence and consequent impairment impact if any on carryingvalue of Property Plant & Equipment and Capital Work in progress as at 31 March2021.
e) We did not obtain external confirmations from vendors banks/financial institutionsand government authorities regarding trade payables advances to suppliers advance exciseduties/CENVAT/VAT/Service tax other advances borrowings balances in current accountsloans cash credits and corporate guarantees. In the absence of such confirmations as onreporting date we are unable to comment on the consequential impact if any on thefinancial statements.
f) As part of the Corporate Insolvency Resolution process the claims from Financialand Operational creditors are being filed and further being admitted rejected or pendingverification. We are unable to comment on the liability that may arise due to suchadmittance to the extent unrecorded/unreconciled with the books of accounts and itsconsequential impact on financial statements as on reporting date.
g) Based on the information and explanations given to us the Company has not providedfor gratuity liability on actuarial valuation as required under the Ind AS 19 EmployeeBenefits and the amount of gratuity liability is not ascertained by the company and it isprovided/paid on cessation of employment as per the accounting policy followed by thecompany. We are unable to quantify the impact of the said liability on the financials ofthe year under report.
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the 'Auditor's Responsibilities for the Audit of the Financial Statements'section of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our qualified opinion.
Emphasis of Matter
i) We draw attention to general Information Note 1.2 (f) to the financial statementswherein it is mentioned that the management has not effected in the boos of account of theCurrent year under report the changes /adjustments in accordance with the NCLT approvedResolution Plan dated 25th June 2021 read with revised order dated 10thJuly 2021. Our opinion is not modified in respect of this matter
ii) We also draw attention to general information Note 1.2(h) to financial statementswherein it is mentioned that only one director of the Company signs Financial statementswhich is not in accordance with the provisions of Section 134(1) of the Companies Act 2013and the said provisions mandate that the Financial Statements are to be signed by twodirectors of the Company
Key Audit Matters
Except for the matter described in the Basis for qualified opinion section we havedetermined that there are no other key audit matters to communicate in our report.
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditor's reportthereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.
Other information is not made available to us at the date of this auditor's report. Wehave nothing to report in this regard.
Responsibilities of Management and those charged with governance for the financialstatements
The Hon'ble NCLT Amaravati Bench has admitted the CIRP application filed by FinancialCreditor of the company and appointed a Resolution Professional ("RP") videorder dated 14th May 2020 in terms of the Insolvency and Bankruptcy Code 2016 ("theCode") to manage the affairs of the Company as per the provisions of the Code.
We were informed that the financial statements have been approved by the Board ofDirectors based on representations clarifications and explanations provided by themanagement for the preparation and presentation of the financial statements.
The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements the management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless themanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The management is also responsible for overseeing the company's financial reportingprocess.
Auditor's Responsibilities for the Audit of Financial Statement
Our objectives are to obtain reasonable assurance about whether the 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 scepticism throughout the audit. We also:
identify and assess the risks of material misstatement of the 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 we report that:
a) except for the effects of the matters specified in the Basis for Qualified Opinionsection we have sought and obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes of our audit;
b) except for the effects of the matter specified the Basis for Qualified Opinionsection 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) except for the effects of the matter specified in the Basis for Qualified Opinionsection in our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with relevant rules issuedthereunder;
e) the matters described in the Basis of Qualified opinion may have adverse effect onthe functioning of the Company;
f) we have not received any written representations from the directors of the Companyas on 31 March 2021 as a result we are unable to comment if any of the directors aredisqualified as on 31 March 2021 from being appointed as a director in terms of Section164(2) of the Act;
g) the qualification relating to maintenance of accounts and other matters connectedtherewith are as stated in the Basis of Qualified Opinion paragraph;
h) 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";
i) 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: according tothe explanations given and to the best of our information no remuneration was paid by theCompany to its directors during the year;
j) 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 Ind ASFinancial 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 31st March 2021 in conjunction with our audit of the IndAS Financial 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.
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 Ind AS Financial Statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol with reference to financial statements includes those policies and procedures that
I) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
II) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Ind AS Financial Statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and
III) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the Ind AS 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.
Basis for Qualified Opinion
According to the information and explanations given to us and based on our audit thefollowing material weakness have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 312021.
a) The Company has not followed the existing internal control system of obtainingexternal balance confirmation for trade receivables loans borrowings trade payables andother liabilities on periodic basis for reconciliation with Books of accounts at regularintervals.
b) The company has not followed the existing internal control system of conductingphysical verification of the Inventory Property Equipment and plant and capital work inprogress thereby updating the records for any discrepancies noticed for existencecondition and valuation if any.
c) The company has not updated of fixed asset register on timely basis.
A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement in the company's annual or interim financial statements willnot be prevented or detected on a timely basis.
In our opinion except for the effects/possible effects of the material weaknessdescribed above on the achievement of the objectives of the control criteria the companyhas in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 312021 based on the internal control over financialreporting 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.
We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2021financial statements of the company and our aforesaid report and opinion on InternalFinancial Control over Financial Reporting should be read in conjunction with our reportof even date issued on the financial statements of the company.
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 for the year under report has not been able to maintain proper recordsshowing full particulars including quantitative 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. According to the information and explanations givento us no such verification has been done for the year;
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 notbeen conducted at reasonable intervals by the management during the year and hence we areunable to report on material discrepancies noticed on physical verification and also weare unable to report on discrepancies if any have been properly dealt or not 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 31st March 2021 and therefore the provisions of the Para 3(v) of the Order is 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 recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as prescribed by the Central Government under sub-section (1) of Section 148 of theCompanies Act 2013 and are of the opinion that prima facie the prescribed cost recordshave been made and maintained. We have however not made a detailed examination of thecost records with a view to determine whether 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 GST Cess andother statutory 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 2021 for a periodof more than six months from the date they became payable.
Statement of arrears of statutory dues outstanding as at 31st March 2021for more than six months:
b) According to the information and explanations given to us the following are thestatutory dues which have not been deposited on account of dispute:
viii) In our opinion and according to the information and explanations given to us theCompany has defaulted in repayment of loans or borrowings to Financial Institutions Banksand to debenture holders as at 31st March2021. During the year the Company hasdelayed the repayment of dues to IIFL & IKF Finance Limited.
The company has delayed the re-payments dues to EW India Special Assets Fund PteLimited and E-Cap Equities Limited towards NCD's.
(Rs in lakhs)
ix) In our Opinion and according to the explanations given to us the company did notraise any money by way of Initial public offer or further public offer ( Including DebtInsttruments) and have not raised funds by way of Term loans during the year.
x) According to the information and Explanations given to us no material fraud on thecompany by its officers or employees has been noticed or reported during the 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 no managerial remuneration hasbeen paid or provided during the year under report.
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 the Companies Act 2013 whereapplicable and the details have not been disclosed in the financial statements as requiredby the 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.
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 CARO 2016 is not applicable
xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act1934.