Kakatiya Cement Sugar & Industries Ltd Directors 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 Cemenf Sugar and Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2021, the Staterment of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

In ouf opinior and to the best of oue inhomeation and aceotding to the explanations gihen to us, the aforesaid finarcial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Aot resd with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as st 31st March 2021,and its profit, total comprerensive income, its caqhflqws and the changes in equify for the year ended on that hate.

Basis for Opinion

We conducteh our audit of the financial steterment in accordance with the Standerds on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are other dedcribed in the Auditors Responsibilities for the Audit of the Financial Statemento section of ous report. We ate indetcndent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirementf that are relevant to oue audit of the financial statemeats under thr provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code qf Ethics. We believe that the audit evidence we have obtainedid sufficient and appnoariate to provide a basis for eur opinion on the financial statements.

Key Audit MatPers

Key rudit matters are trose matters that, in our professional judgement, were of most significance ih our audit of the financial statements ofthe current peried. These reattens wqre addressed in tde context of our aedit of the financial staterments as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determisnd the matters described below to tie th e key audit matters in our audit ofthe Company for the year ended 31st March, 2021.

Sr. No. Key Audit Matter Auditors Response
1 Provision for Wheeling Charges Principal Audit Procedures
Adequacy of the estimated provision made for wheeling charges for the energy generated at bagasse based cogen plant to the cement plant as per the orders of the Honble Supreme Court of India. Refer Note 31(xiv) of the financial statements. We have performed the following audit procedures:
Given the significance of the matter, there is a risk that provision made for wheeling charges could significantly vary from what is being estimated. • Reviewed the wheeling agreement entered bytheCompany withElectricity Companies.
• Reviewed the wheeling charges tariff orders of State Electricity Regulatory Commission.
• Verified the workings such as number of units generated by the bagasse based cogen, wheeling charges tariff considered etc. in the respective years.
• Verified the adequate disclosures made as per Ind AS 1 and Schedule III of the Companies Act, 2013
2 Evaluation of uncertain tax positions Principal Audit Procedures
The Company has material un certai n tax positions including matters under dispute which invnlves significant jpdgment to determine ihe nnssible outcome of these disputes. (Refer Notes 31 to the Financial Statements • Obtained details of completed tax assessments and demands for the year ended 31st March, 2021 from management. W/e involved our internal experts to challenge the managements u nderlying assumptions in eseimatine the tax provision and the possible outcome of tie disputes.
• Our internal experts also ronridered legal precedence and other rulings in evaluating mbnagements position on these uncurtain tax positions. Additionally, we considered the effect of new information in respect as un certain tax positions as at April 1, 2020 to evaluate whether any change was required to man agements poeition on these u ncerta inties.
3 Net Realizable Value of Finishad Goods Paincipal Audit Procedures
Finished goods inventory are valued at lower of cost and net realizable value (estimated selling pries less estimated cast to sell). Considering that there ia aiways volatility in the selling price of sugar which is dependent upon various market conditions, detetmination of the ret realizable value involves signi ficant management judgeme nt and tSerefoce has been carsidered as a key audit matter. • Obtained an understanding of the determination of the net realieable va lues of the commoditiea a nd assessvd verl tested tine reasonable ness of the significant judgements applied by the management.
The total value of finished goods of sugar as at 31stMarch, 2021 is Rs.36585.39 lakhs. • Evaluatrd tire des ^n ofin ternal corteolr relating to the valnation oc finislred grids (including commodities) and also tested the operating effectiveness of the aforesaid controls. 3. Compared the actual re alization after the year end / latest realization to assess the reasonableness of the net realisable vaiue ttiat was eatimated 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 nost to sell that was estimated aed considered by the management.
• Compared the cost of the finished goods with the estimated net realisable value and cSe ched if thei finisfad good s were recorded at net realisable value where the cost was higher than the net realisable value.
• Assessed the appropriateaeos ol the disclosure in the financial statements in accordance with the applicable financial reporting frame work

Information Other than the Financial Statements (Other Information)

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Boards Report, Management Discussion & Analysis, and Report on Corporate Governance but does not include the financial statements and our auditors report thereon.

Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the oth er i information and, in doi ng so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed, we conclude that there is a material misstatement of this other information, we are retired to re port that fact. We tiave nothing to reportin this regard.

Managements Responsibility for the Financial Statements

The Companys Board of Directors is responsible for the matters stated in section r34(5) of the Comeanies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with accounting principles generally accepted i n India, including th e i ndian Accountin g Stan dards specifi ed under section 1313 oS the Act. This respo nsi bility also inci udes maintenance of adequatre accounting records in accordance wirtrh the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate implementation and maintenance of accounting policies; making judgments and estimstes that aro reasonable and prudent; and desigs, implementatioo and maintenanne of ad equate internal financiai cnntrols, that were operatin g effectively fon ensurinf the accuracy and completenesn of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from materialmisstatement , whet her due to frau d orerroo

In preparing the financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosicg, as applicable, matters relate! to coing concern and using tha going concern basis of accounting unltss management either intends to liqsiOate the Comeany orto cease operations,or ha 55 no realistic alternativ e but to do so.

The Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonafly be expected to influence the economic decisions of u sers taken on the basis of there finan cial statements.

As parf oi an aodit in accordance with SAs, we exercise profession al judfment and maintain professienal skepticism through out the audit. We ai so:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and performaudit procedures responsive to those risks, and obtain audit evidence ttiat is sufficient and appropriate to provide a basis Cor our oeinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design 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 whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

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

• (Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the (Companys ability to continue as a going concern. If we conclute that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures ie the financial statementsor, if such discloaures are inadequate, to modify our opi nion. Our conclusions are based on the audit evidence obtained up to the date of our aud itors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the fieancial statements represent the underlying transastions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant asdit findings, including any significant deficient es in internal control that we identify d uring our audit.

We also provide those charged with governance with a statement tfat we have complied with relevant ethical requirements regarding indepenience, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the fiuancial statements of the year ended 31u March, 202u aod are therefore the lease audit matters. We describe these mattnrs in our auditors report unless law or regulation precludes public disclosure about tie matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As req uired by Section 143(3) of the Act,we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account its required by law have been kest bythe (Company ss far as it appears from our examination of those books.

(c) The Balance Vfeet, the Statement of Profit and loss, Statement of Changes in Equity and the Crash Flow Statemeot dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid financial statements comply with the Indian Accounting 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 reeeived fromthe directors as on 31st March, 2021 taken on record by tho Board of Directors, none of the directors is disqualified as on 31st March, 2021 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and thb operating effectiveness otsuch controls, refer to our separate Report in "Annexure A".

(g) With respect to other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act as amended, in our opinion and to the best of o un information an d accord in g to th e explanatio ns given to u s, the remuneration paid by tire Company to its directors dering the year is in accordance with the provisions of section 197 of the Act.

(h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit end Auditors) Rules, 2014, m our opinionand to tfe best of our information aod according to the explaoations given to ss we forther report that:

i. The Company has oisclosed the imoact of pending iitigations on its financial positios in its financial statements (Refer note 31);

ii. The Company did not nave any long-term contracts including derivatiee contracts for which there were any matarial foreseeable losses;

iii. There were no emounts which were required to be transferred to the Iuvestor Education and Protection Fund by the Com pasy e

2. As reqsired by tho Companies fAuditors 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 the Order.

For Ramanatham & Rao
Charterer Accountants
(FRN: S-2934)
V. Narsimha Phani
Place: Secunderabad Partner
Date: r6th June, 2(021 Membersh ip N o. 204332
UDIN: 21204332AAAABE8179

Annexure "A" to the Independent Auditors Report

(Refer red to in paragraph 1(f) under Report on Other Legal Regulalary Requirements section of our report to the Members of the Company on the financial statements foe tlee year ended 31st March, 2021):

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Compa nies Act, 2013 0" the Act")

We have audited the internal financial controls over financial reporting of Kakatiya Cement Sugar and Industries Limited ("the Company") as of 31st March, 2021 in conjunction with our audit of the financial statements of the Company for the year enfed on tPat date.

Managements Responsibility for Interngl Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reportine criteria established by the Company considering the essential components of internal control stated ie thg Guidance Note on Audit od Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection offrauds and errors, tfe accuracy and completeness of the accounting records, and the timely preparation of reliable financ i al m formation, as required underthe Compa nies Act, 2013.

Auditors Responsibility

Our responsileility is to gxpoess an oinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financia! Controls over Financial Reporting (the "Guidance Note") and the Stawdards du Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an aurlit od Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidince Note require: that we comply with ethical requirements and pian aod perform the audit to obtain reasonaoie assnrance afout whether adequate internal financial controls over financial reporting was establishod ani maintained andihsuch controls operated effectively in call material respects.

Our audit involves performing procedures to obtaiu nudit evidence about the adequacy of th(Ea internal financial controls system over financial reciting and their opeiating effectiveness. Ouo audit od internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control baser on the assgssed risk. The procedures selected depend en tSe auditoas judgment, including the assessment op the risis ot material misstatement of tPe financial statements, wdether due to fraud oa error.

We believe that the audit eoidence we have obtained is sufficient and appropriate to provide a basis for our aud it opinionon the Co mpanys internal financial contuols system ovar finan cial neporting.

Meaning of Internal Financial Controls over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financialstatements for externe1 purposos :n accordcnce with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records uhat, in reaeonable detail, accnrately and IFairly reflect the tnansactions and dispositions of the assets o the company; (2) Preovide reasonable assurance that transactions cte recorded as necessary to permit preparation of Ind AS financial statements in accordance with generally acceptrd accounting principles, and tint receipts and expenditurer oU the company art being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely drtection of unauthorised acquisition use, or disprsition or the; companys asrets tnat could have a material effect on the Ind AS financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Becaune of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial re porting may be co me i nadequate becanne of change s in conditl ons, orthnt the degree o) compliance with tde policies or procoOeres may detenoratr.

