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Jet Knitwears Ltd.

BSE: 538374 Sector: Industrials
NSE: JETKNIT ISIN Code: INE564T01017
BSE 05:30 | 01 Jan Jet Knitwears Ltd
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Jet Knitwears Ltd. (JETKNIT) - Auditors Report

Company auditors report

TO THE MEMBERS OFJET KNITWEARS LIMITED

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS DISCLAIMER OF OPINION

We were engaged to audit the accompanying standalone financial statements of JetKnitwears Limited ("the Company") which comprise the Balance Sheet as at 31March 2021 the Statement of Profit and Loss and Statement of Cash Flows for the yearthen ended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the standalone financial statements").

We do not express an opinion on the accompanying standalone financial statements of thecompany. Because of the significance of the matter described in the Basis for Disclaimerof Opinion section of our report we have not been able to obtain sufficient appropriateaudit evidence to provide a basis for an audit opinion on these standalone financialresults.

BASIS FOR DISCLAIMER OF OPINION

The company's trade receivables (classified as unsecured and considered good by themanagement) are carried at Rs. 169993038.00 out of which Rs. 87746531.00 areoutstanding for a period more than six months which is abnormally high as compared to theturnover of the company. We have also not received confirmations from these parties whichhowever as per the management of the company is recoverable.

As a result of these matters and also owing to the economic uncertainty created byworld-wide pandemic COVID-19 we were unable to determine whether any adjustments mighthave been found necessary in respect of recorded amount of Trade Receivables and theelements making up the statement of Profit and Loss and statement of cash flows.

EMPHASIS OFMA TTER

We draw the attention towards the followings

1. Owing to continuous spreading of COVID -19 across India the State Government ofUttar Pradesh announced a lockdown in April 2021 which remains in force till 31stMay 2021 to contain the spread of the virus. This has resulted in restriction on physicalvisit to the client locations and the need for carrying out alternative audit proceduresas per the Standards on Auditing prescribed by the Institute of Chartered Accountants ofIndia (ICAI).

As a result of the above major portion of the audit was carried out based on remoteaccess of the data as provided the management. This has been carried out based on theadvisory on "Specific Considerations while conducting Distance Audit/ Remote Audit/Online Audit under current Covid-19 situation" issued by the Auditing and AssuranceStandards Board of ICAI. We have been represented by the management that the data providedfor our audit purposes is correct complete reliable and are directly generated by theaccounting system of the Company without any further manual modifications.

We bring to the attention of the users that the audit of the financial statements hasbeen performed in the aforesaid conditions.

2. Creditors Loans and advances are subject to confirmations from the respectiveparties.

3. Further the company have been sanctioned a new Skill Development Project under DeenDayal Upadhyay - Grameen KaushalyaYojna (DDU GKY Scheme) of Assam State Rural LivelihoodsMission (ASRLM) to train 1000 Candidates in projects (Rural Youth as defined in guidelinesof DDU-GKY) with placement linkage by setting up a training / skill center at Majuli andKarimganj for the State of Assam.

We did not audit the financial statements and other financial information in respectof this scheme. Amounts received and expanded under this scheme is subject to audit by aseparate auditor which financial statement and other financial information and auditor'sreports have been furnished to us by the management. Our opinion on the financialstatements in so far as it relates to the amounts and disclosures included in respect ofthis scheme and our report in terms of sub-sections (3) of Section 143 of the Act in sofar as it relates to the aforesaid scheme is based solely on the report of such otherauditor.

Our opinion is not qualified in respect of the above.

KEY A UDIT MA TTERS

Key audit matters (‘KAM') 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 be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone financial statements section ofour report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risk of materialmisstatement of the standalone financial statements. The result of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying standalone financial statements.

1. Impact of the COVID-19 Pandemic on the Company's ability to continue as a goingconcern:

The company is primarily engaged in manufacturing and trading of hosiery goods and itsreceivables comprise of several small wholesalers and retailers. Thus vis-a-vis thecompany the impact of COVID-19 pandemic on recoverability of its receivablesrealisability of stocks and future business prospects on its ability to continue as agoing concern required extensive verification procedures analysis of the post BalanceSheet events management discussions and judgements.

