Jagatjit Industries Ltd.
|BSE: 507155||Sector: Consumer|
|NSE: JAGAJITIND||ISIN Code: INE574A01016|
|BSE 00:00 | 08 Feb||97.75||
|NSE 05:30 | 01 Jan||Jagatjit Industries Ltd|
|Mkt Cap.(Rs cr)||453|
|Mkt Cap.(Rs cr)||452.78|
Jagatjit Industries Ltd. (JAGAJITIND) - Auditors Report
Company auditors report
To the Members of Jagatjit Industries Limited Report on the StandaloneFinancial Statements
We have audited the accompanying standalone financial statements ofJagatjit Industries Limited ("the Company") which comprise the StandaloneBalance Sheet as at March 312021 the Standalone Statement of Profit and Loss (includingOther Comprehensive Income) the Standalone Cash Flow Statement and the StandaloneStatement of Changes in Equity for the year then ended and notes to the standalonefinancial statements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the standalone financialstatements").
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner 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 March312021 its income including other comprehensive income changes in equity and its cashflows for the year ended on that date.
Basis for opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the standalone financial statements.
Emphasis of Matter
(i) We draw attention to Note No 2(1 )(iv) regarding going concernNote No. 4(vi) regarding fair value of investment properties Note No. 6[i]&[ii]regarding loan to employees & provision thereof Note No 8(ii) regarding provision foradvances to others Note 1 3(i) regarding amount receivable from group company Note No 15(i) regarding assets held for sale Note No 18(iv) regarding non stipulation of terms andconditions of loan Note No. 22(ii) regarding provision of service tax Note No. 23(i)regarding provision of interest on outstanding amount of MSME suppliers and note 23(ii)regarding reconciliation of old outstanding of MSME suppliers Note No 24(iii) regardingamount payable to ex-employee Note No 24(iv) regarding earlier years expenses payablepending for reconciliation Note No 26(iii) regarding income from franchisee businessNote No 27(ii) regarding other income Note No 34(ii) regarding provisions of doubtfuldebts net of reversal Note No 41 (i) regarding income from discontinued operations NoteNo 45(ii) regarding impact of COVID-19 Note No 45(iii) regarding search conducted by GSTDept. at Head Office and Note No.45(iv) regarding reversal of GST Input credit.
(ii) The Internal Audit system of the company needs to be substantiallystrengthened in scope coverage and compliance in respect of Hamira Plant and Head Officeoperations.
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe Key Audit Matter to be communicated in our report. For each matter mentioned belowour description of how our audit addressed the matter is provided in that context.
Information Other than the Standalone Financial Statements andAuditor's Report Thereon
The Company's management and Board of Directors are responsible for thepreparation of the other information. The other information comprises the informationincluded in the Company's annual report but does not include the financial statements andour auditor's report thereon.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's Board of Directors are 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 of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management 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.
Those Charged with Governance are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 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 professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso 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 sub-section(11) of section 143 of the Act we give in the 'Annexure A" a statementon 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 undersection 197(16) of the Act:
In our opinion and according to the information and explanations givento us the managerial remuneration for the year ended March 312021 has been paid/providedby the Company to its managing director in accordance with the provisions of section 197read 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;
(c) the balance sheet the statement of profit and loss including othercomprehensive income statement of changes in equity and the statement of cash flow dealtwith by this Report are in agreement with the books of account;
(d) in our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 201 5 as amended;
(e) on the basis of the written representations received from thedirectors as on 31 March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2021 from being appointed as a director in termsof Section 164 (2) of the Act;
(f) with respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure B"; and
(g) with respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. the Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements;
ii. the Company did not have any long term contracts includingderivative contracts for which there were any material foreseeable losses;
iii. there has not been delay in transferring amounts which wererequired to be transferred to the Investor Education and Protection Fund by the Company.
ANNEXURE-A' TO THE INDEPENDENT AUDITOR'S REPORT
Statement of the matters specified in paragraph 3 and 4 of theCompanies (Auditor's report) Order 2016 (the Order')
The Annexure referred to in Independent Auditors' Report to the membersof the Jagatjit Industries Limited ("the company") on
the standalone financial statements for the year ended March 31 2021we report that:
(i) In respect of fixed assets:
(a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Company has a programme of annual verification of fixedassets which in our opinion is reasonable having regard to the size of the company andthe nature of its assets. Management has done physical verification of fixed assetssubsequent to close of the year. On reconciliation of physical verification report withassets record it is observed that certain fixed assets are not physically available whichin the opinion of management are not significant.The necessary adjustment entries will bepassed in the financial year 2021-22.
(c) According to the information and explanations given to us andon the basis of our examination of the records of the Company and as certified by thecompany the title deeds of immovable properties are held in the name of the Company andare in possession with Canara Bank for safe custody (certificate awaited from the bank)except in case of immovable properties situated at 4th and 5th Floor Bhandari HouseNehru Place New Delhi 9th& 1 0th Floor Ashoka Estate Barakhamba Road NewDelhi7th Floor Shanti Niketan Building Camac Street Kolkata 700017 and at 4th FloorEmbassy Center Nariman Point Mumbai. It is certified by the management that the companyis in possession of these properties.
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 fromthe bank are not received.
Company has provided photocopies of the title deeds/ lease deeds inrespect of Leasehold Land situated at Sahibabad (U.P.) as the originals are held by UttarPradesh State Industrial Development Corporation (UPSIDC).
