The Members of
WINSOME DIAMONDS AND JEWELLERY LIMITED
1. Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of WINSOMEDIAMONDS AND JEWELLERY LIMITED ("the Company") which comprise the BalanceSheet as at 31st March 2017 the Statement of Profit and Loss and CashFlow Statement for the year then ended and a summary of significant accounting policiesand other explanatory information (herein after referred to as "standalone Ind ASfinancial statements").
2. Management's Responsibility for the Financial Statements
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 andpresentation of these Ind AS 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 Indian AccountingStandards (Ind AS) specified under Section 133 of the Act read with relevant rules issuedthere under.
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; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
3. Auditor's Responsibility
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriateexcept as mentioned in disclaimer of opinion para to provide a basis for our audit opinionon the standalone Ind AS financial statements.
4. Basis for Qualified Opinion
A. The Company has made long term investments in Forever Precious Diamonds andJewellery Ltd. (Forever) amounting to Rs. 1411710802 thereby resulting in it holding a49 % stake in the equity of that company. The said investments continue to be valued atcost. As stated in Note No. 8 in the view of the management provision for diminution invalue of investments as per the requirements of Ind-AS 28 - Investments in Associates andJoint Ventures is not considered necessary and hence not made. We have been provided withthe financial statements of Forever for the year ended 31stMarch 2017. We haveobserved that there are no significant business operations in Forever. Further theauditors of Forever have qualified the financial statements and termed the company as anon-going concern. In view of the above the Company should have provided the diminution invalue of investments amounting to Rs. 1411710801. Accordingly the loss for the yearhave been understated and investments overstated by Rs. 1411710801.
B. The company has also made long term investment in Peakok Jewellery Limited amountingRs.5012750/- at the average rate of Rs.286.44/- per share. As per the balance sheet as at31st March 2016 the book value of the shares of the company is Rs.110.78/- pershare. In the view of the management provision for diminution in value of investments asper the requirements of Ind-AS 28 - Investments in Associates and Joint Ventures is notconsidered necessary and hence not made. In view of the above the Company should haveprovided the diminution in value of investments amounting to Rs.3075100/-. Accordinglythe loss for the year have been understated and investments overstated by Rs.3075100/-.
5. Basis for Disclaimer of Opinion
A. In respect of Trade Receivables amounting to Rs. 56080930760/- (Valued atexchange rate as on 31/03/2017 under IndAS) the auditors have not received anyconfirmations from the overseas parties. The company has filed legal suit against itsdefaulting overseas customers for non-payment of its export bills at Sharjah FederalCourt Sharjah. The court has appointed an expert to look into the affairs of thecompanies based in Dubai/ Sharjah. The Court has confirmed the debts payable to theCompany
and ordered the overseas customer to pay along with interest @5% p.a. However thecopies of the orders are not provided for verification. The overseas customers had filedan appeal against the judgment of the Sharjah Federal Court and the Sharjah FederalAppellate Court has passed order in favour of the Company and now the matter is pendingfor 1 case with the Sharjah Federal Appellate Court and 2 case with Sharjah Supreme courtand their judgments are awaited. . During the year under review state bank of Mauritiushas entered in the One Time Settlement agreement with the company and overseas Customersof the company for settlement of its loan. Accordingly the Overseas customers agreed topay US$ 1050833/- against the total outstanding bill of US$ 8241831.11/-. The balanceamount receivable (Rs. 488352906/-) from overseas customers has been considered asimpaired charged to profit and loss in FY 2016-2017. As per Ind-As - 109 (FinancialInstruments) provides practical expedient to use a provision matrix to estimate ExpectedCredit Loss for trade receivables.
