To the Members of JIK INDUSTRIES LIMITED
Report on the Audit of the Financial Statements
We have audited the financial statements of JIK INDUSTRIES LIMITED ("theCompany") which comprise the balance sheet as at 31st March 2021 the statement ofProfit and Loss statement of changes in equity and statement of cash flows for the yearthen ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 and profit/loss changes in equity and its cash flows for the year ended on thatdate.
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.
Emphasis of Matter
Effects of COVID-19
We draw attention to Note 24.21(2) in the financial statements which describes theeconomic and social consequences the entity is facing as a result of COVID-19 which isimpacting Company's operations supply chains consumer demand personnel available forwork and being able to access offices. Our opinion is not modified in respect of thismatter
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 26.15 and26.16.
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 financial statements.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
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 financial statements that give a true and fair view of the financial positionfinancial performance changes in equity and cash flows of the Company in accordance withthe accounting 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 weexercise professional judgment and maintain 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. 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 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.
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 Companies Act 2013 we give in "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.
2. 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 financial statements comply with the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended.
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 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 ourseparate Report in "Annexure B".
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 does not have any pending litigations which would impact its financialposition
ii. The Company did not have any long-term contracts including derivative contracts forwhich 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.
ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirement section of our report to the Members of JIK INDUSTRIES LIMITED of even date)
(i) In respect of Fixed Assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has program of verification to cover all the items of fixed assets in aphased manner which in our opinion is reasonable having regard to the size of Companyand the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management at reasonable intervals. No material discrepancieswere noticed on such verification.
c) According to information and explanation given to us the records examined by us andbased on examination of the conveyance deeds provided to us we report that the titledeeds comprising all the immovable properties of land and buildings which are freeholdare held in the name of the Company as at the Balance Sheet date.
(ii) In respect of its Inventories:
a) As explained to us the inventories have been physically verified by the managementduring the year at reasonable intervals.
b) On the basis of our examination the Company has maintained proper records ofinventories and no material discrepancies were noticed on physical verification
(iii) In our opinion and according to the information and explanations given to usduring the course of the audit the Company has not granted any loans secured orunsecured to companies firms Limited Liability Partnerships or other parties covered inthe register maintained under section 189 of the Companies Act2013. Thus paragraph3(iii) is not applicable to the Company.
(iv) In our opinion and according to information and explanations given to us theCompany has not advanced loans to Directors and/or Companies in which the director isinterested to which the provisions of Section185 of the Companies Act 2013 apply andhence not commented upon. In our opinion and according to the information and explanationsgiven to us the Company has not made investment and given guarantee/provided securitywhich falls under the purview of section 186 of the Companies Act 2013 and hence notcommented upon.
(v) The Company has not accepted any deposits from the public during the year and doesnot have any unclaimed deposits as at March 31 2021. And therefore the provisions of theclause 3(v) of the order are not applicable to the Company.
(vi) The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013 for the business activities carried outby the Company. Thus reporting under Clause 3 (vi) of the order is not applicable tothe Company.
(vii) According to the information and explanations given to us in respect ofStatutory Dues:
a) The Company has generally been regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax sales-tax ProfessionTax and other material statutory dues applicable to it with the appropriate authorities.
