TO THE MEMBERS OF ATLAS JEWELLERY INDIA LIMITED
Report on the Audit of the Financial Statements Disclaimer of Opinion
We have audited the accompanying financial statements ofAtlas Jewellery IndiaLimited ("the Company") which comprises the Balance Sheet as at 31st March2019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the statement of Cash Flows for the year ended on thatdate and a summary of significant accounting policies and other explanatory informationBecause of the significance of the matters described in the basis of disclaimer of opinionparagraph specifically relating to uncertainty created due to non-recovery of tradereceivables on due dates significant doubts on the ability of the company to continue asa going concern it is not possible to form an opinion on the financial statements due topotential interaction of the uncertainties and their possible cumulative effect on thefinancial statements. Accordingly we do not express an opinion on the financialstatements.
Basis for Disclaimer of Opinion
(a) Refer Note No. 25(1) relating to overdue overseas Trade Receivables -"M/SSatwa Precious Metals & Bullion Trading (FZE)" amounting to Rs.1436362351/-(including unrealized foreign currency exchange gain or loss) isoutstanding from more than three years and the matter is pending before the court. Sincethere have been defaults in payment obligations by the overseas debtor "M/S SatwaPrecious Metals & Bullion Trading (FZE)" on due date and recoveries from thisdebtor are not significant the company has initiated legal action/ suits against them. Inview of the factors stated above and subject to company getting a favorable verdict fromthe Court and time frame of realizability of this Trade Receivable we are unable todetermine the amount of expected credit loss/ impairment based on provision matrix as perthe requirements of Ind-AS 109 "Financial Instruments" and its consequentialimpact on the financial results.
(b) The Company's operating results have been materially affected due to variousfactors including non-realization of Trade receivables notional unrealized foreignexchange gain/loss on unsecured and doubtful overseas debtor non-recovery of loans andadvances (outstanding since long) reliance on cash sales for meeting out expensesoverdue expenses payable pending income tax demands(order pending before CIT-A ) etc.These events cause significant doubts on the ability of the company to continue as a goingconcern. The company's continuing as a going concern is dependent on generation of theexpected cash flows to be able to meet its obligations as and when they arise for which amaterial uncertainty exists as we are unable to determine the possible effect on thefinancial results.
In the absence of any convincing audit evidences regarding certainty and time frame forrecovery from Trade Receivables outcome of pending legal action initiated against debtorimpact of actions and forthcoming actions that may be taken by statutory authorities dueto various factors mentioned herein etc. and in view of multiple uncertainties as statedabove we are unable to determine the possible effect on the financial result and abilityof the company to continue as a going concern.
Emphasis of Matters
We draw attention to
i) Valuation of Inventory is based on determination of estimated net realizable valueand specific identification involving technical judgment of. management and which hasbeenrelied upon by us
ii) Refer Note No. 25(3) regarding non-provision for the expected credit loss/impairment on loan and advances amounting to Rs. 8534000/- and subject to confirmation/reconciliation. No provision for the expected credit loss/impairment against these amountshas been made as the management is of the view that the Company is taking all steps torecover these loan and advances and has also issued notices for recovery of these amounts.
iii) The company has created further provision of Rs. 2400000/- (AccumulatedProvision Rs. 5600000) in the matters of income tax demand for assessment year 2014-15and 2015-16 - Refer Notes No16 to the financial statements.
iv) Refer Note No. 25(2) Balances of Trade Payable Trade Receivables Loans &Advances and Current Assets & Current Liabilities are subject to confirmation andconsequential adjustment thereof.
v) Other Incomes includes Rs. 85091070/-notional foreign currency exchange gain dueto the unrealised exchange difference of the unsecured and doubtful overseas debtor M/sSatwa Precious Metals & Bullion
Trading (FZE) - Refer Note No 25(13) to the financial statements..
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Financial Statements of the current period. These matterswere addressed in `the context of our audit of the Financial Statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.Except for the matter described in the Basis for Disclaimer of Opinion and Emphasis ofMatters section we have determined that there are no other key audit matters tocommunicate in our report.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the Financial Statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of financial statements our responsibility is to read theother information the and in doing so consider whether the other information ismaterially inconsistent with the Financial Statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the Financial Statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are responsible for over seeing the Company's financialreporting . process
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
(i) Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
(ii) Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
(iii) Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
(iv) Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions doubt on the Company's ability to continue as agoing concern. If we conclude that may cast significant that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the financial statements or if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the Company to ceaseto continue as a going concern.
(v) Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements consider quantitativemateriality and qualitative factors in (i) planning the scope may be influenced. of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the significant audit findings including anysignificant deficiencies in internal control and that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits 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 ofthe Act we give in the "Annexure A" a statement on the matters Specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by section 143(3) of the Act based on our audit we report that:
(a) We have sought and except for the matters described in the Basis for Disclaimer ofOpinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;
(b) Except for the possible effects of the matters described in the Basis forDisclaimer of Opinion paragraph in our opinion proper books of account as required by lawhave been kept by the Company so far as appears from our examination of those books;
(c) The Balance Sheet Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account;
(d) Except for the possible effects of the matters described in the Basis forDisclaimer of Opinion paragraph in our opinion the aforesaid financial statements complywith the Ind AS specified under Section 133 of the Act;
(e) The matters described in the Basis for Disclaimer of Opinion paragraph and Emphasisof Matters paragraph above in our opinion may have an adverse effect on the functioningof the Company.
