To
The Members,
M/s. Panyam Cements and Mineral Industries Limited
Report on the Audit of Financial Statements
Qualified Opinion
We have audited the accompanying financial statements of PANYAM CEMENTS AND MINERAL
INDUSTRIES LIMITED("the company"), which comprise the Balance Sheet as at March
31, 2023, the Statement of Profit and Loss (including other comprehensive income), the
Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that
date and a summary of the significant accounting policies and other explanatory
information (herein after referred to as "the financial statements")
In our opinion and to the best of our information and according to the explanations
given to us, except for the effects of the matter described in the Basis for Qualified
Opinion section of our report ,the accompanying financial 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 Act read with the Companies (Indian Accounting Standard) Rules,
2015, as amended, ("Ind AS") and other accounting principles generally accepted
in India, of the state of affairs of the Company as at March 31, 2023, the LOSS and total
comprehensive income, changes in equity and its cash flows for the year ended on that
date.
Basis for Qualified Opinion
The Company has not adopted and complied with the requirements of Ind AS-19
‘Employee Benefits in respect of the Gratuity liability which constitute a departure
from the Accounting standards mentioned in the Companies (Indian Accounting Standards)
Rules 2015 referred in section 133 of the Act. In view of this the liability of the
company in this regard could not be ascertained. Consequently, we are unable to comment
about the impact of the same on the profit for the year, income tax and shareholders
funds.
We conducted our audit of the financial statements in accordance with the Standards on
Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under
those standards are further described in the Auditors responsibility for the Audit of
Financial Statements section of our report. We are independent of the company in
accordance with the Code of Ethics issued by the Institute of Chartered Accountants of
India (ICAI) together with the ethical requirements that are relevant to our audit of
financial statements under the provisions of the Act and the Rules made thereunder, and we
have fulfilled our other ethical responsibilities in accordance with these requirements
and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the financial statements.
Emphasis of matter
We draw attention to NOTE No 1.1.2 of the Notes to the financial statements for the
year ended 31.03.2023 which states the revision on the financial statements initially
approved by the Board on 27.05.2023
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters
were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. We
have determined that there are no key audit matters to communicate in our report
Other Information
The Companys management and Board of Directors are responsible for the other
information. The other information comprises the information included in the Companys
annual report, 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 do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read
the other information and, in doing 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 required to report that fact. We have
nothing to report in this regard.
Responsibilities of Management and those charged with governance for the financial
statements
The Companys Board of Directors is responsible for the matters stated in Section
134(5) of the Act with respect to the preparation of these financial statements that give
a true and fair view of the financial position, financial performance including other
comprehensive income, cash flows and changes in equity of the Company in accordance with
the accounting principles generally accepted in India, including the accounting Standards
specified under section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records in
accordance with 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 accounting policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and maintenance of adequate internal
financial controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and presentation of
the financial statement that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Director is responsible for
assessing the Companys ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
the Board of Directors either intends to liquidate the Company or to cease operations, or
has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the companys financial
reporting process.
Auditors Responsibilities for the Audit of Financial Statement
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 reasonably be expected to influence the economic decisions of users taken on the
basis of these Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. 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
Act, 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 conclude that a material uncertainty exists,
we are required to draw attention in our auditors report to the related disclosures in
the 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 auditors
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 financial statements represent the underlying
transactions 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 audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, 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 financial statements of the
current period and are therefore the key audit matters. We describe these matters in our
auditors report unless law or regulation precludes public disclosure about the 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 required by the Companies (Auditors report) Order, 2020 ("the Order")
issued by the Central Government of India in terms of sub-section (11) of section 143 of
the Act, we give in the "Annexure A" a statement on the matters specified in
paragraphs 3 and 4 of the Order.
