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Jagatjit Industries Ltd.

BSE: 507155 Sector: Consumer
NSE: JAGAJITIND ISIN Code: INE574A01016
BSE 00:00 | 20 Mar 45.00 0.75
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NSE 05:30 | 01 Jan Jagatjit Industries Ltd
OPEN 46.00
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VOLUME 1553
52-Week high 114.95
52-Week low 37.80
P/E
Mkt Cap.(Rs cr) 208
Buy Price 42.85
Buy Qty 50.00
Sell Price 46.00
Sell Qty 100.00
OPEN 46.00
CLOSE 44.25
VOLUME 1553
52-Week high 114.95
52-Week low 37.80
P/E
Mkt Cap.(Rs cr) 208
Buy Price 42.85
Buy Qty 50.00
Sell Price 46.00
Sell Qty 100.00

Jagatjit Industries Ltd. (JAGAJITIND) - Auditors Report

Company auditors report

To the Members of Jagatjit Industries Limited Report on the Standalone FinancialStatements

We have audited the accompanying standalone financial statements of JagatjitIndustries Limited (‘the Company') which comprise the balance sheet as at March31 2018 the statement of profit and loss and the cash flows and changes in equity of theCompany in accordance with the Indian Accounting Standards (Ind AS) prescribed undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended and a summary of significant accounting policies and OTHER explanatoryinformation.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe 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 financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditors' Responsibility

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

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

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

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

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

Basis for qualified opinion

(1) In the opinion of the management Trade Receivable and Loans and Advances have avalue on realisation in the ordinary course of business at least equal to the amount atwhich they are stated in the Balance Sheet.

During the financial year ended March 31 2018 confirmatory letters had been sent tothe sundry creditors suppliers and Trade Receivables requesting them to confirm andreconcile the account balances as on March 31 2018. A significant number of parties havenot yet confirmed/reconciled the balances as on the date of signing of the financialstatements. 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 actionhas been initiated or not. However non - moving debts outstanding beyond 1 year are to theextent ofRs.750 Lacs for which confirmations and reconciliations are not available andhave not been provided for. The system of obtaining confirmations and reconciliation needto be strengthened.

(2) An amount of Rs.2977 Lacs is outstanding in books of accounts of the Companybeing an advance to its wholly owned subsidiary M/s S.R.K. Investments Pvt. Ltd. since2010-11. No recovery of this amount has been made since disbursal of advance to theaforementioned subsidiary.

The Company's management based on internal assessments and evaluations haverepresented that the balance outstanding advances are recoverable and that no accrual fordiminution of advances is necessary as at balance sheet date. The Company has receivedconfirmation from the aforementioned subsidiary on March 31 2018.

The Company has not created a provision against this advance in its books of accounts.In our opinion there is significant uncertainty and doubt about the recovery of thisadvance from the subsidiary as considerable period of time has elapsed from grant ofadvance and therefore a provision for doubtful advance should have been accounted for inthe financial statements for the year ended March 31 2018.

Consequently the loss for the year ended March 31 2018 is understated and reservesand surplus (OTHER equity) as at March 31 2018 are overstated to the extent ofRs.3727Lacs. It may be noted that modified opinion was given in respect of the above two mattersby the previous Auditors on the financial statements for the period ended 31st March 2017.We have also given modified opinion vide report (dated 30th May 2018) in pursuance ofRegulation 33 of SEBI (listing obligations)

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us subject to matters described in basis for qualified opinion paragraph abovethe aforesaid standalone financial statements give the information required by the Act inthe 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 March31 2018 and its loss total comprehensive income the changes in equity and its cashflows for the year ended on that date.

Emphasis of Matter

• Attention is drawn to Note No. 4(vi) regarding fair value of investmentproperties; Note No. 5 (iii) regarding nil diminution in the value of investment ofRs.1016 Lacs in the subsidiary company Note No. 6 (i) and 6 (ii) regarding loan torelated parties and employees Note No. 8 (i) regarding MAT credit and Note No. 8 (iii)regarding interest free security deposits Note No. 8(iv) & Note 39 (iii) regardingprovision made for advance to director in earlier year Note No. 13 (i) regarding securitydeposits and loans and advances to employees Note No. 14 (i) regarding commercial advanceof Rs.132 Lacs to a group company Note No. 15 regarding advances given to associatecompany; Note No 16 regarding assets held for sale Note No. 23 (i) and 24(ii) regardingbills payable; Note No. 24 (iii) regarding claim of GAIL (India) Ltd. Note No. 35B(i)regarding deferred tax Note No. 44 regarding various risks Note No. 45 regardingborrowings not shown at amortised cost.