(f) On the basis of written representations received from the directors as on March 312019 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164(2) of theAct.
(g) The reservation relating to the maintenance of accounts and other matters connectedtherewith are as stated in the Basis of Disclaimer of opinion paragraph and Emphasis ofMatters paragraph above;
(h) 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".
(i) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
(j) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:
i. Due to the possible effects of the matter described in the Basis for Disclaimer ofOpinion paragraph we are unable to state whether the Company has disclosed the impact ofpending litigations on its financial position in its financial statements;
ii. The Company did not have any long-term contracts including derivative contractshence the question of any material foreseeable losses does not arise;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
|For A. KAY. MEHRA & CO. || |
|Chartered Accountants || |
|(Registration No. 050004C) || |
| ||Arun Kumar Mehra |
|Place: New Delhi ||Partner |
|Date : 24/05/2019 ||Membership No. 009963 |
"ANNEXURE A" TO THE INDEPENDENT AUDITOR'S REPORT
The annexure referred to in our Independent Auditor's Report to the members of AtlasJewellery India Limited on the financial statements for the year ended 31st March 2019
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
(i) In respect of fixed assets:
(a) The Company has maintained proper records showing full particulars; includingquantitative details and situation of fixed assets; (b) As explained to us fixed verifiedby the management at regular intervals assets have been physically which in our opinionis reasonable having regard to the size of the company and nature of its business.
No material discrepancies were noticed on such physical verification;
(c) According to the information and explanations given to us and the records (leaveand license agreement) examined by us in respect of immovable properties that been takenon lease and disclosed as property plant and equipment in the Ind AS financialstatements the lease agreements are in the name of the Company.
(ii) In respect of its inventories:
(a) The Inventories of the Company have been physically verified by the management atreasonable intervals during the year; (b) The discrepancies between physical stocks andthe book stocks which have been properly dealt with were not material.
(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability partnerships or other parties covered in the Register maintained undersection 189 of the Act. Accordingly the provisions of clause 3 (iii) (a) to (C) of theOrder 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 thecompany has not made any loans investments guarantees and security as per the provisionof section 185 and 186 of the Companies Act 2013.
(v) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
(vi) As informed to us the maintenance of Cost Records has not been specified by theCentral Government under sub-section (1) of Section 148 of the Act for the businessactivities carried out by the Company.
Thus reporting under 3(vi) of the order is not applicable to the company.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The company is generally regular in depositing the undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Service TaxCustom Duty Cess and other material statutory dues as applicable with the appropriateauthorities;
(b) There were no undisputed amount payable in respect of the aforesaid dues in arrearsas at March 31 2019 for a period of more than six months from the date they becamepayable.
(c) There are no material dues of sales tax or service tax or goods and service tax orvalue added tax or custom duty or duty of excise or cess which have not been depositedwith the appropriate authorities on account of any dispute. However according toinformation and explanations given to us the following material dues of income tax havenot been deposited by the Company on account of disputes:
|Sl No. ||Name of the Statute ||Nature of Dues ||Financial Year ||Forum where Disputes is pending ||Amount (In Lacs) |
|1. ||Income Tax Act 1961 ||Income Tax ||2013-14 ||Commissioner of Income Tax (Appeals) Kochi ||410.46 |
|2. ||Income Tax Act 1961 ||Income Tax ||2014-15 ||Commissioner of Income Tax (Appeals) Kochi ||423.65 |
(viii) The Company has not taken any loans or borrowing from financial institutionsbanks and government or has not issued any debentures. Hence reporting under clause 3(viii) of the Order is not applicable to the Company.
(ix) The company has not raised moneys during the year by way of initial public offeror further public offer including debt instruments or term loans and hence reporting underclause 3 (ix) of the Order is not applicable to the Company.
(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 year. (xi) In our opinion and according to theinformation and explanations given to us the managerial remuneration has been paid orprovided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Act.
(xii) The nature of the company is not a Nidhi Company and hence reporting under clause3 (xii) of the Order is not applicable to the Company.
(xiii) The Company has not made any related party transactions prescribed with theprovision of section 177 and 188 of the Companies Act 2013.
(xiv) During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause 3 (xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to usduring the year the company has not entered into any non-cash transactions with itsdirectors or persons connected to its directors and hence provisions of section 192 ofCompanies Act 2013 are not applicable to the Company.
(xvi) In our opinion the company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
| ||For A. KAY. MEHRA & CO. |
| ||Chartered Accountants |
| ||(Registration No. 050004C) |
| ||Arun Kumar Mehra |
|Place: New Delhi ||Partner |
|Date : 24/05/2019 ||Membership No. 009963 |
"Annexure B" to the Independent Auditor's Report of even date on theFinancial Statements of Atlas Jewellery India Limited.
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of AtlasJewellery India Limited ("the Company") as of March 31 2019 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
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 ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal
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 andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
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 systemover financial
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial assurance regarding thereliability of financial reporting and the preparation of financial purposes in accordancewith generally accepted accounting principles. A company's internal financial control 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 regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
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 the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
| ||For A. KAY. MEHRA & CO. |
| ||Chartered Accountants |
| ||(Registration No. 050004C) |
| ||Arun Kumar Mehra |
|Place: New Delhi ||Partner |
|Date: 24/05/2019 ||Membership No. 009963 |