How our audit addressed the key audit matter

For the matter referred to above our procedures included among others verificationand recovery pattern of all material receivables upto the date of completion of our auditother relevant documentation/correspondence including correspondence with Bankscustomers pending orders to the various parties assessing management's conclusions etc.in view of the laid down accounting and measurement principles.

2. Substantial Movement of Stock upto production of Finished Goods

The company avails services of over thirty job workers and has inter dependentmanufacturing facilities in two States in India. In addition the company has severaldepots. The above entails substantial movement of raw material semi-finished materialsand finished goods from one location to another; and at any given point of time thestocks (of various stages) belonging to the company may be found at several locations. Themovement of stock is the key to the business and was therefore considered as one of the‘Key Audit Matters'. Verification of the internal controls with respect to inventorymanagement and movement recording of consumption valuation of stocks as at the reportingdate involved extensive verification procedures and called for making estimates andjudgments.

How our audit addressed the key audit matter

For the matter referred to above our procedures included among others procedures ofphysical examination end to end verification of stock transfers other relevantdocumentation/correspondence including post balance sheet date events reports submittedto Banks and other authorities assessing management's conclusions etc. in view of thelaid down accounting and measurement principles.

OTHER INFORMA TION

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon. The other information included in the annual report are expected to bemade available to us after the date of this auditor's report.

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 in the audit or otherwise appears to be materially misstated.

After the Other Information is made available to us if based on the work we haveperformed we conclude that there is a material misstatement therein we are required tocommunicate the matter to those charged with governance.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company's management and 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 state of affairs profit and cash flowsof the Company in accordance with the accounting principles generally accepted in Indiaincluding the Accounting Standards specified under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal 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 and Board of Directors areresponsible 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.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism 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 Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to standalone financial statements inplace and the operating effectiveness 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue 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 with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and4 of the Order to the extent applicable.

(A) 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 the Statement of Cash Flowsdealt with by this Report are 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 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st 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 controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) 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 as at 31 March 2021 onits financial position in its standalone financial statements.

ii. The Company does not have any long term contracts requiring a provision formaterial foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30December 2016 have not been made in these standalone financial statements since they donot pertain to the financial year ended 31 March 2021.

(C) With respect to the matter to be included in the Auditors' Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in Para 1 under ‘Report on Other legal and Regulatory Requirements'section of our report of even date)

Re: Jet Knitwears Limited we report that:

(i) a. As per information provided to us by the management of the company the companyis maintaining proper records showing full particulars including quantitative details andsituation of fixed assets however the same has not been provided to us for theverification therefore we are unable to comment the same.

b. The company has a regular programme for physical verification of all assets over aperiod of three years. In accordance with this programme certain fixed assets wereverified during the year and no material discrepancies were noticed on such verification.In our opinion it is reasonable having regard to the size of the company and the natureof its assets.

c. According to the information and explanations given to us and the records examinedby us and based copies on the registered sale deeds/transfer deeds etc. evidencing titlein immovable properties which are freehold we report that the immovable propertiescapitalized in the books of account of the company are held in its name. The Originaltitle deeds being pledged against loans secured from the bank were not in possession ofthe company and therefore could not be verified.

(ii) a. As explained to us the inventory has been physically taken by the managementduring the year at various locations. In our opinion and according to the information andexplanations given to us no material discrepancies were noticed on physical verificationof stock verified.

b. The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the company and the nature of itsbusiness.

(iii) a. The company has not granted any loans secured or unsecured to parties coveredin the register maintained under section 189 of the Companies Act 2013.

(iv) In Our opinion and according to the information and explanations given us thecompany has complied with the provisions of section 185 and 186 of the Companies Act 2013in respect of grant of loans making investments and providing guarantees.

