To the Members of Jagatjit Industries Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Jagatjit Industries Limited (the Company) which comprise the Balance Sheet as at March 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and notes to the standalone financial statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the standalone financial statements).
In our opinion and to the best of our information and according to the explanations given to us except the effects of matter described in the Basis for Qualified Opinion section of our report the aforesaid standalone financial statements give the information required by the Companies Act 2013 as amended (the Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31 2019 its loss including other comprehensive loss changes in equity and its cash flows for the year ended on that date.
Basis for qualified opinion
(1) In the opinion of the management Trade Receivable and Loans and Advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet
Company has a policy of providing for (a) all debts outstanding beyond 3 years or (b) where recovery is considered doubtful irrespective of the fact that legal action has been initiated or not instead the method prescribed under Ind AS 109. The company does not have effective system of obtention of confirmation from Trade Receivable Trade payable and other Advances. The financial impact of these are not ascertainable and to that extent we cannot comment upon the adequacy of provision for doubtful debts and advance. However non - moving debts outstanding beyond 1 year are to the extent of Rs. 1135 Lacs which is static balance and for which confirmations and reconciliations are not available and have not been provided for The system of obtaining confirmations and reconciliation need to be strengthened.
Further Trade payables Loan & advance and trade receivable (other than above) are subject to reconciliation & confirmation.
The financial impact of all this is not ascertainable and to the extent we do not have any information in respect of such balances.
(2) In the books of accounts of the Company an amount of Rs. 1803 Lacs is outstanding as on March 31 2019 (' 2970 Lacs as on March 31 2018) being an advance to its wholly owned subsidiary M/s S.R.K. Investments Pvt. Ltd. since 2010-11. Subsequent to March 31 2019 the Company has further received a sum of Rs. 300 Lacs. Similarly an advance of Rs. 185 Lacs has been outstanding (more than 10 years) in the name of L P Investment Ltd (Subsidiary Company) and investment of Rs. 1020 Lacs (since 2012-13) is made in the same subsidiary making total exposure of Rs. 1205 Lacs.
The Company's management based on internal assessments and evaluations have represented that the balance outstanding advance and investment are recoverable and realisable and that no accrual for diminution of advances/ investment is necessary as at balance sheet date. The company has received confirmation from the aforementioned subsidiaries on March 31 2019.
The Company has not created a provision against the advances/investment in its books of accounts. In our opinion there is significant uncertainty and doubt about the recovery/ realisability of the advance/investment as considerable period of time has elapsed from grant of advances/ investment and therefore a provision for doubtful advance/ investment should have been accounted for in the financial statements for the year ended March 31 2019.
Consequently the loss for the year ended March 31 2019 is understated and Reserves and Surplus (other equity) as at March 31 2019 are overstated to the extent of Rs. 3843 Lacs.
It may be noted that modified opinion was given in respect of the advance and trade receivable matters by us on the Financial Statements for the period ended March 31 2018. We have also given modified opinion vide report (dated May 30 2019) in pursuance of Regulation 33 of SEBI (listing obligations)
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the standalone financial statements.
Emphasis of Matter
Attention is drawn to Note No. 3(iv) regarding installation of plant & machinery Note No. 4(vii) regarding fair value of investment properties Note No. 7 (i) regarding realisation of security deposit of Sikandrabad and Sahibabad Plant Note No. 8 (i) regarding MAT credit Note No. 8(iv) & Note 38 (iii) regarding provision made for advance to director in earlier year Note No. 11 (i) regarding unconfirmed bank balance Note No. 12 (i) & (ii) regarding security deposits and loans and advances to employees Note No. 13 (ii) regarding commercial advance of Rs. 63 Lacs to a company Note No. 14 (i) regarding interest free advance for business purposes and pending receipt of bills for advances made for business purposes Note No. 15 regarding assets held for sale Note No. 18(v) regarding pending finalisation of terms and conditions related to inter corporate loan Note No. 21(ii) regarding provision service tax Note No. 22 (i) and 23(iii) regarding interest payable to MSME Note No. 23(iv) regarding amount payable to employees pending full & final settlement Note No. 23(v)
(a) regarding provision of sales promotion pending credit to parties on account of reconciliation Note No. 24(i) regarding amount received from customer pending reconciliation Note No. 24(iii) regarding provision for service tax Note No. 34B(i) regarding deferred tax and Note No. 43 regarding various risks.