2. 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 best
of 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 the
Company so far as it appears from our examination of those books;
c) the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive
Income, Statement of Changes in Equity and the Statement of Cash Flow 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;
e) on the basis of the written representations received from the directors of the
Company as on 31st March, 2023 taken on record by the Board of Directors, none of the
directors is disqualified as on 31st March, 2023 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 with reference to
financial statements of the Company and the operating effectiveness of such controls,
refer to our separate report in "Annexure B". Our report expresses an unmodified
opinion on the adequacy and operating effectiveness of the Companys internal financial
controls with reference to financial statements;
g) with respect to the other matters to be included in the Auditors report in
accordance with the requirements of section 197(16) of the Act, as amended: no
remuneration was paid by the Company to its directors during the year;
h) with respect to the other matters to be included in the Auditors Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in
our opinion and to the best of our information and according to the explanations given to
us:
i. the Company has disclosed pending litigations by way of a note in the Contingent
Liabilities in its financial statements - Refer Note 28 to the Ind AS financial
statements;
ii. the Company did not have any long-term contracts including derivative contracts; as
such there were no material foreseeable losses thereon;
iii. there are no amounts which are required to be transferred to the Investor
Education and Protection Fund; therefore, delay in transferring such sums does not arise;
iv. a) the management has represented that, to the best of its knowledge and belief, no
funds have been advanced or loaned or invested (either from borrowed funds or share
premium or any other sources or kind of funds) by the Company to or in any other person(s)
or entity(ies), including foreign entities ("Intermediaries"), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall,
whether, directly or indirectly lend or invest in other persons or entities identified in
any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries")
or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b) the management has represented that, to the best of its knowledge and belief, no
funds have been received by the Company from any person or entity, including foreign
entities ("Funding Parties"), with the understanding, whether recorded in
writing or otherwise, that the Company shall, whether, directly or indirectly, lend or
invest in other persons or entities identified in any manner whatsoever by or on behalf of
the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security
or the like on behalf of the Ultimate Beneficiaries; and
c) based on such audit procedures that were considered reasonable and appropriate in
the circumstances, nothing has come to our notice that has caused us to believe that the
representations under sub-clause (a) and (b) contain any material misstatement;
v) no dividend has been declared or paid during the year by the Company.
ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory
Requirements section of our report of even date)
Statement on the matters specified in the Companies (Auditors Report) Order, 2020
On the basis of such checks as we considered appropriate and according to the
information and explanation given to us during the course of our audit, we report that
i) in respect of the Companys property, plant and equipment:
a) (A) the Company has maintained proper records showing full particulars, including
quantitative details and situation of property, plant and equipment;
(B) the Company has not capitalized any intangible assets. Hence Para 3(i) (B) of the
said Order, is not applicable to the Company;
b) the Company has a program of verification to cover all the items of property, plant
and equipment in a phased manner which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. Pursuant to the program, certain
property, plant and equipment were physically verified by the management during the year.
According to the information and explanations given to us, no material discrepancies were
noticed on such verification;
c) on the basis of our examination of the records of the Company, the title deeds of
all immovable properties are held in the name of the Company.
d) on the basis of our examination of the records of the Company, the Company has not
revalued its Property, Plant and Equipment during the year;
e) on the basis of our examination of the records of the Company, there are no
proceedings initiated or pending against the Company for holding any benami property under
the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder;
ii) in respect of Companys inventory:
a) the management has conducted physical verification of inventory at reasonable
intervals during the year. In our opinion, the coverage and the procedure of such
verification by the management is appropriate. Discrepancy of 10% or more were not noticed
on such physical verification. There are no inventories lying with third parties as at
year-end;
b) the Company has not been sanctioned working capital limits by banks or financial
institutions on the basis of security of current assets. Hence, clause 3(ii) (b) of the
said Order is not applicable;
iii) during the year the Company has not made any investment in, provided guarantee or
security or granted any loans or advances in the nature of loans, secured or unsecured ,
to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, the
requirement to report on Para 3(iii)(a) to (f) of the Order is not applicable to the
Company.