(ii) As explained to us inventorieshave been physically verifiedin phases during the year/close of the year by the Management at reasonable intervalsother than stock of Rs 400 Lakhs lying with port authorities as at the close of the yearand no material discrepancies were found on such physical verification.
(iii) (a) According to information and explanation given to us the
Company granted loan to its subsidiary in earlier years which wasprovided in previous year. During the year company has granted interest free loan of Rs 3Lakhs to its subsidiary for meeting expenses. No stipulation as to repayment thereof havebeen laid out.
(iv) In our opinion and according to the information andexplanations given to us the Company has not given any loans and made any investmentwithin the meaning of section 1 85 & 186 of the Act. Thus paragraph 3 (iv) of theOrder is not applicable to the Company.
(v) According to the information and explanation given to us thecompany has not accepted any deposits during the year. On the basis of legal opinion theCompany has claimed the amount of Rs 700 Lakhs received in earlier years as exempteddeposits. Company is of the view that provision of Section 74(1)(b) of the Act arecomplied with in pursuance of Rule 19 of the Acceptance of Deposits Rules 2014. It isalso confirmed by the company that no order has been passed by the Company Law Board orNational 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 andon the basis of our review of the cost records maintained by the Company pursuant to theCompanies (Cost Accounting Records) Rules 2014 prescribed by the Central Government underSection 148(1) of the Companies Act 2013 we are of the opinion that prima facie theprescribed cost records have been maintained. We have however not made a detailedexamination of the records with a view to determining whether they are accurate orcomplete.
(vii) In respect of statutory dues:
(a) According to the information and explanations given to us andon the basis of our examination of the records of the Company the company has generallybeen regular in depositing undisputed statutory dues including provident Fund EmployeesState insurance income tax sales tax wealth tax service tax duty of customs duty ofexcise value added tax cess and other material statutory dues applicable to it with theappropriate authorities. There were no undisputed amounts payable in respect of theaforesaid statutory dues in arrears as at 31.03.2021 for a period of more than six monthsfrom the date they became payable.
(b) (i) According to the information and explanations given to usthere are no dues of income tax sales tax wealth tax service tax duty of customs dutyof excise value added tax cess which have not been deposited as at 31.03.2021 on accountof any dispute except as follows:
[ii] Company made provision for service tax of Rs 345 Lakhs demanded byOrissa State Beverages Corporation Ltd. against their liability to service tax in earlieryear. The matter is pending before Service Tax Tribunal Orissa.
(viii) According to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowing to a financialinstitution bank Government during the year.
(ix) In our opinion and according to the information andexplanation given to us the term loans have been applied by the company during the yearfor the purposes for which they were obtained.
(x) According to the information and explanations given to us nofraud by the Company or on the Company by its officers or employees has been noticed orreported during the course of our audit.
(xi) According to the information and explanations given by themanagement the managerial remuneration has been paid/ provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.
(xii) In our opinion and according to the information andexplanations given to us the Company is not a nidhi company. Accordingly paragraph3[xii] of the Order is not applicable.
(xiii) According to the information and explanations given to usand on the basis of Legal opinion (regarding maintenance charges of Rs 226 Lakhs paid toCorporate Facility Management) [refer Note No. 39B[iv][b]] obtained by the company inearlier years and based on our examination of the records of the Company transactionswith the related parties are in compliance with sections 177 and 1 88 of the Act whereapplicable and details of such transactions have been disclosed in the financialstatements as required by the applicable Ind AS.
(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934.
ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT OF EVENDATE ON THE STANDALONE FINANCIAL STATEMENTS OF JAGATJIT INDUSTRIES LIMITED
Report on the Internal Financial Controls under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 (the Act')
We have audited the internal financial controls with reference tostandalone financial statements of Jagatjit Industries Limited ("the Company")as of March 312021 in conjunction with our audit of the standalone financial statementsof the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal financial controls withreference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note ofICAI. These responsibilities include the design implementation and maintenance ofadequate 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 Companies Act 2013.
Our responsibility is to express an opinion on the Company's internalfinancial 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 Auditingas prescribed under section 143(1 0) of the Act to the extent applicable to an audit ofinternal financial controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with the ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls with reference to standalone financial statementswere established and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to standalone financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to standalone financial statements included obtaining an understanding ofsuch internal financial control assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to standalone financial statements.
Meaning of Internal Financial Controls with reference to standalonefinancial statements
A company's internal financial control with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial control over financial reporting includes those policies and proceduresthat (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) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements
Inherent Limitations of Internal Financial Controls with reference tostandalone financial statements
Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion the Company generally has in all material respects anadequate internal financial controls with reference to standalone financial statements andsuch internal financial controls over financial reporting were generally operatingeffectively as at March 31 2021 based on the internal control with reference tostandalone financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note") except in the case of fixed assets(Behror unit) which need to be substantially strengthened.
Emphasis of Matters:
Internal financial control in respect of trade receivablereconciliation/confirmation provision for bad and doubtful debts accounts payablereconciliation/confirmation updating of status of contingent liabilities Rolling CashPlan (HO) recovery of loan & advances from employees/suppliers revenue recognitionof royalty income from franchise operation revenue recognition of third party supplyagreement and operating assessment of control regarding updating the SecretarialDepartment in respect of borrowings from Group entities where controls were effective butneed to be further strengthened.
Our opinion is not modified in respect of these matters.