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Sona Hi Sona Jewellers (Gujarat) Ltd.

BSE: 535348 Sector: Consumer
NSE: SONAHISONA ISIN Code: INE06MH01016
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Sona Hi Sona Jewellers (Gujarat) Ltd. (SONAHISONA) - Auditors Report

Company auditors report

TO THE MEMBERS OF SONA HI SONA JEWELLERS (GUJARAT) LIMITED

I. Report on the Financial Statements

1. Opinion

A. We have audited the accompanying Financial Statements of SONA HI SONA JEWELLERS(GUJARAT) LIMITED ("the Company") which comprise the Balance Sheet as at March31 2021 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation.

B. 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 amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

2. Basis for Opinion

We conducted our audit of the Financial Statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial 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 (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made there underand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on theFinancial Statements.

3. Emphasis of Matter

We draw your attention to Note-23 to the Financial Results which explains themanagement's assessment of the financial impact due to the lock-down and otherrestrictions and conditions related to the COVID - 19 pandemic situation for which adefinitive assessment of the impact in the subsequent period is highly dependent uponcircumstances as they evolve. Our opinion is not modified in respect of this matter.

4. 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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

The Key Audit matter How our audit addressed the key audit matter
Existence and Valuation of Inventory: As part of our audit procedures:
The Company has an inventory balance of Rs. 179438028/- as disclosed note 18 of the accompanying financial statements Refer note 23 for the accounting policy adopted by the management with respect to inventory balance. Obtained an understanding of the management's process for physical verification recognition and measurement of purchase cost of gold diamonds and cost of manufactured jewellery items.
With respect to existence of inventory as at year end there is an inherent risk of loss from theft or possible malafide intent due to the high intrinsic value and portable nature of individual inventory items. Evaluated the design and tested the operating effectiveness of control implemented by the company with respect to such process including control around safeguarding the high value of inventory items.
In addition to the physical verification performed by the management with the help of an independent professional gemologist the lender of company also conduct stock counts on regular basis throughout the year. Assessed the appropriateness of accounting policy and management valuation methodology adopted by the management.
With respect to valuation of the inventory the company purchased into the respective cost categories purchase into the respective cost categories defined by the management based on price based and other physical characteristics of the diamonds. On sample basis tested invoice and other underlying records to validate the costs and characteristics basis which the inventory is categorized for inventory management and valuation.
Due to the COVID-19 related lockdown we were not able to attend the Management's year end physical verification of inventory considering the complexities involved portable nature of diamonds high inherent risk and high level of estimation involved in valuation of inventory the existence and valuation of inventory has been determined as key audit matter for the current year audit. Consequently we have performed alternate procedures to audit the existence of inventory as per the guidance provided in SA 501 "Audit Evidence - Specific Considerations for Selected Items" and have obtained sufficient appropriate audit evidence to issue our opinion on these Standalone Financial Results.
Our report on the Statement is not modified in respect of the above matters.

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

A. The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the Financial Statements and our auditor's report thereon. Our opinion on thefinancial statements does not cover the other information and we do not express any formof assurance conclusion thereon.

B. In connection with our audit of the financial statements our responsibility is toread the other information and in doing so consider whether the other information ismaterially inconsistent with the Financial Statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in this regard.

6. Management's Responsibility for the Financial Statements

A. 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 Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; 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.

B. 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 Board of Directors are responsible for overseeing the Company's financial reportingprocess.

7. Auditor's Responsibilities for the Audit of the Financial Statements

A. 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.

B. As part of an audit in accordance with SAs we exercise professional judgment andmaintain 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of 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.

C. 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 effect of anyidentified misstatements in the Financial Statements.

D. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

E. 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.

F. 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.

II. Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit 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 including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.

D. In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

E. On the basis of the written representations received from the directors as on March31 2021 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.

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 A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols with reference to financial statements.

G. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

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.

H. 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 as amended inour opinion and to the best of our information and according to the explanations given tous:

The Company has disclosed the impact of pending litigations on its financial positionin its Financial Statements.

The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.