Without qualifying our opinion we draw attention to Note 2.1 (iv) in the financial statements which indicates that the Company has been suffering losses for the last six years and incurred a net loss of Rs. 6627 Lacs during the year ended March 31 2019 and as of that date the company's current liabilities exceeding the total assets by Rs. 10171 Lacs. These conditions along with other matters as set forth in Note 2.1 (iv) indicate the existence of a material uncertainty that may cast significant doubt about the company's ability to continue as a going concern. Company has disclosed the mitigating factors vide the said Note and we have relied upon the same.
The Internal Audit system of the company needs to be substantially strengthened in scope coverage and compliance in respect of Hamira Plant and Head Office operations.
Our opinion is not qualified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. In addition to the matter described in the basis of qualified opinion section we have determined the matters described below to be the Key Audit Matter to be communicated in our report. For each matter below our description of how our audit addressed the matter is provided in that context.
|The Key Audit Matter||How to the matter was addressed in our audit|
|(a) Litigation Matters:||Reviewing the outstanding litigations against the Company for consistency with the previous years. Enquire and obtain explanations for movement during the year.|
|The company operates in various states within India exposing it to a variety of different Central and State Laws regulations and interpretations thereof. In this regulatory environment there is an inherent risk of litigation and claims.||Discussing the status of significant known actual and potential litigations with the Company's in-house officials and other senior management personnel who have knowledge of these matters and assessing their responses.|
|Consequently provisions and contingent liability disclosures may arise from direct and indirect tax proceeding legal proceedings including regulatory and other government/department proceedings as well as investigations by authorities and commercial claims.|
|At March 312019 the Company's contingent liabilities for legal matters were Rs. 1148 Lacs (refer Note 36 to the standalone financial statement) and provision for service tax aggregated 407 Lacs (refer Note 21(A) & Note 24(iii)). The most significant contingent liability pertains to service tax of Rs. 389 Lacs and sales tax of Rs. 562 Lacs.||Reading the latest correspondence between the Company and the various tax/legal authorities and review of correspondence with / legal opinions obtained by the management from external legal advisors where applicable for significant matters and considering the same in evaluating the appropriateness of the Company's provisions or disclosures on such matters.|
|Management applies significant judgment in estimating the likelihood of the future outcome in each case when considering whether and how much to provide or in determining the required disclosure for the potential exposure of each matter. This is due to the highly complex nature and magnitude of the legal matters involved along with the fact that resolution of tax and legal proceedings may span over multiple years and may involve protracted negotiation or litigation. These estimates could change substantially overtime as new facts emerge as each legal case progresses. Given the inherent complexity and magnitude of potential exposures across the Company and the judgment necessary to estimate the amount of provisions required or to determine required disclosures this is a key audit matter.||Examining the Company's legal expenses and reading the minutes of the board meetings in order to ensure that all cases have been identified.|
|With respect to tax matters involving our tax specialists and discussing with the Company's tax officers their views and strategies on significant cases as well as the related technical grounds relating to their conclusions based on applicable tax laws.|
|Assessing the decisions and rationale for provisions held or for decisions not to record provisions or make disclosures.|
|For those matters where management concluded that no provisions should be recorded considered the adequacy and completeness of the Company's disclosures.|
|(b) Loan to employees: Company has given loan of Rs. 894 Lacs to its senior employees in earlier years. Stipulation of repayment is not laid out. Management has represented that the amount will be recovered during the course of time without specifying the time frame.||Our procedures included: We have perused the detail and have verified the repayments made by employees during the year.|
|We have verified balance confirmation.|
|We have advised the company to specify the time frame for recovery of the same.|
|We have disclosed the issue in the emphasis of matter paragraph.|
|(c) Advance to supplier:|
|Company had made an interest free advance of Rs. 270 Lacs in 2017-18 towards supply of sales promotion articles. Vide letter dated 06.06.19 the Company has not approved the samples and has requested for refund of the amount. Management has obtained the confirmation from the supplier.||We have perused the confirmation letter of the supplier and relied upon the assertion of Management that the amount will be recovered. We have disclosed the issue vide emphasis of matter paragraph|
|(d) Interest to MSME Supplier:|
|Other current liabilities include Rs. 217 Lacs towards interest accrued and payable to MSME as per MSMED Act 2006. Company has initiated the exercise of identification of enterprises to whom this amount is payable and has informed that once identification is done the payment will be made.||We have applied the relevant audit procedures and have disclosed the issue in Emphasis of matter in our report.|
|(e) Balance with Govt. Authorities:|
|Other non-current assets include Rs. 67 Lacs as deposit with revenue authorities. Management has informed that the amount represents deposit in earlier years as pre condition for filing appeals against various demands under different statutes. Management has initiated an exercise of reconciliation and adjustment if any will be made on completion of exercise||We have perused contingent liabilities of the company and have gone through various correspondences. We have relied upon the assertion of Management and have disclosed the issue vide note 8 (ii) of Notes to the financial statements |
