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Jakharia Fabric Ltd.

BSE: 535093 Sector: Industrials
NSE: JAKHARIA ISIN Code: INE00N401018
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Jakharia Fabric Ltd. (JAKHARIA) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

Jakharia Fabric Limited

(Formerly known as Jakharia Fabric Private Limited)

Report on the Standalone Financial Statements

We have audited the accompanying Standalone financial statements of Jakharia FabricLimited (Formerly known as Jakharia Fabric Private Limited) ("the company") whichcomprise the Balance Sheet as at 31/03/2020 the Statement of Profit and Loss and theStatement of Cash Flow for the year then ended and a summary of the significantaccounting policies and other explanatory information.

Auditor's Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31/03/2020 and its Profit and its cash flows for the year ended onthat date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Companies Act 2013 and theRules there under and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Sr. No. Kay Audit Matter Auditor's Response
1. Provisions for Contingencies and Litigations and disclosure of Contingent liabilities • operating effectiveness of controls in respect of the determination of the provisions.
Description of Key Audit Matter: We determined that the operation of the controls provided us with evidence over the completeness accuracy and valuation of the provisions.
At March 31 2020 the Company has disclosed total contingent liabilities of Rs.96.65 lakhs. These contingent liabilities are based on judgements and accounting estimates made by management in determining the likelihood and magnitude of claims. • provided hy management and held discussions with the management and their legal counsels. We requested legal letters from some of the Company's external legal advisors with respect to the matters included in the aforesaid disclosures.
Accordingly unexpected adverse outcomes could significantly impact the Company's reported profit and balance sheet position. Where appropriate we examined correspondence connected with the cases.
Refer Note 33 of standalone financial statements for accounting policies for provisions and contingent liabilities and related disclosures. • calculation of the provisions assessed the assumptions against third party data where available and assessed the estimates against historical trends.
• We considered management's judgements on the level of provisioning and disclosures in respect of the aforesaid matters which we considered to be appropriate.
2. Investment in Partnership Firm Description of Key Audit Matter: • others considering the risk associated with
The Company has made investment in partnership firm M/s. Jakharia Industries. This investment is accounted at cost as at March 31 2020. The Company has total investment. We have examined standalone financial statement of the firm as at March 31 2020 and implementation of the project is under progress.
Investment of Rs. 4340.84 lakhs in the partnership firm. • and their counsels.
The Company have made substantial capital contribution of Rs. 762.94 lakhs during FY 2019-20. Refer Note. 12 of standalone financial statements and accounting policy note 1(F) • We considered management's Judg on the level of diminution / no revenue generated from the said investment in firm and disclosures in respect of the aforesaid investment which we considered to be appropriate.

Emphasis of Matter

We draw attention to notes to the financial results which describe the uncertaintiesand the impact of Covid-19 pandemic on the Company's operations and results as assessed hythe management. Our opinion is not modified in respect of this matter.

Other Information

The Company's Management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained 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 materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.

Responsibility of Management and Those Charged with Governance (TCWG)

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 preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance 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 read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibility

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as per due to fraud or error and to issue an auditor's report thatincludes our opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists.

Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe disclosures are inadequate to modify our opinion. Our conclusions are based on theaudit evidence 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 the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh thepublic interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

As required by Section 143 (3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) 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 and dealt with by this Reportare in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on 31/03/2020taken on record by the Board of Directors none of the directors is disqualified as 31/03/2020from 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 financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B".

(g) With respect to the other matters to be included in the Auditor's Report inaccordance 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 the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.

ii. The Company does not have any long term contracts including derivative contractsand therefore no provision is required to be made for any material foreseeable losses tothis effect.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Shah Shroff & Associates
Chartered Accountants
Firm Reg. No.: 0128920W
Yashesh Shroff
Partner
Membership No: 103277
UDIN: 20103277AAAASS8597
Place: Mumbai
Date: 31.07.2020

"Annexure - A" to the Independent Auditors' Report

(Refer to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirementssection of our report of even date)

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended March 312020 we report that:

(i) (a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) As explained to us all the fixed assets have been physically verified by theManagement in a periodical manner which in our opinion is reasonable having regard tothe size of the company and nature of its assets. No material discrepancies were noticedon such physical verification.

