1. We have audited the accompanying standalone financial statements of Kajaria Ceramics Limited ('the Company'), which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including material accounting policy information and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 ('Ind AS') specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing 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 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 the financial statements under the provisions of the Act 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.
Key Audit Matters
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone 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.
5. We have determined the matters described below to be the key audit matters to be communicated in our report.
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Key audit matter
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How our audit addressed the key audit matter
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Impairment assessment of non-current investments in
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Our audit procedures related to impairment assessment of
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and loans given to Kajaria Plywood Private Limited ('KPPL'
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non-current investments in and loans given to subsidiary,
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/ 'Subsidiary')
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included, but were not limited to, the following:
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(Refer note 3c(r) for material accounting policy information
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Obtained an understanding of the management's
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with respect to investments in and loans given to subsidiary
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process, and evaluated the design and tested the
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company).
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operating effectiveness of controls on identification
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The Company has a carrying value of B40.00 crores in
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of indicators of impairment of the carrying value of
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respect of its investment in KPPL, a subsidiary company
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investment and recoverability of loans in accordance
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and has outstanding long-term loans recoverable from
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with Ind AS 36 and Ind AS 109;
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such subsidiary of B39.85 crores as at 31 March 2024.
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Assessed the professional competence, objectivity
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Considering KPPL has incurred losses and has negative net
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and capabilities of the valuation specialist used by the
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worth, the management has identified that indicators exist
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management for performing required valuations to
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that requires the management to test the carrying value
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estimate the recoverable value of the investment in
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of such investments and loans for possible impairment in
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and loan given to such subsidiary;
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accordance with Ind AS 36, Impairment of assets ('Ind AS
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I nvolved auditor's experts to assess the appropriateness
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36') and Ind AS 109, Financial Instruments ('Ind AS 109').
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of the valuation model used by the management's
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Management's assessment of the recoverable amount of
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expert and to test reasonability of the valuation
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investments in and loans given to the aforementioned
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assumptions used therein relating to discount rates,
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subsidiary company requires estimation and judgement
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future cash flows, risk premium, growth rates etc.;
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around assumptions used in the discounted cash flow
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Reconciled the future business projections used for
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valuation model adopted by the Company. The principal
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performing above said valuation for the subsidiary
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driver of recoverable value is the estimated growth in
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from the business plans approved by the board of
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the operations of the subsidiary company and ability to
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directors of the subsidiary company and ensured its
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generate cash profits in the future. The key assumptions
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consistency with our understanding of future business
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supporting management's assessment of such fair
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plans of the subsidiary company obtained through
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valuation include, but are not limited to projections of
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inquiry with the management;
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future cash flows, growth rates, risk premium and the
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Obtained and evaluated sensitivity analysis performed
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discount rates applied.
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by the management on key assumptions of implied
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Changes to these assumptions could lead to material
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growth rates during explicit period, terminal growth
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changes in estimated recoverable amounts, resulting in
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rates and discount rates;
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impairment of the carrying value of such assets.
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Performed independent sensitivity analysis on
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Considering the significance of the amounts involved and
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aforesaid key assumptions to assess the effect of
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auditor attention required to test the appropriateness
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reasonably possible variations in the current estimated
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of accounting estimate that involves high estimation
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recoverable amount to evaluate sufficiency of
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uncertainty and significant management judgement,
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headroom between recoverable value and carrying
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Impairment assessment of non-current investments in
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amount;
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and loans given to subsidiary has been considered as a key
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Tested the mathematical accuracy of the valuation
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audit matter for the current year audit.
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workings performed by the management's expert; and
Evaluated the adequacy and appropriateness of disclosures given in the standalone financial statements, including disclosure of significant assumptions, judgements and sensitivity analysis performed, in accordance with the requirement of the applicable accounting standards.
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Revenue recognition
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Our audit procedures, related to revenue recognition,
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Refer to the Company's material accounting policy
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included, but were not limited to, the following:
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information in note 3C(b) and the revenue related
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Evaluated the design and tested the operating
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disclosures in note 26 of the standalone financial
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effectiveness of Company's controls (including the
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statements.
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automated controls) around revenue recognition
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The Company recognises the revenue from customers in
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(including rebates / discounts);
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accordance with Ind AS 115 Revenue from Contracts with
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Assessed the appropriateness of Company's accounting
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Customers ('Ind AS 115') when the performance obligation
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policies for revenue recognition in accordance with
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is satisfied which is determined to be at a point in time
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the accounting principles laid down in Ind AS 115;
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when the customer obtains controls of the goods in accordance with the terms of contracts with the customers. The revenue is measured based on the transaction price specified in the contract, net of discounts, returns and
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Scrutinized sales ledgers to assess accuracy and completeness of sales transactions and revenue recognised during the year;
Performed test of details on samples of revenue
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goods and services tax.