|(f) Other current assets include MAT credit of Rs. 968 Lacs u/s115JB of the Act. Company continues to suffer losses however company is of the view that in view of mitigating factors adopted by company to curtail losses there would be sufficient Tax profits in future to avail MAT credit for the period of 5 to 7 years.||We have perused details of MAT credits in earlier years. No further credit for C.Y loss is created. We have relied upon the management assertion and disclosed the issue vide emphasis of matter para in our report.|
|(g) Revenue recognition from sale of products:|
|Revenue from sale of products is recognised when control of products has transferred to the customer and there is no unfulfilled obligation that could affect the customer's acceptance of products. Revenue from the sale of products is measured at the fair value of the consideration received and receivable net of returns and allowances discounts and incentives.||Our audit procedures included amongst others assessing the Company's revenue recognition accounting policy including those relating to allowances discounts and incentives.|
|We understood evaluated and tested the operating effectiveness of internal controls over recognition of revenue discounts and incentives.|
|Significant judgment is required in estimating accruals relating to allowances discounts and incentives recognised in relation to sales made during the year.||We performed test of details on a sample basis and inspected the underlying documents relating to sales and accrual of discounts and incentives.|
|We tested sales transactions near year end date as well as credit notes issued after the year end date.|
|We discussed and evaluated management assessment of estimates relating to allowances discounts and incentives.|
|We assessed the disclosures in the standalone financial statements in respect of revenue.|
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Company's annual report but does not include the financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company's Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position financial performance total comprehensive income changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.
Those Charged with Governance are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained a material uncertainty exists related to events or condition that may cast significant doubt on the Company's ability to continue as going concern. We draw attention to Note 2.1 (iv) in the financial statements which indicates that the The Company has been suffering losses for the last six years and incurred a net loss of Rs. 6627 Lacs during the year ended March 312019 and as of that date the company's current liabilities exceeding the total assets by Rs. 10171 Lacs. These conditions along with other matters as set forth in Note 2.1 (iv) indicate the existence of a material uncertainty that may cast significant doubt about the company's ability to continue as a going concern. Company has disclosed the mitigating factors vide the said Note and we have relied upon the same.
Evaluate the overall presentation structure and content of the standalone financial statements including the disclosures and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
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 of the Act we give in the Annexure A a statement on the matters specified in the paragraph 3 and 4 of the order.
2. With respect to matter to be included in the Auditor's Report under section 197(16) of the Act;
I n our opinion the managerial remuneration for the year ended March 312019 has been paid/provided by the Compnay to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
3. 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 best of our knowledge and belief were necessary for the purposes of our audit.
(b) i n our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) the balance sheet the statement of profit and loss including other comprehensive income statement of changes in equity and the statement of cash flow dealt with by this Report are in agreement with the books of account;
(d) in our opinion the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 1 33 of the Act read with Companies (Indian Accounting Standards) Rules 2015 as amended.
(e) on the basis of the written representations received from the directors as on March 31 2019 taken on record by the Board of Directors none of the directors is disqualified as on March 31 2019 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate report in Annexure B; and
(g) with respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of our information and according to the explanations given to us:
i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements;
ii. the Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses;
iii. there has not been delay in transferring amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
for Madan & Associates
Firm's registration number: 000185N
|M. K. Madan|
|Date: August 14 2019||Proprietor|
|Place: New Delhi||Membership number: 082214|
Annexure A to The Independent Auditors' Report of even date on the Standalone Financial Statements of Jagatjit Industries Ltd.
Statement of the matters specified in paragraph 3 and 4 of the Companies (Auditor's Report) order 2016 ('the order')
(i) In respect of fixed assets:
(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The Company has a programme of annual verification of fixed assets which in our opinion is reasonable having regard to the size of the company and the nature of its assets. Pursuant to the said programme fixed assets were physically verified by the Management during the year. On reconciliation of physical verification report with assets record it is observed that certain fixed assets are not physically available which in the opinion of management are not significant.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company and certificate provided by the Company the title deeds of immovable properties are held in the name of the Company except in respect of Immovable property (4th and 5th Floor Bhandari House Nehru Place Delhi) having gross book value of Rs. 103 Lacs (Original Cost) and Net book value of Rs. 91 Lacs.