Without qualifying our opinion we draw attention to Note 2.3 in the financialstatements which indicates that the Company incurred a net loss of Rs.7433 Lacs duringthe year ended March 31 2018 and as of that date the company's current liabilitiesexceeding the total assets by Rs.7620 Lacs. These conditions along with OTHER matters asset forth in Note 2.3 indicate the existence of a material uncertainty that may castsignificant doubt about the company's ability to continue as a going concern. Company hasdisclosed the mitigating factors vide the said Note and we have relied upon the same.

We draw attention to Note 46 (iv) the Company has published the standalone andconsolidated Financial results for the year ended March 2018 and we have issued the reportdated May 30 2018 in pursuance of regulation 33 of SEBI (listing obligations andDisclosure Requirements) Regulations 2015. After publishing the results certain adjustingevents have occurred which has resulted in confirmation of contingent liability of Rs.320Lacs estimated at Rs.9933 Lacs till contract year 2016 and disclosed vide note no. 7 ofthe published results. Therefore in accordance with IND AS – 10 financial statementsto that extent are amended. Impact of the adjusting event is that contingent liabilitiesof

Rs.9933 Lacs are reduced and confirmed liability of Rs.320 Lacs is provided resultingin increase of loss of the year by Rs.320 Lacs; decrease in retained earnings by Rs.320Lacs and corresponding increase in the current liability of Rs.320 Lacs. Company has takenLegal opinion that it is neither required to adopt revised Financial Results for theperiod ended March 31 2018 under Regulation 33 of SEBI (Listing Obligations andDisclosures Requirements) Regulations 2015 nor the Company is required to revise theFinancial Statements for the said period under section 131 of the Companies Act 2013. Wehave relied upon the legal opinion.

The Internal Audit system of the company needs to be substantially strengthened inscope coverage and compliance in respect of Hamira Plant and Head Office operations.

Our opinion is not qualified in respect of these matters.

Report on OTHER Legal and Regulatory Requirements

1. As required by the Companies (Auditors' 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 mattersspecified 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 except for the matters described in Basis for Qualified Opinionparagraph 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 possible effects of the matters described in Basis for Qualified Opinionparagraph in our opinion proper books of account 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 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 possible effects of the matters described in Basis for Qualified Opinionparagraph in our opinion the aforesaid standalone financial statements substantiallycomply with the Indian Accounting Standards (Ind AS) specified under Section 133 of theAct read with the Companies (Indian Accounting Standards) Rules 2015;

(e) the matters described in Basis for Qualified Opinion paragraph and the matterdescribed in Emphasis of matter paragraph in our opinion may have an adverse effect onfunctioning of the Company:

(f) on the basis of the written representations received from the directors as on March31 2018 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 from being appointed as a director in terms of Section 164 (2) of theAct;

(g) the qualification relating to the maintenance of accounts and OTHER mattersconnected therewith are as stated in the Basis for Qualified Opinion;

(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"; and

(i) with respect to the OTHER matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its financial statements;

ii. The Company did not have any long term contracts including derivative contracts forwhich 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 Auditors' Report

The Annexure referred to in Independent Auditors' Report to the members of the JagatjitIndustries Limited on the standalone financial statements for the year ended March 312018 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) The Company has a programme of verification of fixed assets to cover all the itemsin a phased manner over a period of three years which in our opinion is reasonablehaving regard to the size of the company and the nature of its assets. Pursuant to thesaid programme certain fixed assets were physically verified by the Management during theyear. However physical verification report and reconciliation of the same with financialrecords/books is in progress and discrepancies if any will be adjusted on completion ofexercise.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company and certificate provided by the Company thetitle deeds of immovable properties are held in the name of the Company except in respectof Immovable property (4th and 5th Floor Bhandari House Nehru Place Delhi) having grossbook value of Rs.103 Lacs (Original Cost) and Net book value of Rs.93 Lacs.

