TO THE MEMBERS OF
JAI CORP LIMITED
Report on the Audit of Standalone Financial Statements
We have audited the standalone financial statements of Jai Corp Limited("the Company") which comprise the Balance sheet as at 31st March2020 and the statement of Profit and Loss (including other comprehensive income)statement of changes in equity and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "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 Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2020 and profit (including othercomprehensive income) statement of changes in equity and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013 ("the Act").Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India ("ICAI") together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules 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.
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 for the yearended 31st March 2020. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters.
|Key Audit Matters ||How our audit addressed the key audit matter |
|(1) Inventories || |
|As of 31st March 2020 inventories appear on the standalone financial statements for an amount of Rs. 5338.47 Lakh which constitutes 25% of the total current assets. As indicated in Note no. 1 (h) to the financial statements inventories are valued at the lower of cost and net realizable value: The Company may recognize an inventory allowance if inventory items are damaged if the selling price has declined or if the estimated costs to completion or to be incurred to make the sale have increased. We focused on this matter because of the: Significance of the inventory balance. Complexity involved in determining inventory quantities on hand due to the number location and diversity of inventory storage locations. Valuation procedure including of obsolete ||Our audit procedures included the following: Reviewing the Company's process and procedures for physical verification of inventories. Assessing the methods used to value inventories and ensuring ourselves of the consistency of accounting methods. Reviewing of the reported acquisition cost on a sample basis. Analyzing of the Company's assessment of net realizable value as well as reviewing of assumptions and calculations for stock obsolescence. Assessing of appropriateness of disclosures provided in the standalone financial statements. |
|(ii) Litigations Matters & Contingent liabilities || |
|The Company is subject to number of legal and tax related claims which have been disclosed / provided for in the standalone financial statements based on the facts and circumstances of each case. There is a high level of judgment required in estimating the level of provisioning required and appropriateness of disclosure of contingent liabiiities. Refer to Note 1 (q) "Significant Accounting Policies" and Note 41 - "Contingent Liabiiities and Commitments" of the standalone financial statements. ||Our audit procedures included the following Reviewing the process of identification of claims litigations and contingent liabilities. Reviewing the Company's legal and tax cases and assessed management's position through discussion on both the probability of success in significant cases and the magnitude of any potential loss. Discussion with the management on the development in theses litigations during the year ended 31st March 2020. Verifying that accounting and /or disclosure as the case may be in the standalone financial statements is in accordance with the assessment of management. Obtaining representation letter from the management on the assessment of those matters as per SA 580 (revised) - written representations. |
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the annual reportbut does not include the financial statements and our auditor's report thereon. Theabove information is expected to be made available to us after the date of this auditor'sreport
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 in the auditor otherwise appears to be materially misstated.
When we read the above other information if we conclude that there ismaterial misstatement therein we are required to communicate the matter to those chargedwith governance.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate implementation and maintaince ofaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internat financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue 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 Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone FinancialStatements
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 standalonefinancial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism 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 theability of the Company 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 standalone financial statements or if such disclosures areinadequater to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to 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 year and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure aboutthe 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 Requirement
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 Companies Act 2013 we give in the "Annexure B" astatement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
2 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.
(b) In our opinion proper books of account as required by law havebeen 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 othercomprehensive income the Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from thedirectors as on 31st March 2020 taken on record by the Board of Directorsnone of the directors is disqualified as on 31st March 2020 from beingappointed as a director in terms of 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 A".
(g) With respect to the other matters to be included in Auditor'sReport in accordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to theexplanation given to us the remuneration paid or provided by the company to its directorsduring the year is in accordance with the provision of section 197 of the Act.
(h) 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 standalone financial statements. Refer Note 41 to the standalonefinancial statements.
(ii) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
(iii) There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
We draw attention to Note 46 to the accompanying standalone financialstatements regarding accounting of the scheme from the appointed date being 1stApril 2019 as approved by the National Company Law Tribunal (NCLT) though the Scheme hasbecome effective on 19th March 2020
"ANNEXURE A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2(f) under 'Report on Other Legal andRegulatory Requirements' section of our report of even date)
Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub- section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financialreporting of Jai Corp Limited ("the Company") as of 31st March 2020in conjunction with our audit of the standalone financial statements of the Company forthe 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 control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India (" ICAI") and the Standards on Auditing prescribed underSection 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished 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 system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud 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 system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol over financial reporting includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial statements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2020based on the criteria for internal financial control over financial reporting establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe ICAI
"ANNEXURE B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under' Report on Other Legal and RegulatoryRequirements' section of our report of even date)
(i) In respect of its property plant and equipment:
a. The Company has maintained proper records showing full particularsincluding quantitative details and situation of property plant and equipment.
b. As explained to us the Company has physically verified fixedassets in accordance with a phased program of verification which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies were noticed on such physical verification as compared with theavailable records.
