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Sagar Cements Ltd.

BSE: 502090 Sector: Industrials
NSE: SAGCEM ISIN Code: INE229C01021
BSE 00:00 | 24 Sep 288.15 7.00
(2.49%)
OPEN

283.45

HIGH

292.00

LOW

277.30

NSE 00:00 | 24 Sep 287.30 5.90
(2.10%)
OPEN

285.80

HIGH

290.00

LOW

277.00

OPEN 283.45
PREVIOUS CLOSE 281.15
VOLUME 8889
52-Week high 319.00
52-Week low 93.13
P/E 19.76
Mkt Cap.(Rs cr) 3,386
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 283.45
CLOSE 281.15
VOLUME 8889
52-Week high 319.00
52-Week low 93.13
P/E 19.76
Mkt Cap.(Rs cr) 3,386
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sagar Cements Ltd. (SAGCEM) - Auditors Report

Company auditors report

To The Members of Sagar Cements Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

We have audited the accompanying standalone financial statements of Sagar CementsLimited ("the Company") which comprise the Balance Sheet as at March 31 2021and the Statement of Profit and Loss (including Other Comprehensive Income) the Statementof Cash Flows and the Statement of Changes in Equity for the year then ended and asummary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2021 and its profit totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report:

Key Audit Matter Auditor's Response
Revenue recognition - Price Equalizer Discounts (Refer Note 41 of the Standalone financial statements) Principal audit procedures performed:
Revenue is measured net of discounts earned by customers on the Company's sales. Assessed the appropriateness of the Company's accounting policies relating to price equalizer discounts by comparing with applicable accounting standards.
Due to the Company's presence across different marketing regions within the country and the competitive business environment price equalizer discounts vary based on the customer and market it caters to and recognised based on sales made during the year. These discounts are calculated based on the market study reports which are collated periodically by the management and are prone to manual interventions. Assessed the design and tested the implementation and operating effectiveness of Company's internal controls over the approvals calculation accounting and issuance of credit notes.
Therefore there is a risk of revenue being misstated as a result of incorrect computation of price equalizer discounts. Obtained and inspected on a sample basis supporting documentation for price equalizer discounts recorded and credit note issued during the year as well as credit notes issued after the year end date to determine whether these were recorded appropriately.
Given the complexity involved in the assessment of price equalizer discounts and their periodic recognition against sales the same is considered as key audit matter. Compared the historical trend of price equalizer discounts to sales made to determine the appropriateness of current year's discount charge.

Information Other than the Financial Statements and Auditor's Report Thereon

• The Company's Board of Directors is responsible for the other information. Theother information comprises the Director's Report Integrated report and ManagementDiscussion and Analysis Report including Annexures and Corporate Governance Report butdoes not include the consolidated financial statements standalone financial statementsand our auditor's report thereon. The reports are expected to be made available to usafter the date of this auditor's report.

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

• In connection with our audit of the standalone financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe standalone financial statements or our knowledge obtained during the course of ouraudit or otherwise appears to be materially misstated.

• When we read the other information identified above if we conclude that thereis a material misstatement therein we are required to communicate the matter to thosecharged with governance as required under SA 720 ‘The Auditor's responsibilitiesRelating to Other Information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

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

Auditor's Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report:

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. I n our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flows and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.

d. I n our opinion the aforesaid standalone financial statements comply with the IndAS specified under Section 133 of the Act.

e. On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 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 and the operating effectiveness of such controls refer to ourseparate Report in ‘Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting

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

h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements

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

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

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

For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 008072S)
Ganesh Balakrishnan
(Partner)
(Membership No. 201193)
(UDIN: 21201193AAAADJ 2094)
Place: Hyderabad
Date: May 12 2021

Annexure "A" to the Independent Auditor's 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 Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of SagarCements Limited ("the Company") as of March 31 2021 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to respective company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

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

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2021 based on the criteria forinternal financial control over financial reporting established by the respective Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 008072S)
Ganesh Balakrishnan
(Partner)
(Membership No. 201193)
(UDIN: 21201193AAAADJ 2094)
Place: Hyderabad
Date: May 12 2021

Annexure B to the Independent Auditor's Report

(Referred to in paragraph 2 under ‘Report on Other Legal and

Regulatory Requirements' section of our report of even date)

(i) (a) The Company has maintained proper records showing full

particulars including quantitative details and situation of property plant andequipment.

