To the Members of
JINDAL COTEX LTD
Report on the Standalone Ind AS financial statements
We have audited the accompanying Standalone Ind AS financial statements of JINDAL COTEXLTD. ("the Company") which comprise the Balance Sheet as at March 31 2021 andthe Statement of Profit and Loss (including other comprehensive income) Cash FlowStatement and the statement of changes in equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information (herein after referredto as "standalone Ind AS financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the standalone financial statements give the information required by theCompanies Act 2013 in the manner so required and give a true and fair view except for thematter given in Emphasis of matter paragraph in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2021and its Profit and Loss (including other comprehensive income) Cash Flow Statement andstatement of changes in equity for the year ended.
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 Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to the following:
1. In the absence of balance confirmations of Trade receivables Trade payables andLoans Advances the impact on the financial statements is not ascertainable.
2. Since the accounts of the Company have declared NPA with all the banks/financialinstitutions no balance confirmation is thus available since their declaration as NPA.
3. The Company has various statutory liabilities outstanding since long as on31/03/2021 being Vat CST ESI EPF etc.
4. The Company is in the process of challenging the SAT order in response to SEB1 orderWTM/AB/EFD-l/DRA-1/04/2019-2020 dated 24/04/2019 barring the Company and its directorsfrom accessing the securities market and further prohibit them from buying selling orotherwise dealing in securities (including unit of mutual funds) directly or indirectlyor being associated with the securities market in any manner whatsoever for a period offive years.
5 Ind AS on unquoted investments in wholly owned subsidiary and other and on capitaladvance have not been applied by the company so we are unable to comment upon the effectsof the same on the financial statements.
6 Stock is subject to confirmation from management. We have not physically verified thesame.
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 financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
Except for the matters described in emphasis of matter section we have determined thatthere are no other key audit matters to communicate in our report.
Information other than the financial statements and Auditor's Report thereon
The Company's Board of Directprs is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon. Our opinion on the financialstatements does not cover the other information and we do not express any form ofassurance condu^Ton thereon. In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audij or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
Management and Those Charged with Governance's Responsibility for the Standalone Ind ASfinancial statements
The Management and board of directors of the company are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ('the act') with respect to thepreparation of these standalone financial statements that give a'true and fair view of thefinancial position financial performance 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 read with Companies (Indian Accounting Standards)Rules 2015.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement 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.
The respective Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.
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 withStandards on Auditing will always detect a material misstatement when it exjsts.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
i. 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.
ii. 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 explaining our opinion on whether the Companyhas adequate internal financial controls system in place and the operating effectivenessof such controls. '
iii. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
iv. 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.
v. 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 sectionl43 ofthe Act we give in the Annexure A statement on the matters Specified in paragraphs 3 and4 of the Order.
As required by section 143(3) of the Act we report that:
a) Except for the matters described in the Emphasis of matter section we have soughtand obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b) In our opinion except for the matters as stated in the Emphasis of matter sectionproper books of account as required by law have been kept by the Company so far as appearsfrom our examination of those books.
c) The Balance Sheet Statement of Profit and loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisreport are in agreement with the books of account.
d) Except for the matters stated in the Emphasis of matter section there is no anyother observations or comments of the auditors on financial transactions or matters whichhave any adverse effect on the functioning of the company;
e) Except for the matters stated in the Emphasis of matter section there is no anyother qualification reservation or adverse remark relating to the maintenance of accountsand other matters connected therewith;
f) In our opinion except for the matters stated in the Emphasis of matter section theaforesaid standalone Ind AS financial statements comply with the applicable IndianAccounting Standards specified under Section 133 of the Act.
g) On the basis of written representations received from the directors as on March 312021 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164(2) of theAct.
h) 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"; and
i) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014:
i. The company has disclosed the impact of pending litigations on its financialposition in its standalone IND AS financial statements
ii. The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise.
iii. There has not been an occasion in case of the Company during the year under reportto transfer any sums to the Investor Education and Protection Fund. The question of delayin transferring such sums does not arise.
| ||For K.R. Aggarwal & Associates |
| ||Chartered Accountants |
| ||PRN 030088N |
|Place: Ludhiana ||(Partner) |
|Date: 30/06/2021 ||Membership frar539337 |
|UDIN: 21539337AAAAF08792 || |
ANNEXURE A TO THE INDEPENDENT AUDITORS* REPORT
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
I. In respect of fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) According to the information and explanation given to us the company has aregular program of physical verification of fixed assets by which all fixed assets areverified. However no such report of physical verification of fixed assets done by thecompany has been provided to us.
c) According to information and explanation given to us the title deeds ofimmovable Properties are held in the name of the company. However none is made availableto us as they are pledged with the financial institutions.
