To the Members of JIK INDUSTRIES LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of JIK INDUSTRIES LIMITED("the Company") which comprise the balance sheet as at 31st March 2019 thestatement of Profit and Loss statement of changes in equity and statement of cash flowsfor the year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information.
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 March 31 2019 and profit/loss changes in equity and its cash flows for theyear 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance 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 thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese 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 financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
i. Contingent Liability
The Company has various litigations pending before various authorities the outcome ofwhich are material but not practicable for the Company to estimate the timings of cashoutflows hence the Company has disclosed them as contingent liability in Note 24.14.
For legal regulatory and tax matters our procedures included examining external legalopinions obtained by management; meeting with regional and local management and examiningrelevant Group correspondence; discussing litigations with the Company's legal counsel andtax head; assessing management's conclusions through understanding precedents set insimilar cases; and circularization where appropriate of confirmations to third partylegal representatives regarding certain material cases.
We also involved our internal tax specialists to gain an understanding and to determinethe level of exposure for direct and indirect tax litigations of the Company.
In light of the above we examined the level of provisions recorded and assessed theadequacy of disclosures in Standalone financial statements.
ii. Forensic Audit by NSE
The Company received the communication from National Stock Exchange (NSE) of India withrespect to suspected shell company on August 7 2017. On 2nd May 2018 InterimOrder was received from NSE with respect to suspected Shell company directing forensicaudit of the Company & appointment of Forensic Auditor. The Company has complied withand submitted necessary information required by Forensic Auditor from time to time.
Company has received observations of Forensic Audit from NSE of India on April 23 2019with respect to Forensic Audit of the company. The Company has submitted necessaryexplanations to the questionnaire on the audit observation made by the forensic auditors.The case is still pending for final disposal by NSE of India.
Our audit procedures included understanding and evaluating processes and controlsdesigned and implemented by the management for assessment of litigations and testing theiroperating effectiveness; obtaining the list of litigation matters inspecting thesupporting evidence and critically assessing management's evaluation through discussionswith management on both the probability of outcome and the magnitude of potential outflowof economic resources; reading recent communications received and the Company's responsesto such communications to assess the status of the litigations; where relevant readingmost recent advice obtained by management from independent tax consultants and evaluatingthe grounds presented therein; evaluating independence objectivity and competence of themanagement's consultants; understanding the current status of the forensic audit.
In light of the above we did not identify any material exceptions as a result of aboveprocedures.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial
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 of these standalonefinancial statements 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 accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due 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 the Financial Statements
Our 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 financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findingsincludinganysignificantdeficiencies 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 ofthe current period and are therefore the key audit matters. We describe thesematters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1.As required by 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 Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read withCompanies (Indian Accounting
Standard) Rules 2015 as amended.
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st 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 over financialreporting of the
Company and the operating effectiveness of such controls refer to our separate Reportin
(g) 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 24.14 & 24.15 to the financialstatements.
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central
Government of India in terms of sub-section (11) of section 143 of the Companies Act2013 we give in
"Annexure B" a statement on the matters specified in paragraphs 3 and 4of the Order to the extent applicable.
|For Dhawan & Co. |
|Chartered Accountants |
|Firm's Registration No. 002864N |
|M. C. Gupta |
|Membership No. 070834 |
|Place : Mumbai |
|Date : 27th May 2019 |