(c) According to the information and explanation given to us the records examined byus and based on the examination of sale deed / transfer deed / conveyance deed provided tous we report that the title deeds comprising all immovable properties of factorybuilding which are freehold are held in the name of the Company as at the balance sheetdate. In respect of Immovable property amounting to Rs. 2.73 crores taken of lease anddisclosed as Leasehold land in the standalone financial statement the deed of assignmenthas been executed in the name of the Company.

(ii) (a) On the basis of explanation and submission given to us physical verificationof inventory has been conducted at reasonable intervals by the management.

(b) In our opinion and on the basis of examination done by us the procedure ofphysical verification of inventory followed by the management is reasonable and adequatein relation to the size of the company and the nature of its business.

(c) The Company is maintaining proper records of inventory and discrepancies noticed onphysical verification if any have been properly dealt with in the books of accounts.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Companies Firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act. Accordingly paragraph 3 (iii) (a) (b) and (c) of the Order are notapplicable to the Company.

(iv) According to the information and explanations given to us the Company has notgiven any loans or made any investments or provided any guarantee or security asspecified under Section 185 and 186 of the Companies Act 2013. Accordingly paragraph3(iv) of the Order is not applicable.

(v) According to information and explanations given to us the Company has not acceptedany deposits from the public in accordance with the provisions of section 73 to 76 or anyrelevant provisions of the Act and rules framed thereunder.

(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the goods dealt by the Company.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-taxemployees' state insurance duty of excise sales tax value added tax duty of customsservice tax Goods and service tax cess and other material statutory dues have beenregularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax value added tax duty ofcustoms service tax Goods and service tax cess and other material statutory dues werein arrears as at 31 March 2020 for a period of more than six months from the date theybecame payable.

(b) According to the information and explanations given to us outstanding dues thathave not been deposited by the Company on account of disputes are given below:

Name of the Statute Nature of Dues Period to which the amount relates Forum where dispute is pending Amount
Income-tax Act 1961 Income-tax 2015-16 Income-tax-Assessing Officer 2610
2016-17 CPC Bangalore 330590
TDS 2008-09 TDS-Assessing Officer 110
2010-11 TDS-Assessing Officer 32870
2012-13 TDS-Assessing Officer 307180

(viii) According to the information and explanations given to us based on our auditprocedures and as per information and explanation given to us the Company has notdefaulted in repayment of dues to any bank. The Company did not have any outstanding duesin respect of loans or borrowings from any financial institution government or debentureholders during the year.

(ix) In our opinion and according to the information and explanation given to us thelong term loans have been applied by the Company during the year for the purposes forwhich they were raised other than temporary deployment pending application of proceeds.The Company has raised moneys by way of initial public offer during the year and theproceeds have been applied for the purpose for which they were raised.

(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 to us the Company has paid /provided for managerial remuneration in accordance with requisite approvals mandated bythe provisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us in our opinion andaccording to the information and explanations given to us the Company is not a nidhicompany. Accordingly paragraph 3 (xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards

(xiv) The Company has not made any preferential allotment to parties and companiescovered under register maintained under section 42 of the Companies Act 2013 during theyear therefore provisions of Clause 3(xiv) of the said order are not applicable.

(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-LA of the ReserveBank of India Act 1934.

For Shah Shroff & Associates
Chartered Accountants
Firm Reg. No.: 0128920W
Yashesh Shroff
Partner
Membership No: 103277
UDIN: 20103277AAAASS8597
Place: Mumbai
Date: 31.07.2020

"Annexure B" to the Independent Auditor's Report of even date on theStandalone Financial Statements of Jakharia Fabric Limited (Formerly Known As JakhariaFabric Private Limited).

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013.

We have audited the internal financial controls over financial reporting of JakhariaFabric Limited (Formerly Known As Jakharia Fabric Private Limited) as of March 31 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

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 Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

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 on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence amout the adequacy ofthe internal financial control system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reportingassessing the risk that a material weakness exists and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend upon on theauditor's judgment including the assessment of the risks of material misstatement of thestandalone 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 standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting 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 standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

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 controlover 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 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 March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issues by the Institute of CharteredAccountants of India.

For Shah Shroff & Associates
Chartered Accountants
Firm Reg. No.: 0128920W
Yashesh Shroff
Partner
Membership No: 103277
UDIN: 20103277AAAASS8597
Place: Mumbai
Date: 31.07.2020

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