The Members of Divya Jyoti Industries Limited
Report on the Audit of Standalone Financial Statements
We have audited the Standalone financial statements of Divya Jyoti Industries Limited("the Company") which comprise the Standalone Balance Sheet as at 31stMarch 2019; the Statement of Changes in Equity; the Statement of Profit and Loss(including Other Comprehensive Income) and the Cash Flow Statement for the year thenended and Notes to the Standalone Financial Statements including summary of significantaccounting policies and other explanatory information (hereinafter referred to as"Standalone Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone financial statements give the information requiredby the Companies Act 2013 (Act) in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 and loss (including other comprehensiveincome) changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing specified u/s.143(10) of the Act. Our responsibilities under those standards are further described inthe Auditor's Responsibilities for the audit of the Standalone financial statementssection of our report. We are independent of the company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India(ICAI') togetherwith the ethical requirements that are relavant to our audit of the Standalone financialstatements under the provisions of the Act and the rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Information Other than the Standalone Financial Statements and Auditors' Report thereon
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we 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 Standalone Financial Statements
The Company's management and Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view state of affairs profit and other comprehensiveincome changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)specified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management and Board of Directors isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. The company has temporarilysuspended its manufacturing operations and the lead Banker has filed the petition to NCLTunder section 7 of the Insolvency & Bankruptcy Code which is pending as on the date.
Board of Directors is also responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
- Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
- 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 that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
- Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control 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 with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters.
We describe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 in the paragraph 3 and 4 of the order.
2. As required by Section 143 (3) of the Act we report that :
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit
b. In our opinion proper books of accounts as required by law have been kept by theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss the Cash Flow Statement and theStatement of Changes in Equity dealt with by this report are in agreement with the booksof account;
d. In our opinion the aforesaid Standalone financial statements comply with theaccounting standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e. On the basis of the written representation received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof Section 164(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' and
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 in our opinionand to the best of our information and explanations given to us:
(i) The Company has disclosed the impact of pending litigations on the financialposition in its Standalone financial statements.
(ii) The Company has made provision as required under the applicable law or AccountingStandards for material foreseeable losses if any on long term contracts includingderivative contracts.
(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
| ||For Anubhav Pradhan and Co. |
|Date: May 29 2019 ||Chartered Accountants |
|Place: Indore ||Firm Registration No. 013822C |
| ||Sd/- |
| ||CA. Amit Ahuja |
| ||Partner |
| ||Membership No.: 425134 |
ANNEXURE "A' TO INDEPENDENT AUDITOR'S REPORT
The annexure referred to in Independent Auditor's Report on the Standalone financialstatements for the year ended on 31st March 2019 we report that:
i. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As explained to us and on the basis of our examination the company has regularprogramme for physical verification of its fixed assets which is reasonable with regard tothe size of the company and nature of its assets and no material discrepancies werenoticed on such verification.
(c )According to the information and explanation given to us and on the basis of ourexamination the title deeds of immovable properties are held in the name of the company.
ii. According to the information and explanation given to us the physical verificationof inventory has been conducted at reasonable intervals by the management. The procedureof physical verification of inventory followed by the management is reasonable andadequate in relation to the size of the company and nature of its business. The companyhas maintained proper record of inventories and no material discrepancies were noticed onsuch verification of inventories as compared to the book records.
iii. The company has not granted loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013.
iv. The company has not given any loans investments guarantees and security under theprovisions of section 185 and 186 of the Companies Act 2013.
v. The company has not accepted any deposits from the public.
vi. According to the information and explanation given to us and verified by us broadlythe company has maintained the cost records as prescribed by the central government undersub section 1 of section 148 of the Companies Act 2013.
However we have not made a detailed examination of Cost records with a view todetermine whether they are accurate or complete.
(a) According to the information and explanation given to us and on the basis of ourexamination of records of the company the company is regular in depositing statutorydues including provident fund employees state insurance Income tax Sales Tax ServiceTax Goods and Service Tax (GST) Duty of Customs Duty of Excise Value added tax cessand any other statutory dues to the appropriate authorities.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income-Tax Sales-TaxService Tax Goods and Services Tax Duty of Customs Duty of Excise Value Added TaxCess and other material statutory dues were in arrears as at 31st March 2019 for a periodof more than six months from the date they became payable.
(c) According to the information and explanation given to us following dues of IncomeTax sales tax service tax duty of customs or duty of excise or value added tax have notbeen deposited by the company on account of disputes.