b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Sales Tax Service Tax Value Added Tax Goods and ServiceTax Custom Duty Excise Duty Cess and other material statutory dues in arrears as atMarch 31 2021 for a period of more than six months from the date they become payableexcept the following:
Statement of Arrears of Statutory Dues Outstanding for More than Six Months
|Name of the Statue ||Nature of the due ||Period to which Amount relates ||Amount (Rs. in lacs) |
|MVAT Act2002 ||Value Added Tax ||2009-10 ||198.93 |
|Profession tax Act 1961 ||Profession Tax ||2018-19 ||0.49 |
|Profession tax Act 1961 ||Profession Tax ||2019-20 ||0.43 |
|Profession tax Act 1961 ||Profession Tax ||2020-21 ||0.03 |
c) The Statutory dues that have not been deposited on account of any dispute areindicated below:
|Name of the Statute ||Nature of Dues ||Amount (In Lacs) ||Period which the amount relates ||Forum where dispute pending |
|Income Tax Act 1961 ||Income Tax ||156.70 ||2000-01 ||Commissioner of Income Tax Mumbai City II |
| ||Income Tax ||372.69 ||2001-02 ||Commissioner of Income Tax Mumbai City II |
| ||Income Tax ||768.16 ||2008-09 ||Commissioner of Income Tax (Appeal) |
| ||Income Tax ||273.44 ||2007-08 ||Commissioner of Income Tax (Appeal)) |
| ||Income Tax ||4005.12 ||2009-10 ||Commissioner of Income Tax (Appeal) |
| ||Income Tax ||4156.14 ||2010-11 ||Commissioner of Income Tax (Appeal) |
| ||Income Tax ||162.66 ||2010-11 ||Commissioner of Income Tax (Appeal) (Reassessment) |
| ||Income Tax ||62.89 ||2012-13 ||Commissioner of Income Tax (Appeal) |
| ||Income Tax ||5534.03 ||2014-15 ||Commissioner of Income Tax (Appeal) |
| ||Income Tax ||5.03 ||2016-17 ||Commissioner of Income Tax (Appeal) |
|MVAT Act 2002 ||Value Added Tax Interest ||236.24* ||2009-10 ||The Maharashtra Sales Tax - Tribunal Mumbai |
| || ||198.93 || || |
| ||Value Added Tax Interest ||12.64** ||2010-11 ||The Maharashtra Sales Tax - Tribunal Mumbai |
| ||Value Added Tax Interest ||194.99*** ||2010-11 ||The Asst. Commissioner of sales Tax Mumbai |
(*) The Order of Dy. Commissioner is quashed & set aside by Maharashtra sales taxtribunal and the matter is remanded back to First Appellate with a direction to decidethe same on merits.
(**) The Maharashtra sales Tax Tribunal stayed the order till the decision of theappeal.
(***) The Company is in the process of filling appeal before The Maharashtra Sales Tax- Tribunal against the order of the Asst. Commissioner of Sales Tax.
(viii) Company has not defaulted in repayment of loans or borrowing to a financialinstitution bank Government or dues to debenture holders except for the nonpayment of 6instalments to Government of Maharashtra as per the scheme of Hon'ble BIFR the details ofwhich are given below:
|Particulars (Name of Lenders) ||Amount of Default ||Date of Default |
|Development Corporation of Konkan Ltd ||256038 ||30.06.2012 |
| ||256038 ||30.06.2013 |
| ||256038 ||30.06.2014 |
| ||256038 ||30.06.2015 |
| ||256038 ||30.06.2016 |
| ||256038 ||30.06.2017 |
|Sales Tax ||396910 ||30.06.2012 |
|Deferment Loan ||396910 ||30.06.2013 |
| ||396910 ||30.06.2014 |
| ||396910 ||30.06.2015 |
| ||396910 ||30.06.2016 |
| ||396910 ||30.06.2017 |
The above defaults are continuing as on the Balance Sheet date.
(ix) According to the information and explanations given to us the Company has notraised moneys by way of initial public offer or further public offer (including debtinstruments) and term loans during the year; hence reporting under clause 3(ix) of theOrder is not applicable to the Company.
(x) Based on the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that there were no material fraud by the Company or onthe Company by its officers or employees which have been noticed or reported during theyear under review.
(xi) According to the information and explanations given by the management Managerialremuneration has been paid or provided as per the Section 195 read with Schedule V of theCompanies Act 2013 during the year under review.
(xii) The Company is not a Nidhi Company. Consequently provisions of clause 3(xii) ofthe Order are not applicable to the Company.
(xiii) In our opinion and according to the information and explanation given to us theCompany is in compliance with sections 177 and 188 of Companies Act 2013 whereapplicable for all transactions with the related parties and the details or related partytransactions have been disclosed in the Standalone Financial Statements as required bythe applicable accounting standards.
(xiv) Based on our examination of the records of the Company the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year under review and hence reporting under clause 3 (xiv) are notapplicable to the Company.
(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 them and hence provision of section192 of Companies Act 2013 are not applicable to the Company.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2(f) under Report on Other Legal and Regulatory Requirementssection of our report to the members of JIK INDUSTRIES LTD. of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of JIKINDUSTRIES LTD ("the Company") as of March 31 2021 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
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.
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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting 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 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 financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
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.
In our opinion to the best of our information and according to the explanation givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
1. COVID 19 pandemic has resulted in a different and unique working environment whichrequired performance of selective audit procedures remotely and to that extent there is animpact on testing.
|For Dhawan & Co. |
|Chartered Accountants |
|M C Gupta |
|(M. No. 070834 ) |
|Place : Mumbai |
|Date : June 30 2021 |