In view of these court orders pending legal proceedings we are unable to comment ontime frame of the realisability of the debts through provision matrix where allsignificant trade receivables past due by more than a year and any provision to be madefor unrealisability in the remaining carrying amounts of these balances and theconsequential impact on the financial statements. (Refer Note 9 11 and Note 34 to thefinancial statements)
B. As per Ind-AS -16(Property Plant and Equipment) the depreciable amount of atangible fixed asset should be allocated on a systematic basis over its useful life. Thedepreciation method should reflect the pattern in which the asset's future economicbenefits are expected to be consumed by the entity. Further standard requires thedepreciation method applied to an asset residual value and useful life shall be reviewedat least at each financial year-end. Based on technical evaluation the managementbelieves that written down method of depreciation method and the useful lives asprescribed under Part C of Schedule II of the Companies Act 2013 are best representativefuture economic benefits associated with tangible fixed assets. In absence of thetechnical report we are unable to comment on reasonability of useful and method ofdepreciation and the consequential impact on the financial statements. (Refer note 6& 7)
C. As mentioned in Note No 1 regarding preparation of accounts on a Going Concern basisand the reasons stated therein and Note No.34 of the financial statements detailing thedevelopments that have happened in the last 4 years the Company's operating results havebeen materially affected due to various factors including non availability of finance inview of the consortium of bankers recalling the financial facilities granted. These eventscast significant doubts on the ability of the Company to continue as a going concern sincethe business has stopped. The appropriateness of the going concern assumption is dependenton the Company's ability to raise adequate finance from alternate means and/or recoveriesfrom overseas debtors to meet its short term and long term obligations as well as toestablish consistent business operations.
In absence of any convincing audit evidences non recovery of trade receivables on duedate non-payment of liabilities including statutory dues financial difficulties faced bythe company due to recalling of bank finance facilities and in view of multipleuncertainties as stated above we are unable to determine the possible effects on thefinancial statements. We are also unable to conclude on the ability of the company tocarry on as a going concern.
D. The Reserve Bank of India issued notice to the Company under FEMA fornon-realization of foreign exchange from exports made during 2012-13 to overseas customersof Rs.636.14 crore. The Company has already informed time to time Reserve Bank of Indiaabout default made by overseas customers and the status of legal cases.
E. Some of the lending banks have declared the Company as Willful Defaulters and havefiled complaints with investigating agencies and the same are in progress. The Company isextending its full co-operation to the Investigating agencies. The Enforcement directorhas passed order against the Company under PMLA and all the properties are underprovisional attachment by ED. The matter is now with the Enforcement Director New Delhiand the order is awaited.
F. The company has not worked out the interest provision @ 12.5% on the followingcurrent accounts having credit balances. Hence effect of interest on financial statementcannot be determined:
|Bank Name ||Outstanding amount in Rs. |
|CBI ||11116796 |
|PNB ||1801490 |
|PNB C/A 1937 ||73220 |
|VIJAYA BANK ||6636350 |
|TOTAL ||19627856 |
6. Disclaimer of Opinion
Because of the significance of the matters described in the Basis for Disclaimer ofOpinion paragraph specifically relating to the multiple uncertainties created due tofactors such as non recovery of trade receivables on due dates non payments ofliabilities including statutory dues financial difficulties faced by the Company due torecalling of bank finance we have not been able to obtain sufficient appropriate auditevidence to provide a basis for an audit opinion. Accordingly we do not express anopinion on the financial statements.
7. Emphasis of Matter
A. The Company has not carried out any valuation of the stocks which are lying withthem/in the joint custody with the banks. To that extent the increase or decrease in thevalue of-inventories as at year end as required to be done as per the requirements ofInd-AS -2 (Inventories) has not been done. The impact on the profit/loss of the companydue the said non valuation has not been determined. Refer note no. 10.
B. There is difference of Rs. 34688692/- in the outstanding balance of advancesobtained from the bankers. In absence of details made available by the bankers thecompany is not in a position to reconcile the difference. Which may lead to understatementof liability and its consequential effect in the book result if any.
C. Due to the defaults of the Company to the banks the Company's accounts have beenclassified as NPAs by the banks. Most of the banks have not charged interest on theCompany's borrowings/loans while some banks have been charging interest at higher rates.The board of directors of the Company in its meeting held on 30th May 2015 haddecided not to provide Interest. Now the directors in its meeting dated 29thMay 2017 have decided to provide for Interest to comply with Ind-AS. The Company hasprovided Interest @ 12.5 % of the outstanding amount being the average rate of rupeeexport finance as worked out by the Directors. Moreover The Debt recovery tribunal haspassed order dated 09.12.2016 determining the total amount payable Rs.46870404315/-along with the simple interest @ 14% p.a. from the date of filing of original applicationwith DRT till the date of realization of dues. However the company has not passed anyeffect relating to the above mention order as the detailed calculation of Bank wiseliability is not available and in that concern liability of the company cannot bedetermined.
