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J. K. Cement Ltd.

BSE: 532644 | NSE: JKCEMENT |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE823G01014 | SECTOR: Cement - Major

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Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Auditor's Report

INDEPENDENT AUDITOR’S REPORT

To the Members of J. K. Cement Limited

REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

Opinion

We have audited the accompanying standalone Ind AS financial statements of J. K. Cement Limited (“the Company”), which comprise the Balance sheet as at March 31, 2019, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013, as amended (“the Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditor’s Responsibilities for the Audit of the Standalone Ind AS 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 of the financial statements under the provisions of the Act and the Rules there under, 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 standalone Ind AS financial statements.

Emphasis of Matter

We draw attention to Note 36 (A) to the standalone Ind AS financial statements wherein it has been stated that the Competition Commission of India (''CCI'') has imposed penalty of Rs,12,854 lacs (‘first matter’) and Rs,928 lacs (‘second matter’) in two separate orders dated August 31, 2016 and January 19, 2017 respectively for alleged contravention of provisions of Competition Act 2002 by the Company. The Company has filed appeals against the above orders.

The National Company Law Appellate Tribunal (''NCLAT''), on hearing the appeal in the first matter, upheld the decision of CCI for levying the penalty vide its order dated July 25, 2018. Post order of the NCLAT, CCI issued a revised demand notice dated August 7, 2018 of Rs,15,492 lacs consisting of penalty of Rs,12,854 lacs and interest of Rs,2,638 lacs. The Company has filed appeal with Hon’ble Supreme Court against the above order. Hon’ble Supreme Court has stayed the NCLAT order. While the appeal of the Company is pending for hearing, the Company backed by a legal opinion, believes that it has a good case and accordingly no provision has been considered in the books of accounts.

In the second matter, demand had been stayed and the matter is pending for the hearing before NCLAT. While the appeal of the Company is pending for hearing, the Company backed by a legal opinion, believes that it has a good case and accordingly no provision has been considered in the books of accounts.

Our opinion is not modified in respect of this matter. Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the standalone Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.

As at March 31, 2019 the Company has an investment in J. K. Cement (Fujairah) FZC, a wholly owned subsidiary of Rs,46,885.04 lacs.

Key audit matters How our audit addressed the key audit matter Impairment of Investments in J.K. Cement (Fujairah) FZC, a wholly owned subsidiary

(as described in note 4(A) of the standalone Ind AS financial statements)

J. K. Cement Works (Fujairah) FZC (step down subsidiary) is incurring losses and its entire net worth is eroded. As a result, an impairment assessment was required to be performed by the Company by comparing the carrying value of these investments to their recoverable amount to determine whether an impairment was required to be recognized.

For the purposes of the above impairment testing, value in use has been determined by forecasting and discounting future cash flows. Furthermore, the value in use is highly sensitive to changes in some of the inputs used for forecasting the future cash flows.

Further, the determination of the recoverable amount of the investments in J. K. Cement (Fujairah) FZC involved judgments due to inherent uncertainty in the assumptions supporting the recoverable amount of these investments.

Accordingly, the impairment of investments in J. K. Cement (Fujairah) FZC, was determined to be a key audit matter in our audit of the standalone Ind AS financial statements.

Our audit procedures included the following:

- Gained an understanding of the impairment assessment process, and evaluated the design and tested the operating effectiveness of controls.

- Assessed the Company’s valuation methodology applied in determining the recoverable amount.

- Assessed the assumptions around the key drivers of the cash flow forecasts including estimated reserved, discount rates, expected growth rates and terminal growth rates used.

- Discussed potential changes in key drivers as compared to previous year / actual performance with management in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were reasonable.

- Involved specialists to assist us in auditing the valuation methodologies and sensitivity testing of key assumptions used by management in determining the recoverable value headroom.

- Tested the arithmetical accuracy of the models.

- Assessed the relevant disclosures made within the standalone Ind AS financial statements.