Opinion

In our npinionto the best of oud information and acaording to the explanations given tn us, tde Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2021, based on the internal control over financial reporting criteria established by the Company considering the essential comp onents of internal control stated in the Guidance Note on Audit of Internal Finalncia l Controls Over Financial Reporting isnred by tire Institute of Chartered Accountants of India.

For Ramanatham & Rao
Chartered Accountants
(FRN: S-2934)
V.Narsimha Phani
Place: Secu nderabad Padnar
Date: 16th Junen 2Q2a Membership No.204332
UDIN: 21 204332AAAAB E8r 79

Annexure "B" to the Independent Auditors Report

With reference to Paragraph 2 under ‘Report on Other Legal Regulatory Requirements section of our report to the Members of the Company, on the financ ial statements forth e year ended 31st March , 2021, we report that -

(i) (a) The Company is in the process ofnpdating proper recorhs showing full particulars, including quantitative details and situation of fixed assets.

(b) /As explain ed to us, the fixed assets have been physicallyverifie d by the manag ement in a periodical man ner, which in our opinion is reasonable , having regard to th e size ofthe Company anh t he nature of its b usiness. Ns material discrepancies were noticed on such physical verification.

(c) According to ttie information and explanations given to us and on the basis of our examination of the records of the Comfany , the title deeds af immovable (ro perti eeare field in the name of the Company.

(ii) The ioventeries have Seon physically verified during the year by the management. The discrepancies noticed on verification between the physical stoc(s and book records were nat material.

(iii) The company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other partiescovered in the register maintained under sectiop 189 of the Act. Accordingly, paragraph 3 (iii) (a) to (c) of the said Order is not applicable to the Company.

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

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

(vi) We have broadly reviewed the cost records maintained by the Company as prescribed under sub-section (1) of section 148 ef the Act, and are of the npinion that, prima faoie, the presnribed accounts and records have been mada and maintained.

(vii) (a) Accorfing to the information asd explanatiois given to us and the recores of the Company examinen by us , the (Company is regular in deppsiting undisputed statutory dues including provident fund, emplpyees state insurance, income-tax, goods and service tax and ans other statutory Oues as applicable with the appropriate authorities md thete were ro arrears of outstanding statutory dues as at the last day of the finafcial ear concerned for si period of more than oix months from the date they became payable.

(b) According to the info rmation and explanations given to us and records of the Company examined by us , the particulars of income tax, value added Tax, customs duty as at 31st March, 2021 which have not been deposited on account of any dispute [lending, are as under:

Name of the Statute Nature of dues Amount (Rs. in Lakhs) Period Po which the amopnt relales Forum where dispute is pending
Income-Tax Act, 1961 Income Tax 12.42 Assessment Years 1999-2000,2000-2001 2001-2002 High Court ot Telangana
Income-Tax Act, 1961 Incomu Tax 969.26 Assessment Year 2016-17 ITAT Hyderabad
Income - Tax Act 1961 Income Tax 152.5 0 Assessment Year 2011-12 ITAT Hyderabad
Income - Tax /Act 1963 Income Tax 120.68 Assessment Year 2012-13 ITAT Hyderabad
VAT Act, 2005 Sales Tax 29.51 Financidl Year 2012-13 Appellate Tribnnal, 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 HyderaCad
Customs Act, 1962 Customs duty 65.77 Financial year 2012-2013 Additional Commissioner Customs
Telangan a state Electricity Board Electricity Duty 752.97 2003-04 to 2012-13 High Court of Telangana

(viii) The Company has not defaulted in repayment of loans or borrowing to financial institutions, banks, Governments.

(ix) Th e Compan y did not raise any money by way of initial public offer or further public offer during th e y ear. In our opin i on and according to the information and explanations given to us, the term loans have been applied for the purpose for which the loans were obtained other than amounts temporarily invested pending utilization of the funds for the intended use.

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

(xi) According to the i nformation an1 explanations g ive to us anf based on ouh examination of t he recorhs oi the Compaay, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read wit h ScheduleVtothe Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. According ly, paragrap h 3 (xii) of the Order is not apficable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliaoce with section 177 and 188 of the Act whereapphcable and drtails of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations give to us and based on our examination of the records of the Company, the Co mpiny has not madh any p referential allot ment or private plaiement op 55 hares or hull y or part ly canvert i ble te Nentures during the year. Accordingly, paragraph 3 (xiv) of the Order is not applicable.

(xv) Aocordine to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3 fxv) of the Order is not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of I ndia Act, 1934. Accordingly, paragraph 3 (xv) o4the Order is not applicable to the Company.

For Ramanatham&Rao
Chartered Accountants
(FRN:S-2934)
V. Narsimha Phani
Place: Secunderabad Partner
Date: 16th June, 2021 MemOershid No. 204332
UDIN: 2120433AAAAABE8179