c. As per the information and explanation provided to us and therecords examined by us and based on the examination of the registered sale deed/conveyance deed we report that the title deeds comprising all the immovable propertiesof land and building which are freehold are held in the name of the Company as at thebalance sheet date and which are leasehold the lease agreements are in the name of theCompany where the Company is the lessee in the agreement except the following:-
|Particulars ||Actual Cost as at 31st ||Net Block as at ||Remarks |
| ||March 2020 ||31st March 2020 || |
| ||(Rs. In Lakh) ||(Rs. In Lakh) || |
|Freehold/Leasehold land (No of Lands: 7) ||44.77 ||40.87 ||The title deeds are in the names of erstwhile Companies that merged with the Company under Section 391 to 394 of the Companies Act 1956 pursuant to Schemes of Amalgamation and Arrangement as approved by the High Court. |
|Buildings (No of Buildings: 5] ||8.85 ||4.88 ||Out of Rs. 8.85 Lakh the title deeds of Rs. 4.45 Lakh are in the name of erstwhile companies that merged with the Company under Section 391 to 394 of the Companies Act 1956 pursuant to Schemes of Amalgamation and Arrangement as Approved by the high Court. |
(ii) In respect of its inventories:
As explained to us inventories except goods in transit have beenphysically verified during the year by the management. In our opinion the frequency ofverification is reasonable. Discrepancies noticed on physical verification of theinventories between the physical inventories and book records were not material havingregard to the size of the operations of the Company and the same have been properly dealtwith.
(iii) The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the Registermaintained under Section 189 of the Companies Act 2013. Therefore the provision ofclause (iii) of paragraph of the Order are not applicable to the company.
(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Sections 185 and 186 of theCompanies Act 2013 in respect of making investments.
(v) According to the information and explanations given to us theCompany has not accepted any deposits from the public. The Company does not have anyunclaimed deposits and accordingly the provisions of Sections 73 to 76 or any otherrelevant provisions of the companies Act 2013 are not applicable to the Company.
(vi) The maintenance of cost records has been specified by the CentralGovernment under section 148(1) of the Companies Act 2013. We have broadly reviewed thecost records maintained by the Company pursuant to the Companies (Cost Records and Audit)Rules 2014 as amended and the Cost Records and Audit (Telecommunication Industry) Rulesprescribed by the Central Government under sub-section (1) of Section 148 of the CompaniesAct 2013 and are of the opinion that prima facie the prescribed cost records have beenmade and maintained. We have however not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us inrespect of statutory dues:
a. The Company has generally been regular in depositing undisputedstatutory dues including Provident Fund Employees' State Insurance Income-tax Goodsand Services Tax Customs Duty Cess and other material statutory dues applicable to it tothe appropriate authorities as applicable during the year. According to the informationand explanations given to us no undisputed amounts payable in respect of such statutorydues were outstanding as at 31st March 2020 for a period of more than sixmonths from the date they became payable.
b. Details of dues of Income tax Sales tax / Value added taxaggregating to Rs. 2182.60 Lakh that have not been deposited on account of disputedmatters pending before appropriate authorities are as under:
|Name of the Statute ||Nature of the Dues ||Amount (Rs. in Lakh)* ||Period to which the amount relates ||Forum where dispute is pending |
|Income-tax Act 1961 ||Income Tax ||1574.75 ||AY 2007-08 to AY 2012-13 ||High Court |
| || ||120.92 ||AY 2003-04 to AY 2006-07 & AY 2013-14 ||ITAT |
| || ||297.94 ||AY 2014-15 to AY 2015-16 ||Commissioner of Income Tax (Appeal) |
| || ||162.71 ||AY 2016-17 ||Assessing Officer (AO) |
|Central Excise Act 1944 ||Excise Duty || ||2004-05 to 2006-07 ||Assistant Commissioner |
|Bombay Sales Tax Act ||Sales Tax ||26.28 ||2000-01 & 2002-03 ||Maharashtra Sales Tax Tribunal |
|Total || ||2182.60 || || |
(*) Net of deposited under protest and adjusted a gainst refunds.
(viii) Based on our audit procedures and according to the informationand explanations given by the management we are of the opinion that the Company has notdefaulted in repayment of dues to banks. During the year the Company did not have anyloans from financial institutions or by way of debentures.
(ix) In our opinion and according to the information and explanationsgiven to us the Company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments) and no term loans raised during the year.Therefore the provision of clause (ix) of paragraph 3 of the Order is not applicable tothe Company.
(x) Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and on the basis ofinformation and explanations given by the management no fraud by the Company or on theCompany by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanationsgiven to us the Company has paid / provided managerial remuneration in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Companies Act 2013.
(v) The Company is not a Nidhi Company and hence reporting under clause(xii) of the paragraph 3 of the Order is not applicable to the Company.
(vi) In our opinion and according to the information and explanationsgiven to us the Company is in compliance with Section 177 and 188 of the Companies Act2013 as applicable for all transactions with the related parties and the details ofrelated party transactions have been disclosed in the standalone financial statements etc.as required by the applicable Indian accounting standards.
(vii) 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. Therefore the provisions of clause (xiv) of paragraph 3 ofthe Order are not applicable to the Company
(viii) ln our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any non-cash transactionswith its with directors or persons connected with him Therefore the provisions of clause(xv) of paragraph 3 of the Order is not applicable to the Company.
(ix) In our opinion and according to information and explanationsprovided to us the Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.