|Name of the Statute ||Nature of dues ||Amount (in Lacs) ||Period to which the Amount relates ||Forum where dispute is pending |
|M.P. Commercial Tax Act 1994 ||Commercial Tax ||6.51 ||2004-05 ||Reference Application filed to Appellate Tribunal Bhopal |
|M.P. Commercial Tax Act 1994 ||Commercial Tax ||2.39 ||2005-06 ||Reference Application filed to Appellate Tribunal Bhopal |
|M.P. Entry Tax Act 1976 ||Entry Tax ||0.26 ||2005-06 ||Reference Application filed in Jabalpur High Court |
|M.P. Entry Tax Act 1976 ||Entry Tax ||0.79 ||2006-07 ||Writ Petition filed at Indore High Court |
|M.P. Central Tax Act 1956 ||Central Sales Tax ||57.85 ||2003-04 ||Writ Petition filed at Jabalpur High Court |
|M.P. Central Tax Act 1956 ||Central Sales Tax ||181.46 ||2004-05 ||Writ Petition filed at Jabalpur High Court |
|M.P. Value Added Tax 2002 ||Value Added Tax ||52.44 ||2006-07 ||Appeal filed at Appellate Authority Commercial Tax Indore |
|M.P. Central Tax Act 1956 ||Central Sales Tax ||39.59 ||2008-09 ||Appeal filed at Appellate Authority Commercial Tax Indore |
|M.P. Central Tax Act 1956 ||Central Sales Tax ||29.17 ||2010-11 ||Appeal filed at Appellate Authority Commercial Tax Indore |
|M.P. Central Tax Act 1956 ||Central Sales Tax ||386.62 ||2011-12 ||Appeal filed at Appellate Authority Commercial Tax Indore |
|M.P. Central Tax Act 1956 ||Central Sales Tax ||85.43 ||2012-13 ||Appeal filed at Appellate Authority Commercial Tax Indore |
|M.P. Central Tax Act 1956 ||Central Sales Tax ||25.48 ||2014-15 ||Appeal filed at Appellate Authority Commercial Tax Indore |
|M.P. Entry Tax Act 1976 ||Entry Tax ||150.41 ||2007-08 ||High Court Order came in favour of the company |
|M.P. Entry Tax Act 1976 ||Entry Tax ||223.66 ||2008-09 ||High Court Order came in favour of the company |
Note: The amount due has been shown as net of amounts paid.
The amount does not include the interest claimed but not yet quantified.
(viii) The company has defaulted in repayments of loans or borrowings to followingbanks :-
|Bank Name ||Cash Credit Limit Amount |
|Dena Bank ||127339789 |
|Oriental Bank of Commerce (OBC) ||114103520 |
|Saraswat Co-operative Bank Ltd. (SCBL) ||89993610 |
The above Cash Credit Loan Amount has been reported as NPA by the banks on differentdates during the year. The company has no other borrowings from financial institutionsbank government or debenture holders.
(ix) The company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3(ix) of the order is not applicable.
(x) According to the information and explanations given to us no fraud by the companyor on the company by its officers or employees has been noticed or reported during thecourse of our audit.
(xi) According to the information and explanation given to us and based on ourexamination of the records of the company the company has paid/provided for themanagerial remuneration in accordance with the approvals mandated by the provisions ofsection 197 read with Schedule V of the Companies Act2013.
(xii) In our opinion and according to the information and explanation given to us thecompany is not a Nidhi Company.
Accordingly paragraph 3(xii) of the order is not applicable to the company.
(xiii) According to the information and explanation given to us by the managementtransactions with related parties are in compliance with Section 177 and 188 of theCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements.
(xiv) According to the information and explanation given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xv) According to the information and explanation given to us and based on ourexamination of records of the company the company has not entered into non cashtransaction with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe order is not applicable.
(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For Anubhav Pradhan and Co. |
|Date : May 29 2019 ||Chartered Accountants |
|Place : Indore ||Firm Registration No. 013822C |
| ||CA. Amit Ahuja |
| ||Partner |
| ||Membership No.: 425134 |
Annexure B' to the Independent Auditor's Report on Standalone FinancialStatements
Report on the Internal Financial Controls under Clause (i) of sub- section 3 of Section143 of Companies Act 2013(the Act')
We have audited the internal financial controls over financial reporting of Divya JyotiIndustries Limited (the Company') as of 31st March 2019 in conjunctionwith our audit of the Standalone financial statements of the company for the year ended onthat date.
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 31st March 2019based on the internal control over financial reporting criteria established by the companyconsidering the essential component of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India.
Management's Responsibility for Internal Financial Controls
The Company's management and the Boar d of Directors are responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants ofIndia(ICAI').These responsibilities include the design implementation andmaintenance of adequate internal controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to the Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information as required under the Companies Act 2013.
Our responsibility is to express opinion on the Company's internal financial controlsover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial controls over financial reporting (theGuidance Note') and the Standards on Auditing issued by ICAI and deemed to be prescribedunder Section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting were established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls systems over financial reporting and their operatingeffectiveness. Our audit of internal financial controls system over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing risk that a material weakness exists and testing and evaluating thedesign an operating effectiveness of internal financial controls based on the assessedrisk. The procedures selected depend on the auditor's judgment including the assessmentof the risks of material misstatement of the financial statements whether due to fraud orerror.
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 with reference to Standalone FinancialStatements
A company's internal financial control over financial reporting is a process design toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statement for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial controls over financialreporting include those policies and procedures that:
(i) Pertain to the maintenance of records in reasonable details accurately and fairlyreflects the transactions and dispositions of the assets of the company.
(ii) Provide reasonable assurance that transaction 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 authorization of the managements and the directors of the company and
(iii) 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 standalone financial statements.
Inherent Limitations of Internal Financial Controls with reference to StandaloneFinancial Statements
Because of Inherent limitations of internal financial controls of financial reportingincluding the possibilities of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods are subject to the risk that the internal financial controls overfinancial reporting may become inadequate because of changes in condition or that thedegree of compliance with the policies or procedures may deteriorate.
| ||For Anubhav Pradhan and Co. |
| ||Chartered Accountants |
| ||Firm Registration No. 013822C |
|Place: Indore ||CA. Amit Ahuja |
|Date: May 29 2019 ||Partner |
| ||Membership No.: 425134 |