Title deeds in respect of Immovable Properties as mentioned in Note No. 19 are held bythe lenders as Equitable Mortgage against the borrowing. Confirmations from the banks areawaited.

Company has provided photocopies of the title deeds/ lease deeds in respect ofLeasehold Land situated at Sikandrabad ( U.P.) and Sahibabad (U.P.) as the originals areheld 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 bythe Management at reasonable intervals OTHER than stock lying with third parties wherecertificates confirming physical inventory have been received.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

(iii) (a) According to Information and explanation given to us the Company has grantedloan to its subsidiary and advance to associate company covered in register maintained u/s189 of the Companies Act 2013 in earlier years The Company has given interest bearingadvance of Rs.265 Lacs during the year and Rs.75 Lacs towards expense reimbursements(interest free) arising out of commercial and contractual obligations.

(b) In respect above advances no terms and conditions and stipulation regardingpayment of principal amount or interest have been laid out. Accordingly no repayments havebeen received. Regarding recovery of principal amount and interest it is informed thatassociate company has more than adequate amount of immovable property and the amount willbe recovered through sale of immovable property in due course. Regarding advance ofRs.2977 Lacs given to anOTHER subsidiary company the matter has been qualified by usvide paragraph 2 of basis for qualified opinion of our audit report.

(iv) (a) Company had given loan of Rs.339 Lacs (Interest free amount is Rs.214 Lacs andinterest bearing amount is

Rs.125 Lacs) to an employee in the earlier years who became Additional Director w.e.f.April 28 2017 and ceased to be director w.e.f. February 1 2018. It has been informedthat during the year Company further advanced Rs.45 Lacs (42.92 Lacs given during thetenure of Directorship) to the Director and received back the same during the year. Totalamount outstanding at the year end is Rs.295 Lacs (Interest free amount is Rs.170 Lacs andinterest bearing amount is Rs.125 Lacs). Company has taken Legal opinion that it is hasnot contravened the provisions of Section 185 of the Companies Act 2013 by extending loanduring the tenure as Whole Time Director commencing from April 28 2017 till January 312018

(b) Company has represented before us that provision of section 185/186 are notapplicable for advances given prior to Companies Act 2013 and are still outstanding.Similarly it has been represented that advance to associate company during the year (asdescribed in para (iii)(a)) are on account of commercial and contractual obligations andare therefore not covered within the meaning of Section 185/186.

(v) According to the information and explanation given to us the company has notaccepted any deposits during the year. Company is of the view that provision of Section74(1)(b) of the Act are complied with in pursuance of Rule 19 of the Acceptance ofDeposits Rules 2014. It is also confirmed by the company that no order has been passed bythe Company Law Board or National Company Law Tribunal or Reserve Bank of India or anycourt or any OTHER tribunal.

(vi) According to the information and explanations given to us and certified by themanagement provision of Section 148(1) of the Companies Act 2013 for maintenance of Costrecords are not applicable as products manufactured by the company as specified in TableA/Table B under rule 3 of Companies (Cost Records & Audit Rules) 2014 represents aby-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 ourexamination of the records of the Company the company has generally been regular indepositing undisputed statutory dues including provident Fund Employees State insuranceincome tax sales tax wealth tax service tax duty of customs duty of excise valueadded tax cess and OTHER material statutory dues applicable to it with the appropriateauthorities. There were no undisputed amounts payable in respect of the aforesaidstatutory dues in arrears as at March 31 2018 for a period of more than six months fromthe date they became payable.

(b) According to the information and explanations given to us there are no dues ofincome tax sales tax wealth tax service tax duty of customs duty of excise valueadded tax cess which have not been deposited as at March 31 2018 on account of anydispute except as follows:

Name of Statute Nature of Dues Amount (Rs.) Period for which the amount relates Forum where dispute is pending.
EXCISE DUTY
1 Central Excise Act 1944 Demand of Cess on manufacturing of Corrugated Paper Board 58736 November 2012 to September 2015 Commissioner (Appeals) Chandigarh – I
2 Central Excise Act 1944 Penalty in the above matter 58736 November 2012 to September 2015 Commissioner (Appeals) Chandigarh – I
3 Central Excise Act 1944 Demand of Cess on manufacturing of Corrugated Paper Board 1468 October 2015 to June 2017 Commissioner (Appeals) Ludhiana
4 Central Excise Act 1944 Penalty in the above matter 1468 October 2015 to June 2017 Commissioner (Appeals) Ludhiana
5 Central Excise Act 1944 Demand for clearance of Broken glass generated during the handling of Bottles used for IMFL and Country liquor 1310346 June 2013 to Oct 2015 Assistant Commissioner CE & ST Jalandhar
6 Central Excise Act 1944 Demand for clearance of Broken glass generated during the handling of Bottles used for IMFL and Country liquor 363094 Nov 15 to June 2017 Assistant Commissioner CE & ST Jalandhar
SERVICE TAX
7 The Finance Act 1994 Wrong availment of Service Tax Cenvat Credit 5382166.35 October 2003 to CESTAT Chandigarh
September 2007
8 The Finance Act 1994 Penalty in the above matter 5382166.35 October 2003 to September 2007 CESTAT Chandigarh
9 The Finance Act 1994 Wrong availment of Service Tax Cenvat Credit 6970632 October 2007 to March 2008 CESTAT Chandigarh
10 The Finance Act 1994 Penalty in the above matter 6970632 October 2007 to March 2008 CESTAT Chandigarh
11 The Finance Act 1994 Demand and Penalty towards Management maintenance and Repair Services 1797534 June 2005 CESTAT Chandigarh
12 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
13 The Finance Act 1994 Penalty in the above matter 6221720 May 2008 to April 2010 CESTAT Chandigarh
SALES TAX
14 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
15 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
16 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
17 Sales Tax under Jharkhand VAT Act Demand in respect to VAT assessment 2032974 2013 – 2014 Commissioner (Appeals) Ranchi
18 Sales Tax under Punjab VAT Act & Central Sales Tax Act Disallowance of ITC on purchase of Rice Flour 10754088 2011 – 2013 VAT Appellate Tribunal

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowing to a financial institution bank Governmentduring the year.

(ix) In our opinion and according to the information and explanation given to us theterm loans have been applied by the company during the year for the purposes for whichthey were obtained.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and on the basis ofLegal opinion (regarding maintenance charges of Rs.194 lacs paid to corporate facilitymanagement) [refer Note No. 39B(d)] obtained by the company and based on our examinationof the records of the Company transactions with the related parties are in compliancewith sections 177 and 188 of the Act where applicable and details of such transactionshave been disclosed in the financial statements as required by the applicable accountingstandards.

(xiv) According to the information and explanations 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 explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions 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 Madan & Associates
Chartered Accountants
Firm's registration number: 000185N M. K. Madan
Date: September 20 2018 Proprietor
Place: New Delhi Membership number: 082214

Annexure B to The Independent Auditors' Report

(Referred to in Paragraph 2 (f) under the heading of "Report on OTHER Legal andRegulatory Requirements" of our report of even date to the members of JagatjitIndustries Limited on the financial statements for the year ended March 31 2018)

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 JagatjitIndustries Limited ("the Company") as of March 31 2018 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(‘ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditors' Responsibility

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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act 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 the ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was 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 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 auditors' 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 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 authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised 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 controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company generally has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were generally operating effectively as at March 312018 except in respect of trade receivable reconciliation and provision for bad anddoubtful debts where controls were found to be ineffective and in respect of various areasnamely Capitalisation of Fixed Assets (Hamira) Classification of an asset to an assetgroup in Fixed Asset Register (Hamira) Accounts payable process (Head office &Hamira) Debit notes (Head office & Hamira) Bank reconciliation process (Head office& Hamira) Cash Management (Hamira) TDS Payment compliance Prepaid Expenses Goods& Service Tax Reconciliation with Contract Manufacturing Units

Foreign Exchange management (Head office) Contracts for Rental Income (Head Office)Revenue recognition of Royalty Income from Franchise operation (Head office & Hamira)TDS Return Compliance (Behror) where controls were effective but need to be strengthenedbased on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

for Madan & Associates
Firm's registration number: 000185N Chartered Accountants
Date: September 20 2018 M. K. Madan
Place: New Delhi Proprietor
Membership number: 082214