(b) The Company has a program of verification of property plant and equipment to coverall the items in a phased manner over a period of three years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the program certain property plant and equipment were physically verified by theManagement during the year. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate. Immovable properties of land and buildings whose title deeds have been pledged assecurity for loans are held in the name of the Company based on the confirmations directlyreceived by us from lender. In respect of immovable properties of land and buildings thathave been taken on lease the lease agreements are in the name of the Company where theCompany is the lessee in the agreement.

(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification.

(iii) According to the information and explanations given to us the Company hasgranted unsecured loans to company covered in the register maintained under section 189 ofthe Companies Act 2013 in respect of which:

a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.

b) The schedule of repayment of principal and payment of interest has been stipulatedand repayments or receipts of principal amounts has been regular and interest have beenregular as per stipulations except for interest relating to one loan which has not beenrepaid owing to certain contractual obligations which prevent the party from repayment.

c) There is no overdue amount remaining outstanding as at the balance sheet.

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

(v) According to the information and explanations given to us the Company has notaccepted any deposit falling under the purview of the provisions of section 73 to 76 ofthe Companies Act 2013 during the year and does not have any unclaimed deposits andhence reporting under clause (v) of the order is not applicable.

(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of Section 148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.

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

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Customs Duty Goods andService Tax cess and other material statutory dues applicable to it to the appropriateauthorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income- tax Customs Duty Goods and Service Tax cess and other materialstatutory dues in arrears as at March 31 2021 for a period of more than six months fromthe date they became payable.

(c) Details of dues of Income-tax Sales Tax Service Tax Customs Duty Excise DutyValue Added Tax and Entry Tax which have not been deposited as on March 31 2021 onaccount of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is pending Period to which the Amount relates Amount involved (Rs Lakhs) Amount Unpaid (Rs Lakhs)
Central Excise Act 1944 Excise Duty CESTAT 2011-12 to 2012-13 214 168
Commissioner of Appeals 2010-11 to 2017-18 1301 11
Assistant Commissioner 2014 -15 to 2015-16 41 41
Sales Tax and VAT laws Sales Tax and VAT Sales Tax Appellate Tribunal 1999-2000 20 15
High Court of Telangana and Andhra Pradesh 2010-11 7 7
High Court of Telangana 2017-18 to 2018-19 209 157
The Customs Act 1962 Customs Duty CESTAT 2012-13 193 189
The Finance Act 1994 Service Tax Assistant Commissioner 2016-17 to 2017-18 181 175
The Income Tax Act 1961 Income Tax Income Tax Appellate Tribunal 2009-10 to 2010-11 28 28
Commissioner of Income-tax (Appeals) 2012-13 25 -
Commissioner of Income-tax (Appeals) 2017-18 92 92
Local Areas Act 2001 Entry Tax Additional Divisional Commissioner Rural Division Hyderabad 2012-13 to 2015-16 11 7
High Court of Telangana and Andhra Pradesh 2016-17 to 2017-18 88 66

There are no dues of Goods and Services Tax as on March 31 2021 on account ofdisputes.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government. The Company has not issued any debentures.

(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion and according to the information andexplanations given to us money raised by way of term loans have been applied by theCompany during the year for the purposes for which they were raised other than temporarydeployment pending of proceeds.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

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

(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us the Company has madepreferential allotment of shares and Company has not issued any debentures during the yearunder review.

In respect of the a bove issue we further report that:

a. the requirement of Section 42 of the Companies Act 2013 as applicable have beencomplied with; and

b. the amounts raised have been applied by the Company during the year for the purposesfor which the funds were raised other than temporary deployment pending application.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding subsidiary companies or persons connected with themand hence provisions of section 192 of the Companies Act 2013 are not applicable.

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

For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 008072S)
Ganesh Balakrishnan
(Partner)
(Membership No. 201193)
(UDIN: 21201193AAAADJ 2094)
Place: Hyderabad
Date: May 12 2021

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