iv) in view of our comment in the sub para (iii) above compliance with the provisions
of Sections 185 and 186 of the Act does not arise;
v) the Company has not accepted deposits from public during the year and does not have
any unclaimed deposits as at 31st March, 2023 and therefore, the provisions of the Para 3
(v) of the Order are not applicable to the Company;
vi) since there were no operations during the immediately preceding year , maintenance
of Cost records U/s148(1) of the Act is not applicable;
vii) according to the information and explanations given to us, in respect of statutory
dues:
a. the Company has generally been regular in depositing undisputed statutory dues,
including Goods and Services Tax (GST), Provident Fund, Employees State Insurance,
Income-tax, sales tax , service tax Customs Duty, Excise duty Cess and other material
statutory dues as applicable, with the appropriate authorities;
b. there were no undisputed amounts payable in respect of Provident Fund, Employees
State Insurance, Income-tax, Goods and Service Tax (GST), Customs Duty, Cess and other
material statutory dues in arrears as at 31st March, 2023 for a period of more than six
months from the date they became payable;
c. there were no disputes as at 31.03.2023 to the extent of depositing the current year
dues. However PF Authorities, Electricity Board and Excise Duty Authorities have
approached NCLAT (National Company Law Appellate Tribunal ) claiming the amounts as
mentioned below pertaining to earlier years owed by the erstwhile Management and the
company has shown as Contingent Liability as on 31.03.2023
| Name of the Statute |
Nature of dues |
Amount (Rs. in lakhs) |
Forum where dispute is pending |
| Employees Provident Fund and Miscellaneous Provisions Act, 1952 |
PF delay charges/ damages for belated payments |
722.72 |
NCLAT, Chennai |
| The Electricity Act, 2003 |
Dues to APSPDCL |
4,702.25 |
NCLAT, Chennai |
| Central excise, service tax |
Dues due to central excise, service tax |
3,122.21 |
NCLAT, Chennai |
| Securities & Exchange Board of India |
Penalties for non-compliance |
14.00 |
See note below* |
Note*: SAT decided the case in favour of the company, but SEBI intends to appeal to the
Supreme Court of India against SAT order.
viii) the Company has not surrendered or disclosed any transaction, previously
unrecorded in the books of account, in the tax assessments under the Income Tax Act, 1961
as income during the year. Accordingly, the requirement to report on Para 3(viii) of the
Order is not applicable to the Company;
ix) a) the Company has been taken over by the new management through NCLT
Order and the new management has not defaulted in repayment of loans and borrowing or
in the payment of interest.
b) the Company is not a declared wilful defaulter by any bank, financial institution or
other lender;
c) during the year under report the company has not raised any term loans;
d) during the year under report the Company got intercorporate deposits from related
parties and were shown under Current Liabilities pending finalisation of repayment terms
by the Lenders. Deposit amounts were utilised for both long term purposes and short term
purposes:
e) the Company does not have subsidiaries, joint ventures. Hence reporting under
Clauses 3(ix) ( e ) and (f) is not applicable;
x) a) the Company did not raise moneys by way of initial public offer or further public
offer during the year .Hence reporting under Clauses 3(x) ( a ) is not applicable;
b) the Company has made preferential allotment during the year and complied with the
requirements of section 62 of the Companies Act 2013:
xi) a) based on examination of the books and records of the Company, considering the
principles of materiality outlined in Standards on Auditing, we report that no fraud by
the Company or on the Company has been noticed or reported during the course of the audit;
b) no report under sub-section (12) of Section 143 of the Companies Act, 2013 has been
filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules,
2014 during the year and up to the date of this Report with the Central Government;
c) no whistle blower complaints received by the Company during the year;
xii) the Company is not a Nidhi Company. Accordingly, Para 3(xii) of the Order is not
applicable;
xiii) the Company is in compliance with Section 188 and 177 of the Act, where
applicable, for all transactions with the related parties and the details of related party
transactions have been disclosed in the financial statements etc as required by the
applicable accounting standards;
xiv) a) the Company has an internal audit system, in our opinion , which needs to be
strengthened ;
b) we were unable to obtain on timely basis of the internal audit reports of the
company, hence the internal audit reports have not been entirely considered by us
xv) during the year the Company has not entered into any non-cash transactions with its
directors or persons connected with its directors and hence provisions of Section 192 of
the Act, are not applicable;
xvi) a) the Company is not required to register under section 45-IA of the Reserve Bank
of India Act, 1934 ;
b) the Company has not conducted any Non-Banking Financial or Housing Finance
activities without obtaining a valid Certificate of Registration (CoR) from the Reserve
Bank of India as per the Reserve Bank of India Act, 1934;
c ) the Company is not a Core Investment Company as defined in the regulations made by
Reserve Bank of India;
d) the Company does not have any Core investment Company as a part of its group of
Companies;
xvii) the Company had incurred cash loss of Rs 10.01 Cr in the immediately preceding
financial year and during the year an amount of Rs 26.05 incurred cash losses ;
xviii) there has been no resignation of the statutory auditors during the year.