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transactions recorded during the year, including during
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Owing to the diverse terms of contracts with customers, in line with the requirements of the standards of auditing, revenue is determined to be an area involving significant risk and hence, requiring significant auditor attention. Further, the application of Ind AS 115 requires management to make certain judgements / estimates such as determining timing of revenue recognition and transaction price including impact of variable consideration in the form of rebates and discounts as per the terms of the contracts
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a specific period before and after year end. For the samples selected, inspected supporting documents such as price lists, invoices, proof of dispatches, agreements and approved incentives / discounts schemes, to ensure correct amount of revenue is recorded in the correct period;
Tested the appropriateness of accruals for various rebates and discounts as at the year-end;
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with customers.
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Performed substantive analytical procedures on
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The Company also focuses on revenue as a key performance measure, which could create an incentive for overstating
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revenue recognised during the year which included review of price, quantity and product mix analysis etc;
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revenue and thus, the timing of revenue recognition is
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Performed other substantive audit procedures
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critical as there is a risk of revenue being recognised before
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including obtaining debtor confirmations on a sample
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the control is transferred to the customers.
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basis and reconciling revenue recorded during the
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Considering the diverse terms of contracts with customers,
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year with statutory returns; and
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size of distribution network, materiality of the amount
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Ensured the adequacy and appropriateness of
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involved and significant attention required by auditor as
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related disclosures made in the standalone financial
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mentioned above, revenue recognition has been identified
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statements in accordance with the requirements of the
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as a key audit matter for the current year audit.
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applicable accounting standards.
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Information other than the Standalone Financial Statements and Auditor's Report thereon
6. The Company's Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditor's report thereon. The Annual Report is expected to be made available to us after the date of this auditor's report.
Our opinion on the standalone 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 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 financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
7. The accompanying standalone financial statements have
been approved by the Company's Board of Directors. The Company's Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these
standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act and other accounting principles generally accepted in India. 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 statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
8. In preparing the financial statements, the Board of Directors 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
9. The Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the
Standalone Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the standalone 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 Standards on Auditing 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 financial statements.
1. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act 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(3X0 of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls 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 Board of Directors' 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 financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
12. 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.
13. 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.
14. 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 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
15. As required by section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor's Report) Order, 2020 ('the Order') issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
17. Further to our comments in Annexure I, as required by section 143(3) of the Act based on our audit, we report, to the extent applicable, 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
purpose of our audit of the accompanying standalone financial statements;
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 for the matters stated in paragraph 17(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended). ;
c) The standalone financial statements dealt with by this report are in agreement with the books of account;
d) In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;
e) On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2024 from being appointed as a director in terms of section 164(2) of the Act;
f) The modification relating to the maintenance of accounts and other matters connected therewith is as stated in paragraph 17(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);
g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company as on 31 March 2024 and the operating effectiveness of such controls, refer to our separate report in Annexure II wherein we have expressed an unmodified opinion; and
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, as detailed in note 38 (b) to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2024;
ii. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses as at 31 March 2024;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2024;
iv .a. The management has represented that, to the best of its knowledge and belief, as disclosed in note 54(ii) (A) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any persons or entity, including foreign entities ('the 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 ('the Ultimate Beneficiaries') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 54(ii) (B) to the standalone financial statements, no funds have been received by the Company from any person or entity, including foreign entities ('the 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 performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the
management representations under subclauses (a) and (b) above contain any material misstatement.
v. The interim/final dividend declared and paid by the Company during the year ended 31 March 2024 and until the date of this audit report is in compliance with Section 123 of the Act. Further, as stated in note 58 to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31 March 2024 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
vi. Based on our examination which included test checks, the Company, in respect of financial year commencing on 01 April 2023, has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except that, audit trail feature was not enabled at database level for accounting software SAP S/4 HANA to log any direct data changes, as described in note 59 to the financial statements. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of the accounting software where such feature is enabled.
For Walker Chandiok & Co LLP
Chartered Accountants Firm's Registration No.: 001076N/N500013
Nalin Jain
Partner
Place : New Delhi Membership No.: 503498
Date : 07 May 2024 UDIN: 24503498BKFQAS9551
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