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Kakatiya Cement Sugar & Industries Ltd.

BSE: 500234 Sector: Industrials
NSE: KAKATCEM ISIN Code: INE437B01014
BSE 00:00 | 24 Apr 2020 Kakatiya Cement Sugar & Industries Ltd
NSE 05:30 | 01 Jan 1970 Kakatiya Cement Sugar & Industries Ltd

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OPEN 128.20
PREVIOUS CLOSE 130.15
VOLUME 197
52-Week high 298.00
52-Week low 91.75
P/E 8.24
Mkt Cap.(Rs cr) 98
Buy Price 125.00
Buy Qty 25.00
Sell Price 132.80
Sell Qty 10.00
OPEN 128.20
CLOSE 130.15
VOLUME 197
52-Week high 298.00
52-Week low 91.75
P/E 8.24
Mkt Cap.(Rs cr) 98
Buy Price 125.00
Buy Qty 25.00
Sell Price 132.80
Sell Qty 10.00

Kakatiya Cement Sugar & Industries Ltd. (KAKATCEM) - Auditors Report


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Company auditors report

To

The Members of Kakatiya Cement Sugar and Industries Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Kakatiya Cement Sugar and IndustriesLimited("the Company") which comprise the Balance Sheet as at 31st March 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and Statement of Cash Flows for the year then ended including a summaryof 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 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 31 March 2019 and its profit total comprehensiveincome its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statement in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Companies Act 2013. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. Weare independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the financial statements under the provisions of theCompanies Act 2013 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 opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificant 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.

Sr. No. Key Audit Matter Auditor's Response
1 Evaluation of uncertain tax positions Principal Audit Procedures
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Refer Notes.32 to the Financial Statements • Obtained details of completed tax assessments and demands for the year ended March 31 2019 from management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes.
• Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2018 to evaluate whether any change was required to management's position on these uncertainties.
2. Net Realizable Value of Finished Goods Principal Audit Procedures
Finished goods inventory are valued at lower of cost and net realizable value (estimated selling price less estimated cost to sell). Considering that there is always volatility in the selling price of sugar ("commodity") which is dependent upon various market conditions determination of the net realizable value involves significant management judgement and therefore has been considered as a key audit matter. The total value of finished goods of sugar ("commodity") as at 31st March 2019 is Rs. 5831.85 lakhs. Also refer to Note 2.8 for the accounting policy on valuation of finished goods. • Obtained an understanding of the determination of the net realizable values of the commodities and assessed and tested the reasonableness of the significant judgements applied by the management.
• Evaluated the design of internal controls relating to the valuation of finished goods (including commodities) and also tested the operating effectiveness of the aforesaid controls.
• Compared the actual realization after the year end / latest realization to assess the reasonableness of the net realisable value that was estimated and considered by the management.
• Compared the actual costs incurred to sell after the year end / based on the latest sale transaction to assess the reasonableness of the cost to sell that was estimated and considered by the management.
• Compared the cost of the finished goods with the estimated net realisable value and checked if the finished goods were recorded at net realisable value where the cost was higher than the net realisable value.
• Assessed the appropriateness of the disclosure in the financial statements in accordance with the applicable financial reporting framework.

Other Information

The Company's Board of Directors are responsible for the other information. The otherinformation comprises the information included in the Directors Report CorporateGovernance 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 wewill not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

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 Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance total comprehensive income changes in equity and cash flows of theCompany in accordance with accounting principles generally accepted in India includingthe Indian Accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateimplementation and maintenance of accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement 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 are also responsible for overseeing the Company's financialreporting process.

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 collusionforgeryintentional 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 Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company 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.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.

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 matterstheplanned 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) 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 Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with the IndianAccounting Standards prescribed under Section 133 of the Act read with Rule 7 of Companies(Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (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 A".