There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For J S SHAH & CO

Chartered Accountants

Firm Registration Number: 132059W
Sd/-
CA JAIMIN S SHAH Partner
Date: 28/06/2021 Membership Number: 138488
Place: Ahmedabad UDIN: 21138488AAAADO9055

Annexure "A" to the Independent Auditor's Report - 31st March 2021

Independent Auditors' report on the financial statements of SONA HI SONA JEWELLERS(GUJARAT) LIMITED for the year ended 31st March 2021.

Report on the internal financial controls with reference to the aforesaid financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013(Referred to in paragraph l(A)(t) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date/

Opinion

We have audited the internal financial controls with reference to financial statementsof SONA HI SONA JEWELLERS (GUJARAT) LIMITED ("the Company") as of 31stMarch 2021 in conjunction with our audit of the financial statements of the Company forthe year ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31st March 2021 based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India ("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness.

Our audit of internal financial controls with reference to financial statementsincluded obtaining an understanding of such internal financial controls assessing therisk that a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement 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 withreference to financial statements.

Meaning of Internal Financial controls with Reference to Financial Statements

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 include those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial controls with Reference to FinancialStatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For J S SHAH & CO

Chartered Accountants

Firm Registration Number: 132059W
Sd/-
CA JAIMIN S SHAH Partner
Date: 28/06/2021 Membership Number: 138488
Place: Ahmedabad UDIN: 21138488AAAADO9055

Annexure "B" to the Independent Auditor's Report - 31st March 2021

(Referred to in our report of even date)

With reference to the "Annexure B" referred to in the Independent Auditor'sReport to the members of the Company on financial statements for the year ended 31 March2021 we report the following:

i. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified annually. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. In accordance with this programme fixed assets were physically verified by themanagement during the year. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification.

According to the information and explanations given to us and the records examined byus including registered titled deeds we report that the title deeds comprising of allof immovable properties of land and buildings which are freehold are held in the name ofthe Company as at Balance sheet date.

ii. Inventories have been physically verified by the management during the year. In ouropinion the frequency of such verification is reasonable. The discrepancies noticed onverification between the physical stocks and the book records were not material and havebeen properly dealt with in the books of account.

iii. According to the information and explanation given to us the company has notgranted any loans or unsecured loan to companies firm limited liabilities partnershipsor either parties covered in the register maintained u/s 189 of the companies Act 2013.

iv. In our opinion and according to the information and explanations given to us andbased on the audit procedures conducted by us the Company has complied with theprovisions of Section 185 and Section 186 of the Act with respect to loans granted andinvestments made by the Company. The Company has not provided any guarantee or securityduring the year to the parties covered under section 185 and 186 of the Act. Accordinglycompliance under section 185 and 186 of the Act in respect of providing guarantees orsecurities is not applicable to the company.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from public as per the directives issued by theReserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and the rules framed there under. Accordingly paragraph 3 (v) ofthe Order is not applicable to the Company.

vi. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans and borrowings to banks financialinstitutions and government. The Company did not have any dues to debenture holders duringthe year.

vii. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Provident fund Employees' StateInsurance Income- tax Sales-tax Service tax Goods and service tax Duty of exciseValue added tax Cess and other material statutory dues have been generally regularlydeposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income-tax Sales-taxService tax Goods and service tax Duty of excise Value added tax Cess and othermaterial statutory dues were in arrears as at 31 March 2021 for a period of more than sixmonths from the date they became payable.

viii. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has raised money by way of initialpublic offer during the year. In our opinion and according to the information andexplanations given to us the term loans taken by the Company were applied for the purposefor which they were raised.

ix. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.

x. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

xi. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company as prescribed under Section 406 of the Act. Accordinglyparagraph 3 (xii) of the Order is not applicable to the Company.

xii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the financial statements as required bythe applicable Indian Accounting Standards.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has made preferential allotment ofshares during the year under consideration.

xiv. 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 any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3 (xv)of the Order is not applicable to the Company.

xv. In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3 (xvi) of the Order is not applicable to the Company.

For J S SHAH & CO

Chartered Accountants

Firm Registration Number: 132059W
Sd/-
CA JAIMIN S SHAH Partner
Date: 28/06/2021 Membership Number: 138488
Place: Ahmedabad UDIN: 21138488AAAADO9055

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