TO THE MEMBERS OF SHRI KESHAV CEMENTS & INFRA LIMITED
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of SHRI KESHAV CEMENTS &INFRA LIMITED (the Company) which comprise the Balance Sheet as at March 312020 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as the financial statements).
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (the Act) in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended(Ind AS) and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2020 the loss and total comprehensiveloss changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.
Material uncertainty related to going concern
1. We draw attention to Note 32 (1) of the financial statements regarding preparationof the Ind AS financial statements on going concern basis for the reasons stated therein.The appropriateness of assumption of going concern is dependent upon realization of thevarious initiatives undertaken by the Company and/or the Company's ability to raiserequisite finance/generate cash flows in future to meet its obligations.
2. We further draw attention to Note 32 (2) of the financial statements wherein it isstated that there exists certain uncertainty about the impact of COVID-19 on the futureoperations of the company. The appropriateness of assumption of going concern is dependentupon realization of the various initiatives undertaken by the Company to mitigate theimpact of COVID-19 on the Business operation of the company.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key Audit Matter ||Auditor's Response |
|1. Inventory Valuation: As described in Note No. S (Significant Accounting policy) and Note No.3 (Inventories) of the Financial Statement the company carries inventory at lower cost or net realizable value on first in first out basis (FIFO). ||We obtained a detailed understanding and evaluated the design and implementation of controls that the Company has established in relation to inventory management. |
|As at 31 March 2020 company held inventory of Rs.1963.73 Lakhs (PY.Rs. 1857.46 Lakhs) which includes Raw material Finished Goods Traded Items Packing material Work in Progress (WIP) and Stores and Consumables. The measurement of these inventories involved certain estimations/assumption with regard to net realizable value for finished goods and provision for obsolescence for stores & consumable inventory items based on usablecondition of the items. This methodology relies upon assumptionsmade in determining appropriate provisioning percentagesto apply to inventory balances. We determined this to be a matter of significance to our audit due to quantum of the amount & estimation involved. || |
| ||We obtained assurance over the appropriateness of management's assumptions applied in calculating the value of inventory provisions by: |
| ||- verifying the value of a sample of inventory items to confirm whether they are held at the lower of cost and net realizable value through comparison to vendor invoices and sales prices; |
| ||- Critically assessing the Company inventory provisioning method with specific consideration given to aged inventory. |
| ||- Reviewing the physical verification report of inventory carried out by the independent internal auditor of the company. |
|2. Liquidity Risk: ||We obtained cash flow projection from the management and evaluated the reasonableness and appropriateness of the key assumptions used for future cash flow and reduction in cost. |
|As described in Note No. 28 (2) (Financial Risk management objectives and policies) company has significant liquidity risk due to term loan repayment which it has incurred for funding solar power plant and cement plant expansion. || |
|Further company has the current liabilities of Rs. 7307.97 Lakhs and current assets of Rs. 3502.88 Lakhs as at 31 March 2020 Current Liabilities exceeds the current assets as at the year end. || |
| ||For notes on the going concern assumption see the going concern principle as referred on note no. 32(1) of the financial statements. |
|The availability of sufficient funds and the testing of whether the company will be able to resume normal operation and continue meeting its obligations are important for the going concern assumption and as such are significant aspects of our audit. || |
|However the management is expecting significant growth in revenue and reduction in cost due to captive consumption of power and sale of excess power. This will mitigate the liquidity risk in future. || |
Information Other than the Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report andShareholder's Information but does not include the financial statements and our auditor'sreport thereon.
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 during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the 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 financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind-AS andother accounting principles generally accepted in India. 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 financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements 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 managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors is responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Financial Statements
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 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 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 financial controls 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 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.Refer to paragraph material uncertainty related to going concern above inrespect to our reporting in respect to going concern appropriateness. Our conclusions arebased on the audit evidence obtained up to the date of our auditor's report. Howeverfuture events or conditions may cause the Company to cease to continue as a 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.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 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.
Due to COVID-19 related lockdown we were not able to participate in the physicalverification of inventory and fixed assets that was carried out by the internal auditorsand management subsequent to the year end. Consequently we have performed alternateprocedures to audit the existence of inventory and assets and have obtained sufficientappropriate audit evidence to issue our unmodified opinion on these financial statements.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d. In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
e. On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct.