(v) In our opinion and according to the information and explanations given to us thecompany has not accepted any public deposits. As per the information and explanationsgiven to us no order has been passed by the Company Law Board or the National Company LawTribunal or the Reserve Bank of India or any Court or Tribunal.

(vi) In our opinion and according to the information and explanations given to us thecompany is not liable for maintenance of cost records u/s 148 of the Companies Act 2013.

(vii) (a) The company is regular in depositing with appropriate authorities undisputedstatutory dues including investor education protection fund income tax sales tax wealthtax service tax & customs duty and other material statutory dues applicable to it.According to the information and explanations given to us no undisputed amounts payablein respect of provident fund income tax sales tax wealth tax customs duty VAT cessand other material statutory dues were in arrears as at 31st March 2021 for aperiod of more than six months from the date they became payable.

Nature of Dispute Amount Period to which it relates
1. Income Tax Department 100617.38 TDS defaults of previous years
2. Service Tax Department 449823.00 01.04.2007 to 31.07.2011

(b) According to the information and explanations given to us there are no dues ofincome tax sales tax wealth tax service tax excise duty customs duty value addedtax cess Goods and service tax on account of any dispute.

(c) According to the information and explanation given to us there are no amounts thatare required to be transferred to Investors Education and Protection Fund.

(viii) In our opinion and according to the information and explanations given to usthe company has not defaulted in repayment of dues to a financial institution or bank. Thecompany has not issued debentures.

(ix) In our opinion and according to the information and explanations given to us thecompany has applied term loans for the purposes for which the same were availed.

(x) According to the information and explanations given to us no fraud by the companyor on the company by its officers or employees has been noticed or reported during thecourse of our audit.

(xi) In our opinion and according to the information and explanations given to us thecompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V of the CompaniesAct 2013.

(xii) The company is not a Nidhi Company and hence the reporting under clause (xii) ofCARO 2016 Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to usthe company has complied with Sections 177 and Section 188 of the Companies Act 2013where applicable for all transactions with related parties and the details of relatedparty transactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

(xiv) During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of CARO 2016 is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us thecompany has not entered into any non-cash transactions with its directors or directors ofits subsidiary or associate companies or persons connected with them and hence provisionsof section 192 of Companies Act 2013 are not applicable.

(xvi) In our opinion the company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934.

ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in Para 2(f) under ‘Report on Other legal and RegulatoryRequirements' section of our report of even date)

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER SECTION 143(3)(I) OF THE COMPANIES ACT2013 ("THE ACT")

We have audited the internal financial controls with reference to financial statementsof Jet Knitwears Limited ("the Company") as of March 31 2021 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

Opinion

In our opinion to the best of our information and according to the explanations givento us the company has in all material aspects an adequate internal financial controlswith reference to Financial Statements and such internal financial controls over financialreporting were operating effectively as at March 31st 2021 based on theinternal control over financial reporting criteria established by the company consideringthe essential components of internal control stated in Guidance Note of Audit ofInternational Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

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 with reference to Financial Statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing to theextent applicable to an audit of internal financial controls both issued by the Instituteof Chartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to FinancialStatements were established and maintained and if such controls operated effectively inall material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to Financial Statements and their operatingeffectiveness. Our audit of internal financial controls with reference to FinancialStatements included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal controls based on theassessed risk. The procedures selected depend on the auditor's judgement 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 and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to Financial Statements.

Meaning of Internal Financial Controls With Reference to Standalone FinancialStatements

A company's internal financial controls with reference to Financial Statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to Financial Statements 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 with reference to StandaloneFinancial Statements

Because of the inherent limitations of internal financial controls with reference toFinancial Statements 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 withreference to Financial Statements to future periods are subject to the risk that theinternal financial controls with reference to Financial Statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For RAJIV MEHROTRA & ASSOCIATES
CHARTERED ACCOUNTANTS
FIRM REG.NO.002253C
(PARTNER)
Kanpur June 28 2021 ASHISH LALWANI
UDIN: 21426684AAAABW6938 M.No.426684

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