We have audited the financial statements of Kakatiya Cement Sugar & Industries Limited (“the Company”), which comprise the Balance Sheet as at 3111 March, 2024, the Statement 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 notes to the financial statements, including material accounting policies and other explanatory information (hereinafter referred to as “the financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state ofaffairsofthe Company as at March 31,2024, and its loss, total comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor's Responsibilities fortheAudit ofthe 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 together with the ethical requirements that are relevant to our audit ofthe financial statements under the 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 of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit ofthe financial statements ofthe current period. These matters were addressed in the context of our audit ofthe 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 the matters described below to be the key audit matters in our audit ofthe Company for the year ended 31" March, 2024.
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Sr.
No.
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Key Audit Matter
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Auditor’s Response
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1.
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Evaluation of uncertain tax Dositions
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome ofthese disputes.
Refer Notes 32 to the Financial Statements
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Principal Audit Procedures
The audit procedures included but were not limited to:
- Obtaining a detailed understanding processes and controls of the Management with respect to claims ordisputes
- Performing following procedures on samples selected:
- Understanding the matters by reading the correspondences, communications, minutes of the management meeting
- Making corroborative inquiries with appropriate level of the management personnel including status update, expectation of outcomes with the basis, and the future course of action contemplated bythe unit, and perusing legal opinions, if any, obtained bythe Management.
- Discussing the status of the cases with the legal team regarding the progress and probability assessment of the outcomes.
- Evaluating the evidence supporting the judgement of the management about possible outcomes and the reasonableness of the estimates.
- Evaluating appropriateness of adequate disclosures in accordance with the applicable Indian accounting standards.
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Net Realizable Value of Finished Goods
Finished goods 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 which is dependent upon various market conditions, determination of the net realizable value involves significant management judgement and therefore has been considered asa keyaudit matter.
Total value of finished goods of sugar as at 31 “March, 2024 is ? 3,249.90 Lakhs.
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PrinciDal Audit Procedures
The audit procedures included but were not limited to:
- Obtained an understanding of the determination of the net realizable value of the sugar and assessed and tested the reasonableness of the significant judgementsapplied bythe management.
- Evaluated the design of internal controls relating to the valuation of sugar and also tested the operating effectivenessofthe 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 bythe 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 wasestimated and considered bythe 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 ofthe disclosure in the financial statements in accordance with the applicable financial reporting framework.
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Other Information
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report but does not include the financial statements and our auditor’s 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 ofthe financial statements, our responsibility is to read the other information identified above when it becomes available 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 forthe Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) ofthe Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view ofthe financial position, financial performance, total comprehensive income, changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in India, including the Indian 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 implementation and maintenance of 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 ofthe accounting records, relevant to the preparation and presentation ofthe 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, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor’s Responsibilities forthe 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 auditor's 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 ofthese financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughoutthe 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, orthe 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)if the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system with reference to financial statements 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 management’s use ofthe 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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's 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 auditor's 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.
Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
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 year ended 31“ March, 2024 and are therefore the key audit matters. We describe these matters in our auditor's 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 Section 143(3) ofthe 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 forthe purposes ofouraudit
(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 except forthe matter stated in paragraph 1(i)(vi) below on reporting under Rule 11 (g) ofthe Companies (Audit and Auditors) Rules, 2014.
(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 ofthe written representations received from the directors as on 31" March, 2024 taken on record by the Board of Directors, none ofthe directors is disqualified as on 31“ March, 2024 from being appointed as a director in terms of Section 164 (2)oftheAct.
(f) The modification relating to the maintenance of accounts and other matters connected there with are as stated in paragraph 1 (b) above and paragraph 1 (i)(vi) below on reporting under Rule 11(g) ofthe Companies (Audit and Auditors) Rules, 2014.
(g) 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, referto our separate Report in “Annexure A”.
(h) In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 oftheAct.
(i) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the
Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the
explanationsgiven to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial
statements (Refer Note 32);
ii. The Company did not have any long-term contracts including derivative contracts for which there were any
material foreseeable losses;
iii. There is no delay in transferring the amounts which were required to be transferred to the Investor Education
and Protection Fund by the Company.
iv. (a) The Management has represented that (Note 45 of the Financial Statements), to the best of its
knowledge and belief, no funds (which are material either individually or in the aggregate) 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 or entity, including foreign entity (“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 (Note 45 of the Financial Statements), to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (“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 orthe like on behalf of the Ultimate Beneficiaries;
(c) Based on the audit procedures that have been 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 (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. (a) As stated in Note 38 to the financial statements, the dividend proposed in the previous year, declared
and paid by the company during the year is in accordance with section 123 of the Act, as applicable.
(b) The Board of Directors of the Company have proposed dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 ofthe Act, as applicable.
vi. Based on our examination, the Company has used accounting software Oracle 9i which does not have the feature of audit trail (edit log) facility at both application level and database level. Hence, we are unable to comment on the audit trail feature and whether the audit trail had operated throughout the year or was tampered with.
2. As required by the Companies (Auditor's Report) Order, 2020, (‘the Order ) issued by the Central Government in terms of Section 143 (11) oftheAct, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 ofthe Order.
For M. Anandam & Co.,
Chartered Accountants (Firm Regn.No.000125S)
A. V. Sadasiva
Partner
Place: Hyderabad Membership No. 018404
Date : 23.05.2024 UDIN: 24018404BKEAYE2940
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