Claims, litigations and contingent liabilities

(as described in note 36 of the standalone Ind AS financial statements)

As of March 31, 2019, the Company has disclosed contingent Our audit procedures included the following:

liabilities of Rs,62,922.95 lacs relating to tax and legal claims. - Gained an understanding of the process of identification of claims, litigations and contingent liabilities, and evaluated the There are several pending legal and regulatory cases against , a i r b b b design and tested the operating effectiveness of key controls. the Company across various jurisdictions. Accordingly, management exercises its judgement in estimation of - Obtained the summary of Company’s legal and tax cases and provision required in respect of such cases. The evaluation assessed management’s position through discussions with of management’s judgments, including those that involve the legal head, tax head and Company’s management, on estimations in assessing the likelihood that a pending claim both the probability of success in significant cases, and the will succeed, or a liability will arise, and the quantification magnitude of any potential loss. of the ranges of potential financial settlement have been a matter of most significance during the current year audit. - Obtained responses from relevant third party legal counsel

and conducted discussions with them regarding material Furthermore, the Company has operations across many cases. jurisdictions and is subject to taxation related litigations as per local tax regulations. Evaluation of the outcome of - Inspected external legal opinions and other evidence to the taxation related matters, and whether the risk of loss corroborate management’s assessment of the risk profile in is remote, possible or probable, requires judgment by respect of legal claims. management given the complexities involved.

- Engaged tax specialists to assess management’s application Accordingly, due to large number of claims and complexity/ and interpretation of tax legislation affecting the Company, judgment involved in outcome of these litigations. ^^in^ and to consider the quantification of exposures and litigations and contingent liabilities was defined to be settlements arising from disputes with tax authorities in the a key audit matter in our audit of the standalone Ind AS various tax jurisdictions financial statements.

- Reviewed that the management assessment of similar cases is consistent across the divisions or that differences in positions taken are adequately justified.

- Assessed the relevant disclosures made within the standalone Ind AS financial statements.

Key audit matters

How our audit addressed the key audit matter

Revenue Recognition

(as described in note 27 of the standalone Ind AS financial statements)

For the year ended March 31, 2019 the Company has

Our audit procedures included the following:

recognized revenue from operations of Rs,498,129.88 lacs.

- Considered Company’s revenue recognition policy and its

The Company expects the revenue recognition to occur at point in time when control over the goods are transferred to

compliance in terms of Ind AS 115 ‘Revenue from contracts

with customers’.

the customer, generally on delivery of the goods. Accordingly,

- Assessed the design and tested the operating effectiveness of

this requires the management to establish the fact that

internal controls related to revenue recognition.

control over goods is transferred at the time of dispatch in accordance with Ind AS 115.The variety of terms that define

- Performed sample tests of individual sales transaction and traced

when title, risk and rewards are transferred to the customer,

to sales invoices, sales orders and other related documents.

as well as the high value of the transactions, give rise to the

Further, in respect of the samples tested we checked that the

risk that revenue is not recognized in the correct period.

revenue has been recognized as per the shipping terms.

This area was of most significance in our audit due to the

- Selected sample of sales transactions made pre- and

magnitude of amount of the revenue involved and high

post-year end, agreeing the period of revenue recognition to

number of transactions.

third party support, such as transporter invoice and customer

Revenue is also an important element of how the Company

confirmation of receipt of goods.

measures its performance, upon which management is

- Performed monthly analytical review of revenue by streams

incentivized. The Company focuses on revenue as a key

to identify any unusual trends.

performance measure, which could create an incentive for revenue to be recognized before the risk and rewards have

- Obtained trade receivable balance confirmations as at the

been transferred.

year end to evaluate recognition of revenue.

Accordingly, due to the significant risk associated with

- Assessed the relevant disclosures made within the

revenue recognition in accordance with terms of Ind AS 115

standalone Ind AS financial statements.

‘Revenue from contracts with customers’, it was determined to be a key audit matter in our audit of the standalone Ind AS financial statements.

Deferred Tax Assets with respect to MAT Credit Entitlement

(as described in note 20 of the standalone Ind AS financial statements)

As at March 31, 2019 deferred tax assets in respect of ‘MAT

Our audit procedures included the following:

credit entitlement’ recognized in the standalone Ind AS

- Developed an understanding of the nature of the Company’s

financial statements is Rs,26,359.74 lacs.

tax structure and of the key tax positions.

Deferred tax assets are recognized for MAT credit available

- Assessed the design and tested the operating effectiveness of

to the extent that it is probable that the Company will pay

internal controls related to recognition of deferred tax assets

normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward.

with respect to MAT credit entitlement.