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company 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 by the Company to its directors during the year is in accordance withthe 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 financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on longterm contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
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 inAnnexure B a statement on the matters specified in paragraphs 3 and 4 of theOrder.
|For Singhi & Co. |
|Chartered Accountants |
|(Firm's Registration No.302049E) |
|CA. Krishna Chaitanya |
|(Membership No.228661) |
|Bengaluru June 29 2020. |
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 to the Members of Shri Keshav Cements & InfraLimited 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 SHRI KESHAVCEMENTS & INFRA LIMITED (the Company) as of March 31 2020 in conjunctionwith our audit of the 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 over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting 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 including adherence to respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the Guidance Note) issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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 internal financial controls system overfinancial reporting of the Company.
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 overfinancialreporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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.
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.
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 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
|For Singhi & Co. |
|Chartered Accountants |
|(Firm's Registration No.302049E) |
|CA. Krishna Chaitanya |
|(Membership No.228661) |
|Bengaluru June 29 2020. |
ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Shri Keshav Cements & InfraLimited 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 the records examined byus and based on the examination of the conveyance deeds / registered sale 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;
ii. In our opinion and according to the information and explanations given to usinventories have been physically verified during the year by the management at reasonableintervals and no material discrepancies were noticed on physical verification;
iii. (a) As explained to us the company has not granted any Loan secured or unsecuredto companies firms or other parties as disclosed in the Register maintained under section189 of the Companies Act 2013. Accordingly the provisions stated in paragraph 3 (iii)(a) (b) and (c) of the order are not applicable;
iv. In our opinion and according to the information and explanations given to us thecompany does not have any loans investments guarantees and security as specified inSection 185 and 186 of the Companies Act 2013;
v. In our opinion and according to the information and explanations given to us thecompany has not accepted deposits hence the provision of the directives issued by theReserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovisions of the Act and the rules framed there under not applicable to the company;
vi. We have broadly reviewed the cost records maintained by the Company pursuant to theCompanies (Cost Records and Audit) Rules 2014 (as amended) prescribed by the CentralGovernment under Section 148 (1) of the Companies Act 2013 and are of the opinion thatprima facie the prescribed accounts and cost records have been maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete;
vii. (a) In our opinion and according to the information and explanations given to usthe company regular in depositing undisputed statutory dues including provident fundemployees' state insurance income-tax sales-tax wealth tax service tax duty ofcustoms duty of excise value added tax cess and any other statutory dues with theappropriate authorities;
(b) In our opinion and according to the information and explanations given to us duesof income tax or sales tax or wealth tax or service tax or duty of customs or duty ofexcise or value added tax or cess have not been deposited on account of any dispute aregiven below:
|Statute ||Nature of Dues ||Amount Rs. In Lakhs ||Relevant Period/Financial Year ||Authority where dispute pending |
|1 MVAT Act ||MVAT Liability Interest and Penalty ||34.95 ||FY 2012-13 ||Deputy Commissioner of Sales Tax. |
viii. In our opinion and according to information and explanation given to us thecompany has not defaulted in repayment of loans or borrowings to financial institutions orbank and the company does not have any loans or borrowing from government and debentures;
ix. In our opinion and according to the information and explanations given to us moneyraised by way of the term loans were applied for the purpose for which those are raisedand the company has not raised any money by initial public offer or further public offer;
x. In our opinion and according to the information and explanations given to us thereare no fraud by the company and any fraud on the company by its officers or employees werenoted or reported during the year;
xi. In our opinion and according to the information available to us the Company haspaid or provided managerial remuneration in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act 2013;
xii. In our opinion and according to the information available to us company is not aNidhi company hence the reporting under Paragraph 3 (xii) of the Order not applicable tothe company;
xiii. In our opinion and according to the information and explanation given to us allthe transaction with related parties are in compliance with the provisions of Section 177and 188 of Companies Act 2013 and details of related party transactions have beendisclosed in the Ind AS financial statements as required by the applicable accountingstandards;
xiv. In our opinion and according to the information and explanation given to uscompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year under review hence reporting under Paragraph3 (xiv) of the Order is not applicable to the Company;
xv. In our opinion and according to the information and explanation given to us thecompany has not entered into any non-cash transaction with directors or persons connectedwith him and hence reporting under clause of Paragraph 3 of the Order is not applicable tothe Company;
xvi. In our opinion and according to the information and explanation given to us thecompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
For Singhi & Co.
(Firm's Registration No.302049E)
CA. Krishna Chaitanya
Bengaluru June 29 2020.