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JHS Svendgaard Laboratories Ltd.

BSE: 532771 Sector: Consumer
NSE: JHS ISIN Code: INE544H01014
BSE LIVE 15:46 | 11 Dec 68.40 -1.65
(-2.36%)
OPEN

71.00

HIGH

71.00

LOW

68.00

NSE 15:46 | 11 Dec 68.55 -2.00
(-2.83%)
OPEN

70.55

HIGH

70.55

LOW

68.15

OPEN 71.00
PREVIOUS CLOSE 70.05
VOLUME 36959
52-Week high 83.05
52-Week low 34.95
P/E 21.44
Mkt Cap.(Rs cr) 305
Buy Price 68.40
Buy Qty 499.00
Sell Price 0.00
Sell Qty 0.00
OPEN 71.00
CLOSE 70.05
VOLUME 36959
52-Week high 83.05
52-Week low 34.95
P/E 21.44
Mkt Cap.(Rs cr) 305
Buy Price 68.40
Buy Qty 499.00
Sell Price 0.00
Sell Qty 0.00

JHS Svendgaard Laboratories Ltd. (JHS) - Auditors Report

Company auditors report

Independent Auditor's Report

To the Members of

JHS Svendgaard Laboratories Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of JHS SvendgaardLaboratories Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2017 the Statement of Profit and Loss and the Cash Flow Statement for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014 (as amended). This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

Referencing to the note no. 33 to the standalone financial statements the Company hasnot recognised an income amounting to Rs. 2750.00 Lakhs on account of compensation agreedand received subsequent to the year-end in terms of settlement agreement with itscustomers dated March 28 2017 in the financial statements for the year ended March 312017 which constitutes a departure from the Accounting Standards prescribed in section133 of the Companies Act 2013. Had the management recognised the said exceptional incomewould have increased by Rs. 2750.00 Lakhs. The carrying amount of other current assetswould have increased by Rs. 2475 Lakhs net profit after tax and reserves and surpluswould have increased by Rs. 1900.25 Lakhs and deferred tax assets would have reduced byRs. 849.75 Lakhs.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofa_airs of the Company as at March 31 2017 and its profit and its cash flows for the yearended on that date in India.

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 Section 143(11) of the Act we givein the Annexure "A" a statement on the matters specified in paragraphs 3 and 4of the Order.

2. As required by Section 143(3) of the Act we report to the extent applicable that:

a) We have sought and except for the possible effects of the matter described in theBasis for Qualified Opinion paragraph above obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;

b) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;

c) The standalone financial statements dealt with by this report are in agreement withthe books of account;

d) Except for the matter described in the Basis for Qualified Opinion paragraph abovein our opinion the aforesaid standalone financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 (as amended);

e) On the basis of the written representations received from the directors as on March31 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2017 from being appointed as a director in terms of Section164(2) of the Act;

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its standalonefinancial position in its financial statements- Refer Note 32 to the standalone financialstatements;

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

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

iv. The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes during the period from November 82016 to December 30 2016. Based on audit procedures and relying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company and as produced to us by the Management – Refer Note 43

For S.N. Dhawan & Co LLP

(Formerly S. N. Dhawan & Co.)

Chartered Accountants

Firm Registration No.: 000050N/N500045

S. K. Khattar

Partner

Membership No.: 084993

Place: New Delhi

Date: May 23 2017

Annexure "A" to the Independent Auditor's Report

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of the Independent Auditor's Report of even date to the members ofJHS Svendgaard Laboratories Limited on the standalone financial statements as of and forthe year ended March 31 2017

(i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.

b) The Property Plant and Equipment are physically verified by the managementaccording to a phased programme designed to cover all items over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and the natureof its assets. Pursuant to the programme a portion of the Property Plant and Equipmenthas been physically verified by the management during the year and no materialdiscrepancies have been noticed on such verification.

c) According to the information and explanations given to us and the records examinedby us and based on the examination of the title deeds provided to us we report that thetitle deeds of all the freehold immovable properties (which are included under the head‘Property Plant and Equipment) are held in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year except for stocks lying with a third party. For stocks lyingwith a third party at the year-end written confirmations have been obtained by themanagement. According to the information and explanations given to us no materialdiscrepancies were noticed on the aforesaid verification.