- Obtained the future business plan approved by the Board

The Company’s ability to recognize deferred tax assets for

of Directors and assessed the MAT credit position by inter

‘MAT credit entitlement’ is assessed by management at the

alia agreeing key inputs to supporting documentation and by

end of each reporting period, considering forecasts of future normal taxable profits and if required the Company will write

assessing the judgments made by management in this respect.

down the asset to the extent that it is no longer probable

- Assessed the Company’s tax planning in relation to the recovery of

that it will pay normal tax during the specified period. The

MAT credit assets by comparing the forecasted taxable profit with

assumptions used in the projections are determined by management.

historical data and budgets approved by the board of directors. - Analyzed and tested management’s projections and

Given the degree of estimation and judgment involved in

corresponding assumptions used to determine the likelihood

projection of future taxable normal profits and the fact that

that MAT Credit recognized as on the reporting date will be

if the MAT credit is not utilized within the block of 15 years (immediately succeeding the assessment year in which the

recovered through future tax as per normal provisions.

credit was generated) it will lapse, management’s decision

- Checked the consistency of business plan with the latest

to create deferred tax assets in respect of ‘MAT credit

management estimates prepared as a part of the budgeting

entitlement’ is determined to be a key audit matter in our

process and also the reliability of the process by which the

audit of the standalone Ind AS financial statements.

estimates were computed, by assessing the reasons for differences between projected and actual performances.

- Assessed the relevant disclosures made within the standalone Ind AS financial statements.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON

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 standalone Ind AS financial statements and our auditor’s report thereon.

Our opinion on the standalone Ind AS 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 standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone Ind AS 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 FOR THE STANDALONE IND AS FINANCIAL STATEMENTS

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS 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 Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone Ind AS 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.

Those Board of Directors are also responsible for overseeing the Company’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS 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 of these standalone 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 standalone Ind AS 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 management’s 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 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 standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS 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 standalone Ind AS financial statements for the financial year ended March 31, 2019 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 the Companies (Auditor’s Report) Order, 2016 (“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 1” a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. 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 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 the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 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 with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure 2” to this report;

(g) In our opinion, the managerial remuneration for the year ended March 31, 2019 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;

(h) 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, 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 the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 36 A to the standalone Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

J. K. Cement Limited (‘the Company’)

i. a. The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.

b. All property, plant and equipment have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

No material discrepancies were noticed on such verification.

c. According to the information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company except for 1 case of leasehold land and 4 cases of freehold land amounting to gross block of Rs,1,353.07 lacs (net block: Rs,70.42 lacs) and gross block of Rs,225.64 lacs (net block: Rs,225.64 lacs) respectively as at March 31, 2019 for which title deeds are in the name of the erstwhile company that merged with the Company pursuant to a scheme of amalgamation and arrangement as approved by the honorable High Court in earlier years. Also refer note 2 of the accompanying standalone Ind AS financial statements.

ii. The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31, 2019 and no material discrepancies were noticed in respect of such confirmations.

iii. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

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 Companies Act, 2013 in respect of the investments made and guarantees provided by it. The Company has not granted any loan or provided any security to the parties covered under Section 185 and 186.

v. The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

vi. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the manufacture of cement, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

vii. a. Undisputed statutory dues including provident fund, employees’ state insurance, income-tax, duty of custom, goods and service tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income-tax, duty of custom, goods and service tax, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

c. According to the records of the Company, the dues of income-tax, excise duty, sales-tax, value added tax, goods and service tax, cess on account of any dispute, are as follows:

According to information and explanation given to us, there are no dues of Provident Fund and ESI which have not been deposited on account of any dispute.

Name of the Statute

Nature of Dues

Period to which

Forum where

Amount

Amount relates

dispute is pending

(Rs, in lacs)

The Bihar Tax on Entry of Goods into Local

Entry Tax

2009-10

Joint

86.58

Areas for Consumption, Use or Sale Therein

Commissioner (Appeals)

Act, 1993

Entry Tax

2008-09,

2011-12

Deputy Commissioner (Appeals)

90.60

Entry Tax

2015-2016

Deputy Commissioner (Appeals)