Title deeds in respect of Immovable Properties as mentioned in Note No. 18 are held by the lenders as Equitable Mortgage against the borrowing. Confirmations from the banks are not received.
Company has provided photocopies of the title deeds/ lease deeds in respect of Leasehold Land situated at Sikandrabad (U.P.) and Sahibabad (U.P.) as the originals are held by Uttar Pradesh State Industrial Development Corporation (UPSIDC).
(ii) In respect of its inventories:
(a) As explained to us inventories have been physically verified during the year by the Management at reasonable intervals other than stock of Rs. 757 Lacs lying with port authorities.
(b) In our opinion and according to the information and explanations given to us the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations given to us the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.
(iii) (a) According to Information and explanation given to us the Company has granted loan to its subsidiary and advance to associate company covered in register maintained u/s 189 of the Companies Act 2013 in earlier years. No loan was granted to any entity covered in the register maintained u/s 189 of the Companies Act 2013 during the current year.
(b) I n respect above advances no terms and conditions and stipulation regarding payment of principal amount or interest have been laid out. Advance to associate company has been received during the year.
(c) In respect of overdue advance of Rs. 1988 Lacs given to subsidiary companies the matter has been qualified by us vide paragraph 2 of basis for qualified opinion of our audit report.
(iv) (a) In our opinion and according to the information and explanations given to us the Company has not given any loans and made any investment within the meaning of section 185 & 186 of the Act. Thus paragraph 3(iii) of the Order is not applicable to the Company.
(b) Company has represented before us that provision of section 185/186 are not applicable for advances given prior to Companies Act 2013 and are still outstanding.
(v) According to the information and explanation given to us the company has not accepted any deposits during the year except advance from customers of Rs. 12065085/- outstanding more than 365 days. Company is of the view that the amount is not advance from customers but needs to be adjusted against debit balance of receivables. Pending reconciliation amount is shown as advance from customers and hence claimed exempted deposits. Pending reconciliation we are unable to comment upon this. Company is of the view that provision of Section 74(1)(b) of the Act are complied with in pursuance of Rule 19 of the Acceptance of Deposits Rules 2014. It is also confirmed by the company that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal.
(vi) According to the information and explanations given to us and certified by the management provision of Section 148(1) of the Companies Act 2013 for maintenance of Cost records are not applicable as products manufactured by the company as specified in Table A/Table B under rule 3 of Companies (Cost Records & Audit Rules) 2014 represents a by-product and no cost is incurred for the same.
(vii) In respect of statutory dues:
(a) According to the information and explanations given to us and on the basis of our examination of the records of the Company the company has generally been regular in depositing undisputed statutory dues including provident Fund Employees State insurance income tax sales tax wealth tax service tax duty of customs duty of excise value added tax cess and other material statutory dues applicable to it with the appropriate authorities. There were no undisputed amounts payable in respect of the aforesaid statutory dues in arrears as at 31.03.2019 for a period of more than six months from the date they became payable except service tax payable of Rs. 54 Lacs which represent difference on provision made in respect of Royalty income on accrual basis and payment made on actual receipt for which identification of parties and reconciliation thereof is under process as certified by the management.