Accordingly, Para 3(xviii) of the Order is not applicable;
xix) on the basis of the financial ratios, ageing and expected dates of realisation of
financial assets and payment of financial liabilities, other information accompanying the
financial statements, our knowledge of the Board of Directors and management plans and
based on our examination of the evidence supporting the assumptions, nothing has come to
our attention, which causes us to believe that any material uncertainty exists as on the
date of the audit report that the Company is not capable of meeting its liabilities
existing at the date of balance sheet as and when they fall due within a period of one
year from the balance sheet date. We, however, state that this is not an assurance as to
the future viability of the Company. We further state that our reporting is based on the
facts up to the date of the audit report and we neither give any guarantee nor any
assurance that all liabilities falling due within a period of one year from the balance
sheet date, will get discharged by the Company as and when they fall due;
xx) in our opinion and according to the information and explanations given to us, the
company is not obligated to spend the amount under CSR Obligations as per section 135 of
the Companies Act, 2013. Accordingly, Para 3(xx)(a)& (b) of the Order is not
applicable;
ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and Regulatory
Requirements section of our report of even date)
Report on the Internal Financial Controls Over Financial Statements under Clause (i) of
Subsection 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial statements of Panyam
Cements and Mineral Industries Ltd ("the Company") as of 31st March, 2023 in
conjunction with our audit of the financial statements of the Company for the year ended
on that date.
Managements Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaining
internal financial controls based on the internal control with reference to financial
reporting criteria established by the Company considering the essential components of
internal control stated in the Guidance Note on Audit of Internal Financial Controls Over
Financial Reporting issued by the Institute of Chartered Accountants of India. 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, the safeguarding of its assets, the prevention and detection of
frauds and errors, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under the Act.
Auditors Responsibility
Our responsibility is to express an opinion on the internal financial controls with
reference to financial reporting of the Company based on our audit. We conducted our audit
in accordance with the Guidance Note on Audit of Internal Financial Controls Over
Financial Reporting (the "Guidance Note") issued by the Institute of Chartered
Accountants of India and the Standards on Auditing prescribed under Section143(10) of the
Act, to the extent applicable to an audit of internal financial controls. Those Standards
and the Guidance Note require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether adequate internal financial
controls with reference to financial statements was established and maintained and if such
controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of
the internal financial controls system with reference to financial statements and their
operating effectiveness. Our audit of internal financial controls with reference to
financial statements included obtaining an understanding of internal financial controls
with reference to financial statements, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. The procedures selected depend on the auditors
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error.
We believe that the audit evidence we have obtained, is sufficient and appropriate to
provide a basis for our audit opinion on the Companys internal financial controls system
with reference to financial statements.
Meaning of Internal Financial Controls Over Financial Statements
A companys internal financial control with reference to financial statements is a
process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A companys internal financial control with
reference to financial statements includes those policies and procedures that(1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of Ind AS
financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with
authorisations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorised acquisition, use, or
disposition of the companys assets that could have a material effect on the financial
statements.
Limitations of Internal Financial Controls with reference to Financial Statements
Because of the inherent limitations of internal financial controls with reference to
financial statements, including the possibility of collusion or improper management over
ride 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 with
reference to financial statements to future periods are subject to the risk that the
internal financial control with reference to financial statements may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Opinion
During the Last Quarter of the Year under Report the Company started its manufacturing
activity. It is informed by the Company that it is in the process of establishing and
documenting internal financial controls with reference to financial statements . For the
year under report we relied upon the manual controls adopted by the Management.
Considering the operations and transactions of the Company in our opinion these controls
are to be strengthened.
|
For K.S. RAO & Co., |
|
Chartered Accountants |
|
Firms Regn.No.003109S |
|
P.GOVARDHANA REDDY |
|
Partner |
| Place: Hyderabad |
M.No.029193 |
| Date: 04-09-2023 |
UDIN : 23029193BGWHKX1704 |
+91-9892691696