25.96

The Rajasthan Tax on Entry of Goods into

Entry Tax

2002-03

High Court of Rajasthan

5,563.07

Local Areas Act, 1999

onwards

The Uttar Pradesh Tax on Entry of Goods into Entry tax

2005-2006

Supreme Court of India

314.48

Local Areas Act, 2007

to 2009-2010

Central Excise Act, 1944

Excise Duty

July 1999-March 2008

Commissioner (Appeals)

1,716.94

Excise Duty

July 1999-March 2008

Custom Excise and Service Tax Appellate Tribunal -Jaipur

23.97

Excise Duty

1989-1990

Supreme Court of India

419.02

Service Tax [Finance Act, 1994]

Service Tax

June 2007-March 2008

Commissioner - Jaipur

654.82

Service Tax

June 2005 -June 2008

Custom Excise and Service Tax Appellate Tribunal -Delhi

276.44

Finance Act, 2008 (State)

Environment

2008-2009

High Court of Karnataka,

3,323.44

& Health Cess

to 2015-2016

High Court of Rajasthan

Local Sales Tax Acts

Sales Tax

1990-1991 to 2014-2015

Various courts in Uttar Pradesh, Bihar, Gujrat Rajasthan & Karnataka

458.13

Sales Tax

2012-2013 to 2014- 2015

Additional Commissioner (Appeals)

363.41

Sales Tax

2014-2015

Deputy Commissioner (Appeals)

38.38

Sales Tax

2014-2015

Joint Commissioner (Appeals)

15.61

Income-tax Act, 1961

Income Tax

2004-2005 to 2010-2011

Allahabad High Court

4,229.82

2011-12

Income Tax Appellate

1,258.82

to 2013- 2014

Tribunal, Lucknow

2014-2015

Commissioner of Income

385.80

to 2015-2016

Tax (Appeals) Kanpur

viii. In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, banks, debenture holders or government.

ix. In our opinion and according to the information and explanations given by the management, monies raised by way of term loans were applied for the purposes for which they were raised. Further, based on the information and explanations given by the management, the Company has

not raised any money way of initial public offer / further public offer / debt instruments.

x. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the Standalone Ind AS financial statements and according to the information and explanations given by the management, we report that no fraud by the company or no material fraud on the company by the officers and employees of the Company has been noticed or reported during the year.

xi. According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

xii. In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

xiii. According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the Standalone Ind AS financial statements, as required by the applicable accounting standards.

xiv. According to the information and explanations given by the management the Company has complied with provisions of section 42 of the Companies Act, 2013 in respect of the preferential allotment / private placement of shares during the year. According to the information and explanations given by the management, we report that the amount raised, have been used for the purposes for which the funds were raised except for idle/surplus funds amounting to Rs,44,060 lacs which were not required for immediate utilization and which have been gainfully invested in liquid investments payable on demand. The maximum amount of idle/surplus funds invested during the year was Rs,44,060 lacs of which Rs,25,560 lacs was outstanding at the end of the year. The Company did not make preferential allotment/ private placement of fully or partly convertible debentures during the year.

xv. According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

xvi. According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of J. K. Cement Limited (“the Company”) as of March 31, 2019 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

MANAGEMENT’S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over 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, including adherence to the Company’s policies, 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 Companies Act, 2013.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting with reference to these financial statements 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”) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. 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 over financial reporting with reference to these standalone Ind AS 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 over financial reporting with reference to these standalone Ind AS financial statements and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone Ind AS 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 auditor’s 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 internal financial controls over financial reporting with reference to these standalone Ind AS financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESE STANDALONE IND AS FINANCIAL STATEMENTS

A company’s internal financial control over financial reporting with reference to these standalone Ind AS 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 company’s internal financial control over financial reporting with reference to these standalone Ind AS 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING WITH REFERENCE TO THESE STANDALONE IND AS FINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls over financial reporting with reference to these financial statements, 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 with reference to these standalone Ind AS financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion, the Company has, in all material respects, and adequate internal financial controls over financial reporting with reference to these standalone Ind AS financial statements and such internal financial controls over financial reporting with reference to these standalone Ind AS financial statements were operating effectively as at March 31, 2019, based on the internal control over 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.

For S.R. Batliboi & Co. LLP

Chartered Accountants ICAI

Firm Registration Number: 301003E/E300005

per Atul Seksaria

Place of Signature: Kanpur Partner

Date: 18th May, 2019 Membership Number: 086370