II. In respect of Inventories: -
a) According to information and explanations given to us the inventories have beenphysically verified during the year by the management. In our opinion the frequency ofverification is reasonable.
b) In our opinion and according to the information and explanations given to usthe procedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness. However no such report was made available to us.
c) The company has maintained proper records of inventory. As explained to us thediscrepancies noticed on physical verification were not material. However thediscrepancies noticed have been properly dealt with in the books of account.
III. According to the information and explanations given to us the Company has notgranted secured or unsecured loans to companies firms Limited Liability partnerships orother parties covered in the Register maintained under section 189 of the Act. There arehowever outstanding loans and advances to the tune of Rs. 166.36 crore as on 31.03.21 theterms and conditions of which are not specified and hence we are unable to comment upon.
IV. In our opinion and according to the information and explanations given to us thecompany has not granted loans during the year. So the provisions of section 185 and 186of the Companies Act 2013 are not applicable. However the Company has complied with theprovisions of Section 185 and 186 of the Companies Act 2013 in respect of investmentmade. In our opinion and according to the information and explanations given to us theCompany has not given any guarantee for loan taken by others from a bank or financialinstitution during the year.
V. In our opinion and according to the information and explanations given to us thecompany has not accepted any deposit from the public covered under Section 73 to 76 of theCompanies Act 2013 during the Year However for the repayment of the fixed depositsreceived in earlier years by the company from the public the company has taken permissionfrom the Hon'ble Company Law Board New Delhi for extension of time for repayment *offixed deposits as the company was unable to repay the same on due dates due to financialcrisis.
VI. We have broadly reviewed the records maintained by the company pursuant to therules prescribed by the central government for maintenance of cost records undersubsection (I) of section 148 of the act and are of the opinion that prima facie theprescribed accounts have been prepared and maintained. However we have not made thedetailed examination of records.
I VII. (a) According to the information and explanations given to us and based on therecords of the company examined by us the company is not regular in depositing theundisputed statutory dues including Provident Fund Employees' State InsuranceIncome-tax Custom Duty Goods and Service tax and other material statutory dues asapplicable with the appropriate authorities in India. Vat 8791536/- PF Payable5856000/- ESI Payable 1375000/-
(b) According to the information and explanation given to us and based on the recordsof the company examined by us there are no dues of Provident Fund Employees' StateInsurance Income-tax Sales-tax Service Tax Custom Duty and other material statutorydues which have not been deposited on account of any disputes.
VIII. According to the records of the Company examined by us and the informationand explanations given to us the Company has defaulted in repayment of loans orborrowings to banks and financial institution. The company has not issued any debenturesduring the year. Banks have recalled entire advances from the company and have startedrecovery proceedings under SARFAESI ACT 2002.
IX. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
X. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
XI. In our opinion and according to the information and explanations given to usthe Company has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
XII. In our opinion and according to the information and explanations given to usthe Company is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
XIII. In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards:
XIV. During the year the Company has not made any preferential allotment orprivate placement of shares or fully or partly paid convertible debentures and hencereporting under clause 3 (xiv) of the Order is not applicable to the Company.
XV. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hen.ce provisions of section 192 ofthe Companies Act 2013 are not applicable to the Company.
XVI. The Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.
Annexure - B to Independent Auditors" Report (Referred to in our report of evendate)
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 JINDALCOTEX LTD. as of 31st March 2021 in conjunction with our audit of the standalone Ind ASfinancial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India ('1CAI').
These responsibilities include the design implementation and maintenance of adequateinternal financial control's that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the 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") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia.
Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated 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 standalone Ind AS financial statements whether due to fraudor error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone Ind AS financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standaloneInd AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the company are being made only in accordance withAuthorizations of management and directors of the company; and (3) provide reasonableAssurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the standaloneInd AS 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 that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the company has Except for-the matters described in the Emphasis of matter sectionin all material respects an adequate internal financial controls system over financialreporting and such internal financial controls over financial reporting were operatingeffectively as at 31st March 2021 based on the internal control over financial reportingcriteria established by the company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.
| ||For K.R. Aggarwal & Associates |
| ||Charted accountants |
| ||PRN 030088N |
| ||(Partner) |
|Place: Ludhiana || |
|Date: 30/06/2021 ||Membership No: 539337 |
|UDIN: 21539337AAAAF08792 || |