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JHS Svendgaard Laboratories Ltd.

BSE: 532771 Sector: Consumer
NSE: JHS ISIN Code: INE544H01014
BSE 00:00 | 31 Mar 7.48 0.08
(1.08%)
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7.08

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7.48

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7.08

NSE 00:00 | 31 Mar 7.55 0.40
(5.59%)
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7.15

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7.55

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OPEN 7.08
PREVIOUS CLOSE 7.40
VOLUME 5247
52-Week high 28.70
52-Week low 6.67
P/E 8.04
Mkt Cap.(Rs cr) 33
Buy Price 7.00
Buy Qty 10.00
Sell Price 7.48
Sell Qty 46.00
OPEN 7.08
CLOSE 7.40
VOLUME 5247
52-Week high 28.70
52-Week low 6.67
P/E 8.04
Mkt Cap.(Rs cr) 33
Buy Price 7.00
Buy Qty 10.00
Sell Price 7.48
Sell Qty 46.00

JHS Svendgaard Laboratories Ltd. (JHS) - Auditors Report

Company auditors report

To the Members of

JHS Svendgaard Laboratories Limited

Report on the Standalone Ind AS Financial Statements

We have audited the financial statements of JHS Svendgaard Laboratories Limited("the Company") which comprise the balance sheet as at 31 March 2019 and thestatement of Profit and Loss (including other comprehensive income) statement of changesin equity and statement of cash flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amendedand other accounting principles generally accepted in India of the state of a3airs of theCompany as at 31 March 2019 and profit and total comprehensive income changes in equityand its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India ("the ICAI")together with the ethical requirements that are relevant to our audit of the financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the ICAI'sCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate 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 matter described below to be the key audit matters to becommunicated in our report.

Key Audit Matter Auditor's Response
1. Revenue Recognition Principal Audit Procedures
Revenue from the sale of goods (hereinafter referred to as "Revenue") is recognised when the Company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. Our audit approach was a combination of test of internal controls and substantive procedures including:
• Assessing the appropriateness of the Company's revenue recognition accounting policies in line with Ind AS 115 ("Revenue from Contracts with Customers") and testing thereof.
The timing of such recognition in case of sale of goods is when the control over the same is transferred to the customer which is mainly upon delivery. The timing of revenue recognition is relevant to the reported performance of the Company. • Evaluating the design and implementation of Company's controls in respect of revenue recognition.
• Testing the effectiveness of such controls over revenue cut off at year-end.
• We performed substantive testing by selecting samples of revenue transactions recorded during the year by verifying the underlying documents which included goods dispatch notes and shipping documents.
The management considers revenue as a key measure for evaluation of performance. • Performing analytical procedures on current year revenue based on monthly trends and where appropriate conducting further enquiries and testing.
Refer Note 2(a) to the Standalone Financial Statements - Significant Accounting Policies Based on the above procedure performed the recognition and measurement of revenue from sale of goods are considered to be adequate and reasonable.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the Director's Report including AnnexuresManagement Discussion and Analysis Corporate Governance Report and other company relatedinformation (but does not include the standalone financial statements and our auditor'sreport thereon) These reports are expected to be made available to us after the date ofthis auditor's report.

Our opinion on the standalone financial statements does not cover the other informationand we do not and will 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 identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take appropriate action if required.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash

flows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of 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 financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the company's financialreporting process.

Auditor's Responsibilities for the Audit of Financial Statements

1Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

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

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances but not for the purposeof expressing an opinion on the effectiveness of the entity's internal controls. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the e3ect of anyidentified misstatements in the financial statements.

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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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

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 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act based on our audit we report to theextent applicable 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 Sheetthe Statement of Profit and Loss

(including Other Comprehensive Income) Statement of Changes in Equity and the Statementof Cash Flow dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act;

(e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164 (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".

(g) 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.

(i) 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 financial statements – Refer Note 37 to the standalone financialstatements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

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

For S.N. Dhawan & Co LLP
Chartered Accountants
Firm's Registration No.:000050N/N500045
S. K. Khattar
Place: New Delhi Partner
Date: 18 May 2019 Membership No.: 084993

Annexure "A"

1. Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of the Independent Auditor's Report of even date to the members ofJHS Svendgaard Laboratories Limited on the standalone Ind AS financial statements as ofand for the year ended 31 March 2019.

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets {comprising of property plant andequipment and other intangible assets}.