(iii) According to the information and explanations given to us the Company hasgranted interest free unsecured loans to companies covered in the register maintainedunder Section 189 of the Companies Act 2013 in respect of such loans;

a) in our opinion the terms and conditions of grant of such loans are not prima facieprejudicial to the company's interest.

b) no repayment schedule has been specified and accordingly the question of regularityin repayment of principal amount does not arise. Further as stated above these loans areinterest free and repayment of interest does not arise.

c) in the absence of stipulated schedule of repayment of principal we are unable tocomment as to whether there is any amount which is overdue for more than 90 days andwhether reasonable steps have been taken by the Company for recovery of the amount.

(iv) In our opinion and according to the information and explanations given to us theCompany has not entered into any transaction covered under Sections 185. However theCompany has complied with the provisions of Sections 186 of the Act in respect of loansinvestments guarantees and security.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year and had no unclaimed deposits at thebeginning of the year 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 clause3(v) of the Order are not applicable.

(vi) According to the information and explanations given to us the Central Governmenthas not specified maintenance of cost records under sub-section (1) of Section 148 of theAct in respect of Company's products/ services. Accordingly the provisions of clause3(vi) of the Order are not applicable.

(vii) a) According to the information and explanations given to us undisputedstatutory dues including provident fund employees' state insurance income-taxsales-tax service tax duty of customs duty of excise value added tax cess and othermaterial statutory dues as applicable have generally been regularly deposited to theappropriate authorities though there has been a slight delay in a few cases. Further noundisputed amounts payable in respect thereof were outstanding at the year-end for aperiod of more than six months from the date they became payable.

b) According to the information and explanations given to us there are no dues inrespect of income-tax sales-tax service tax duty of customs duty of excise and valueadded tax that have not been deposited with the appropriate authorities on account of anydispute.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans to banks and financial institutions.The Company does not have any loans or borrowings from any government or debenture holdersduring the year.

(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any moneys by way of initial public offer or further public offer(including debt instruments). The term loans raised were applied for the purposes forwhich they have been raised.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or on the Company by its Officers or employees hasbeen noticed or reported during the period covered by our audit.

(xi) In our opinion and according to the information and explanations given to usmanagerial remuneration has been provided by the Company in accordance with the requisiteapprovals mandated by the provisions of Section 197 of the Act read with Schedule V to theAct.

(xii) In our opinion the Company is not a Nidhi Company.

Accordingly provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion and according to the information and explanations given to usall transactions with the related parties are in compliance with Sections 177 and 188 ofAct where applicable and the requisite details have been disclosed in the financialstatements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us during the year theCompany has made preferential allotment of shares. In respect of the same in our opinionthe Company has complied with the requirement of Section 42 of the Act and the Rulesframed there under. Further in our opinion the amounts so raised have been used for thepurposes for which the funds were raised. During the year the Company did not makeprivate placement of shares/ fully/partly convertible debentures.

(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with the directors or persons.Accordingly provisions of clause 3 (xv) of the Order are not applicable.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly provisions of clause 3 (xvi) of the Order are notapplicable.

For S.N. Dhawan & Co LLP

(Formerly S. N. Dhawan & Co.)

Chartered Accountants

Firm Registration No.: 000050N/N500045

S. K. Khattar

Partner

Membership No.: 084993

Place: New Delhi

Date: May 23 2017

Annexure "B" to the Independent Auditor's Report of even date to the membersof JHS

Svendgaard Laboratories Limited on the standalone financial statements for the yearended March 31 2017

Independent Auditor's report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

1. We have audited the internal financial controls over financial reporting of JHSSvendgaard Laboratories Limited ("the Company") as of March 31 2017 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on Internal financial controls over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal financial controls over financial reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and e_cient conduct of the company'sbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's Internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal financial controls over financial reporting(the "Guidance Note") and the Standards on Auditing issued by the Institute ofChartered Accountants of India (ICAI) and deemed to be prescribed under section 143(10) ofthe Act to the extent applicable to an audit of internal

financial controls both applicable to an audit of Internal Financial Controls andboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate Internal financial controls over financial reporting were established andmaintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the Internal financial controls over financial reporting and their operatingeffectiveness. Our audit of Internal financial controls over financial reporting includedobtaining an understanding of Internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's Internal financial controls overfinancial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

6. A company's Internal financial controls over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's Internal financial controls overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

7. Because of the inherent limitations of Internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the Internal financial controls over financialreporting to future periods are subject to the risk that Internal financial controls overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based onInternal financial controls over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal financial controls over financial reporting issued by the Institute ofChartered Accountants of India.

For S.N. Dhawan & Co LLP

(Formerly S. N. Dhawan & Co.)

Chartered Accountants

Firm Registration No.: 000050N/N500045

S. K. Khattar

Partner

Membership No.: 084993

Place: New Delhi

Date: May 23 2017