(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/provided 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 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements (Refer note.32);

ii. The Company did not have any longterm contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

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

For Ramanatham & Rao
Chartered Accountants
(Firm Registration No.S-2934)
V. Narasimha Phani
Place: Secunderabad Partner
Date: 11th May 2019 M. No.204332

Annexure "A" to the Independent Auditor's Report

(Referred to in paragraph 1(f) under 'Report on Other Legal Regulatory Requirements'section of our report to the Members of the Company of even date)

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 KakatiyaCement Sugar and Industries Limited ("the Company") as of 31 March 2019 inconjunction with our audit of the financial statements of the Company for the year endedon 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'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 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 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 judgment 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 Ind AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting 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 Ind ASfinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial 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 31 March 2019 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 Ramanatham & Rao
Chartered Accountants
(Firm Registration No.S-2934)
V. Narasimha Phani
Place: Secunderabad Partner
Date: 11th May 2019 M. No.204332

Annexure "B" to the Independent Auditor's Report

With reference to Paragraph 2 under 'Report on Other Legal Regulatory Requirements'section of our report to the Members of the Company we report that

(i) (a) The Company is in the process of updating proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) As explained to us the fixed assets have been physically verified by themanagement in a periodical manner which in our opinion is reasonable having regard tothe size of the Company and the nature of its business. No material discrepancies werenoticed on such physical verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) The inventories have been physically verified during the year by themanagement.The discrepancies noticed on verification between the physical stocks and bookrecords were not material.

(iii) The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Act. Accordingly paragraph 3 (iii) (a) to (c) of the said Order is notapplicable to the Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto loans investments guarantees and securities made.

(v) The company has not accepted deposits within the meaning of Sections 73 to 76 ofthe Act and the rules framed there under. Paragraph 3 (v) of the said Order is notapplicable to the Company.

(vi) We have broadly reviewed the cost records maintained by the Company as prescribedunder subsection (1) of section 148 of the Act and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained.

(vii) (a) According to the information and explanations given to us and the records ofthe Company examined by us the Company is regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax sales-tax value addedtax wealth tax service tax customs duty excise duty cess and goods and service taxand any other statutory dues as applicable with the appropriate authorities and there wereno arrears of outstanding statutory dues as at the last day of the financial yearconcerned for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and records of theCompany examined by us the particulars of income tax sales tax valued added tax wealthtax service tax customs duty excise duty or cess as at 31st March 2019which have not been deposited on account of any dispute pending are as under:

Name of the Statute Nature of dues Amount (Rs. In Lakhs) Period to which the amount relates Forum where dispute is pending
Income-Tax Act 1961 Income Tax 12.42 Assessment Years 1999- 2000 2000- 2001 High Court of Judicature at Hyderabad for the State of Telanga- na and the State of Andhra Pradesh
Income-Tax Act 1961 Income Tax 969.26 Assessment Year 2016-17 CIT(A) Hyderabad
VAT Act 2005 Sales Tax 29.53 Financial Year 2012-13 Appellate Tribunal Hyderabad
VAT Act 2005 Sales Tax 27.52 Financial Year 2013-14 Appellate Tribunal Hyderabad
VAT Act 2005 Sales Tax 173.33 Financial Year 2014-15 Additional Joint Commissioner Hyderabad
Customs Act 1962 Customs Duty 65.77 Financial year 2012-2013 Additional Commissioner Customs

(viii) The Company has not defaulted in repayment of loans or borrowing to financialinstitutions banks Governments and dues to debenture holders.

(ix) The Company did not raised any money by way of initial public offer or furtherpublic offer during the year. In our opinion and according to the information andexplanations given to us the term loans have been applied for the purpose for which theloans were obtained other than amounts temporarily invested pending utilization of thefunds for the intended use.

(x) To the best of our knowledge and belief and according to the information andexplanations given to us no fraud on or by the Company was noticed or reported during theyear.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(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 Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3 (xiv) of the Order is not applicable.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3 (xv)of the Order is not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3 (xv) of the Order is not applicable tothe Company.

For Ramanatham & Rao
Chartered Accountants
(Firm Registration No.S-2934)
V. Narasimha Phani
Place: Secunderabad Partner
Date: 11th May 2019 M. No.204332


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