(b) The fixed assets comprising of (property plant and equipment and other intangibleassets) are physically verified by the management according to a phased programme designedto cover all items over a period of three years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programmea portion of the fixed assets has been physically verified by the management during theyear and no material discrepancies have been noticed on such verification

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed provided to us we reportthat the title deeds of all the freehold immovable properties which are included underthe head ‘fixed assets'{comprising of property plant and equipment and otherintangible assets} are held in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year except for goods-in-transit and stocks lying with thirdparties. For stocks lying with third parties at the year-end written confirmations havebeen obtained by the management. According to the information and explanations given tous no material discrepancies were noticed on the aforesaid verification.

(iii) According to the information and explanations given to us the Company hasgranted interest free unsecured loans to companies covered in the register maintainedunder Section 189 of the Act; and with respect to the same:

(a) in our opinion the terms and conditions of grant of such loans are not primafacie prejudicial to the company's interest;

(b) no repayment schedule has been specified and accordingly the question of regularityin repayment of principal amount does not arise. Further as stated above these loans areinterest free and repayment of interest does not arise.

(c) in the absence of stipulated schedule of repayment of principal and payment ofinterest we are unable to comment as to whether there is any amount which is overdue formore than 90 days and whether reasonable steps have been taken by the Company for recoveryof the principal amount and interest.

(iv) In our opinion and according to the information and explanations given to uscompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofloans investments guarantees and security.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year and had no unclaimed deposits at thebeginning of the year within the meaning of Sections 73 to 76 of the Act and the Companies(Acceptance of Deposits) Rules 2014 (as amended). Accordingly the provisions of clause3(v) of the Order are not applicable.

(vi) According to the information and explanations given to us the Central Governmenthas not specified maintenance of cost records under sub-section (1) of Section 148 of theAct in respect of Company's products/ services. Accordingly the provisions of clause3(vi) of the Order are not applicable.

(vii) (a) According to the information and explanations given to us the Company isregular in depositing undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess goods and services tax and other material statutory dues as applicableto the appropriate authorities though there has been a slight delay in a few cases.Further no undisputed amounts payable in respect thereof were outstanding at the year-endfor a period of more than six months from the date they become payable.

(b) According to the information and explanations given to us there are no dues inrespect of income-tax sales-tax service tax duty of customs duty of excise valueadded tax and goods and services tax that have not been deposited with the appropriateauthorities on account of any dispute.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans to banks and financial institution.The Company does not have any loans or borrowings from any government or debenture holdersduring the year.

(ix) In our opinion and according to the information and explanations given to us theCompany did not raise moneys by way of initial public officer or further public officer(including debt instruments) and did not have any term loans outstanding during the year.Accordingly the provisions of clause 3(ix) of the Order are not applicable.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or on the company by its Officers or employees hasbeen noticed or reported during the period covered by our audit.

(xi) In our opinion and according to the information and explanations given to usmanagerial remuneration has been provided by the Company in accordance with the requisiteapprovals mandated by the provisions of Section 197 of the Act read with Schedule V to theAct.

(xii) The Company is not a Nidhi Company. Accordingly provisions of clause 3(xii) ofthe Order are not applicable.

(xiii) In our opinion and according to the information and explanations given to usall transactions with the related parties are in compliance with Sections 177 and 188 ofAct where applicable and the requisite details have been disclosed in the financialstatements etc. as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Accordingly provisions ofclause3 (xiv) of the order are not applicable.

(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with the directors or personsconnected with them covered under Section 192 of the Act. Accordingly provisions ofclause3 (xv) of the order are not applicable.

(xvi) The company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly provisions of clause3 (xvi) of the order are notapplicable.

For S.N. Dhawan & Co LLP

Chartered Accountants Firm's Registration No.:000050N/N500045

S. K. Khattar
Place: New Delhi Partner
Date: 18 May 2019 Membership No.: 084993

Annexure "B"

Independent Auditor's report on the Internal Financial Controls with reference tofinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 ("the Act")

1. We have audited the internal financial controls over financial reporting of JHSSvendgaard Laboratories Limited ("the Company") as of March 31 2018 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on internal financial controls with reference to financialstatements. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and e3cient conduct of the company's business including adherence to company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

3. 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 issuedby the Institute of Chartered Accountants of  India (ICAI) and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI.. 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.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

5. 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 systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

6. 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 and fairlyreflect 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 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 e3ect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

7. 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.

Opinion

8. In our opinion the Company has in all material respects adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31 March 2019 based on the internal financial control with reference to financialstatements.

For S.N. Dhawan & Co LLP
Chartered Accountants
Firm's Registration No.:000050N/N500045
S. K. Khattar
Place: New Delhi Partner
Date: 18 May 2019 Membership No.: 084993