(b) (i) According to the information and explanations
given to us there are no dues of income tax sales tax wealth tax service tax duty of customs duty of excise value added tax cess which have not been deposited as at 31.03.2019 on account of any dispute except as follows:
|Sr. No.||Name of Statute||Nature of Dues||Amount m||Period for which the amount relates||Forum where dispute is pending.|
|1||The Finance Act 1994||Wrong availment of Service Tax Cenvat Credit||5382166||October 2003 to September 2007||CESTAT Chandigarh|
|2||The Finance Act 1994||Penalty in the above matter||5382166||October 2003 to September 2007||CESTAT Chandigarh|
|3||The Finance Act 1994||Wrong availment of Service Tax Cenvat Credit||6970632||October 2007 to March 2008||CESTAT Chandigarh|
|4||The Finance Act 1994||Penalty in the above matter||6970632||October 2007 to March 2008||CESTAT Chandigarh|
|5||The Finance Act 1994||Demand and Penalty towards Management maintenance and Repair Services||1797534||June 2005||CESTAT Chandigarh|
|6||The Finance Act 1994||Demand and Penalty towards conversion charge for SMP & Ghee under category of Supply of Tangible Goods||6221720||May 2008 to April 2010||CESTAT Chandigarh|
|7||The Finance Act 1994||Penalty in the above matter||6221720||May 2008 to April 2010||CESTAT Chandigarh|
|8||Sales Tax under Telangana VAT Act||Demand and Penalty on account of VAT on Royalty Income||10300000||2012 - 13 to November 2014||Appellate Deputy Commissioner Hyderabad|
|9||Sales Tax under Punjab VAT Act & Central Sales Tax Act||Demand and Penalty on account of disallowance of VAT input credit on Rice Husk||21967703||2010 - 11||Deputy Excise and Taxation Commissioner (Appeals) Jalandhar|
|10||Sales Tax under Haryana VAT Act||Demand and Penalty on account of disallowance of VAT input credit on Rice Husk||3969900||2011 -12||Joint Excise & Taxation Commissioner (A) Rohtak|
|11||Sales Tax under Jharkhand VAT Act||Demand in respect to VAT assessment||2032974||2013-14||Commissioner (Appeals) Ranchi|
|12||Sales Tax under Punjab VAT Act & Central Sales Tax Act||Disallowance of ITC on purchase of Rice Flour||10754088||2011 -13||VAT Appellate Tribunal|
|13||Rajasthan VAT Act.||Demand in respect of VAT||4544581||2015-16 & 2016-17||VAT Commissioner Rajasthan|
|14||Jharkhand VAT Act||Demand in respect of VAT||397965||2014-15||Commissioner (Appeals) Ranchi|
|15||Andhra Pradesh VAT Act||Demand in respect of VAT||2297671||2012-13||Appellate Deputy Commissioner|
(ii) Company made provision for service tax of Rs. 353 Lacs demanded by Orissa State Beverages Corporation Ltd. against their liability to service tax in earlier year. The matter is pending before Service Tax Terminal Orissa.
(viii) According to the information and explanations given to us the Company has not defaulted in repayment of loans or borrowing to a financial institution bank Government during the year.
(ix) In our opinion and according to the information and explanation given to us the term loans have been applied by the company during the year for the purposes for which they were obtained.
(x) According to the information and explanations given to us no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given by the management the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.
(xii) In our opinion and according to the information and explanations given to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and on the basis of Legal opinion (regarding maintenance charges of Rs. 211 Lacs paid to corporate facility management) (refer Note No. 38B(iii)(c)) obtained by the company and based on our examination of the records of the Company transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and based on our examination of the records of the Company the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
(xv) According to the information and explanations given to us and based on our examination of the records of the Company the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly paragraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
for Madan & Associates
Chartered Accountants Firm's registration number: 000185N
|M. K. Madan|
|Date: August 14 2019||Proprietor|
|Place: New Delhi||Membership number: 082214|
Annexure B to The Independent Auditors' Report of even date on the Standalone Financial Statements of Jagatjit Industries Ltd.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (`the Act')
We have audited the internal financial controls with reference to standalone financial statements of Jagatjit Industries Limited (the Company) as of March 31 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
In our opinion the Company generally has in all material respects an adequate internal financial controls with reference to standalone financial statements and such internal financial controls over financial reporting were generally operating effectively as at March 31 2019 except in respect of trade receivable reconciliation/ confirmation provision for bad and doubtful debts and accounts payable reconciliation/confirmation where controls were found to be ineffective and in respect of various areas namely Physical availability of fixed assets record updating of status of contingent liabilities Rolling Cash Plan (HO) recovery of loan & advances from employees/suppliers Full & Final settlement of employee Filling of VAT return (Behror) Revenue recognition of royalty income from franchise operation (Head office & Hamira) revenue recognition of third party supply agreement revenue recognition of distribution income where controls were effective but need to be strengthened based on the internal control with reference to standalone financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the Guidance Note).
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to standalone financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to Company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financial controls with reference to standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing as prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to standalone financial statements was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to standalone financial statements and their operating effectiveness. Our audit of internal financial controls with reference to standalone financial statements included obtaining an understanding of such internal financial assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls with reference to standalone financial statements.
Meaning of Internal Financial Controls with reference to standalone financial statements
A company's internal financial control with reference to standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the company's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to standalone financial statements
Because of the inherent limitations of internal financial controls with reference to standalone financial statements including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls with reference to standalone financial statements to future periods are subject to the risk that the internal financial controls with reference to standalone financial statements may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
for Madan & Associates
Firm's registration number: 000185N
|M. K. Madan|
|Date: August 14 2019||Proprietor|
|Place: New Delhi||Membership number: 082214|