To the Members of
ATLAS JEWELLERY INDIA LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of Atlas Jewellery India Limited("the Company") which comprises the Balance Sheet as at 31st March 2017 theStatement of Profit and Loss and Cash Flow Statement for the year then ended on that dateand a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with rule 7 of Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent;design implementation and maintenance of adequate internal financial controls that areoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
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 there under.
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 financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2017 its profit/loss and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to the following matters in the Notes to the financial statements:
(i) Note 26.1 to 26.4 in the financial statements indicates that the Company has anoverseas debtor "M/S Satwa Precious Metals & Bullion Trading (FZE)"amounting to Rs.1347002082/- which constitutes more than 80% of company's Total Assetsas at the balance sheet date. The Company has filed a recovery suit against the said partybearing No. IOP No. 7 of 2016 before the Honorable Sub Court North Paravoor Kerala forrecovery of its entire export dues and as a consequence of the filing of recovery suitsthe debt gets classified as legal debtors. Since the matter is under judicial review thecompany has not created any provision for the bad and doubtful debts in the currentfinancial year.
(ii) Note 26.5 to the financial statements describes that The company has booked Rs18113747 as loss of fixed assets (leasehold improvements) due to termination of leaveand license agreement for it showroom premises at Vashi Navi Mumbai and as part of itsbusiness strategy the Company has also exited its leave and license agreement executedwith Phoenix Market City Mall Bengaluru. The portion of this amortized fixed asset was38% approximately of the Company's Total Fixed Assets (including the said asset) as atbalance sheet date. Further in Previous financial year the company had terminated itslease agreement from a leased property in Chennai also which indicates that the company isexiting from its lease agreements regularly and there is a down trend towards to businessoperations of the company.
(iii) Note 25 to the financial statements describes that Balances of Sundry DebtorsSundry Creditors and Long Term Loans & advances (Other Loans & Advances) andShort Term Loan & Advances are subject to confirmation as on balance sheet date.
(iv) A statement from the company in Note 36 to the financial statements describesthat: "There is a complaint filed in "Economic Offence Department (EOW)"against the company and its promoters by Commercial Bank of Dubai (Complainant). Thecomplainant has mixed up issues and tried to bring a private arrangement between theComplainant and the promoter which had purportedly taken place sometime in April 2013 inUnited Arab Emirates (U.A.E) to India and make our Company as parties to the complaint.The Company is no way connected to the alleged transaction nor concerned with the same orhas been aware of the same till the complaint was lodged. However the Company as a lawabiding citizen had provided all the necessary information as being sought from it by theinvestigating officer and fully co-operating and supporting the investigation in order tobring the matter for an early closure".
These conditions along with the Going Concern matter stated in Note 26 indicates theexistence of a material uncertainty that may cast significant doubt about the Company'sability to continue as a going concern. However the financial statements of the Companyhave been prepared on a going concern basis for the reasons stated in the said Note.
Our opinion is not modified in respect of these matters.
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 section143 of the Act we give inthe "Annexure
A" statement on the matters Specified in paragraphs 3 and 4 of the Order to theextent applicable.
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 bestof our knowledge and belief were necessary for the purpose of our audit;
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;
(c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
(d) In our opinion the aforesaid financial statements comply with the applicableAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
(e) The going concern matter described under the Emphasis of Matters paragraph abovein our opinion may have an adverse effect on the functioning of the Company.
(f) On the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of Section 164(2) of theAct.
(g) 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".
(h) 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) The Company has disclosed the impact of pending litigations wherever quantifiableon its financial position in its financial statements - Refer Note 22 to the financialstatements.
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
"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 ('the company') on the financial statements for the year ended 31st March 2017
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 including aquantitative details and situation of fixed assets;
(b) As explained to us fixed assets have been physically verified by the management atregular intervals which in our opinion is reasonable having regard to the size of thecompany and nature of its business. No material discrepancies were noticed on suchphysical verification;
(c) As explained to us no immovable property are held 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 and the book stocks which have beenproperly 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 in respect of theactivities carried on by the company.
(vii) (a) According to the information and explanations given to us and based on therecords of the company examined by us the company is regular in depositing the undisputedstatutory dues including Provident Fund Employees' State Insurance Income-taxSales-tax Wealth Tax Service Tax Duty of Custom Duty of Excise Value Added Tax Cessand other material statutory dues as applicable with the appropriate authorities;
According to the information and explanations given to us no undisputed amountspayable in respect of the aforesaid dues were outstanding as at 31st March 2017 for aperiod of more than six months from the date of becoming payable;
(b) According to the information and explanations given to us there are no materialdues of sales tax or wealth tax or service tax or duty of customs or duty of excise orvalue added tax or cess which have not been deposited with the appropriate authorities onaccount of any dispute. However according to information and explanations given to usthe following material dues of income tax have not been deposited by the Company onaccount 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) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of dues to banks. The Company has not takenany loan either from financial institutions or from the government and has not issued anydebentures.
(ix) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not raised moneys by way of initial public offeror further public offer including debt instruments.
(x) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
(xi) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act.
(xii) The nature of the company is not Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are 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) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.
(xv) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has entered into non-cash transactions with Managingdirectors as per the provision of section 192 of Companies Act 2013 - Refer Note 37 to thefinancial statements.
(xvi) In our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi)of the Order are not applicable to the Company and hence not commented upon.
"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 under Clause (i) of Sub-section 3 of Section143 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 2017 in conjunction withour audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information 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 ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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 judgement 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 reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management 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 the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017.
For A. KAY. MEHRA & CO.
Chartered Accountants (Registration No. 050004C)
Membership No. 501957
Place: New Delhi
Date: May 26 2017