D. The company has received summons from Serious Fraud Investigation Office of Ministryof Corporate Affairs dated 05.07.2016 u/s 217 of The Co. Act 2013 and investigation undersection 212 of The Companies Act 2013 dated 01.08.2016. The company has complied for thesame. However no quantification of any financial liability arises out of the same in theopinion of the Board.
8. Report on Other Legal and Regulatory Requirements
1) As required by The Companies (Auditors Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 4 of the said order to the extent applicable.
2) As required by section 143(3) of the Companies Act 2013 we report that:
(a) As described in the Basis for Disclaimer of Opinion Paragraph we were unable toobtain all the information and explanations which to the best of our knowledge and beliefwere necessary for the purpose of our audit;
(b) in our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;
(c) the Balance Sheet Statement of Profit and Loss and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account
(d) Except for the effects of the matter described in the Basis forQualified/Disclaimer Opinion/Emphasis of Matter paragraphs in our opinion the aforesaidfinancial statements comply with the Accounting Standards specified under section 133 ofthe Act read with relevant rule issued there under.
(e) On the basis of written representations received from the directors as on 31stMarch 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director interms of Section 164(2) of the Act.
(f) The matter described in Basis of Disclaimer of opinion in Paragraph 5 above in ouropinion may have an adverse effect on the functioning of the company.
(g) With respect to the adequacy of internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in Annexure 2.
(h) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us :
(i) Total pending litigations which would impact the standalone Ind AS financialposition of the company are enclosed herewith in Annexure A. The management is unable toascertain the amount of liabilities to the company on the said litigations.
(ii) The Company did not have any long term contracts including derivative contractsfor which there were any material foreseeable losses.
(iii) During the year under consideration there is no pending amount which is requiredto be transferred to the Investor Education and Protection fund.
(iv) The Company has provided requisite disclosure in its Standalone INDAS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016 and these are in accordance with the books ofaccounts maintained by the Company. Refer Note 40 to the standalone INDAS financialstatements.
| ||For NAUTAM R. VAKIL & CO. |
| ||CHARTERED ACCOUNTANTS |
| ||FRN:106980W |
| ||MANAN VAKIL |
| ||PARTNER |
|Ahmedabad: 29th May 2017 ||MEMB. NO. : 102443 |
| ||Annexure - A |
|Sr. No. ||Details of Litigation |
|1 ||Debt Recovery Tribunal Mumbai |
| ||Axis Bank has filed Original Application No. 89 of 2015 against the Company with regard to recovery of outstanding dues for Term loan granted for Windmill installed at Gujarat. |
|2 ||Sharjah Federal Court Sharjah |
| ||The company has filed legal suit against its defaulting overseas customers for non-payment of its export bills at Sharjah Federal Court Sharjah. The court has appointed an expert to look into the affairs of the companies based in Dubai/ Sharjah. |
| ||The Court has confirmed the debts payable to the Company and ordered the overseas customer to pay along with interest @5% p.a. The overseas customers had filed an appeal against the judgment of the Sharjah Federal Court and the the Sharjah Federal Appellate Court has passed order in favour of the Company and now the matter is pending for 1 case with the Sharjah Federal Appellate Court and 2 case with Sharjah Supreme court. |
|3 ||Bombay High Court |
| ||Company has filed Defamation Suit Case No . S/512/2014 against Chaim even Zoharc Tacy Limited Mr. Eli Chen Mr. Rachel Segal for carrying the Article 'Unraveling Jatin Mehta's Hidden Synthetics Empire in the magazine 'Diamond Intelligence Briefs edition 5th February 2014 Vol. 29 No 797 published by Tacy Limited. |
|4 ||Bombay High Court |
| ||Writ Petition No. 1432 of 2007 filed by the trade union challenging the order of the Industrial Court dated 23-04-2007 passed in Complaint (ULP) No. 1411 of 1999 in respect of the closure of the Goregaon factory of the Company pending before the Division bench of the Original Side High Court Bombay. |
|5 ||Bombay High Court |
| ||Writ Petition No. 2594 of 2008 (Civil side) filed by the trade union challenging Award dated 6-2-2008 passed by Industrial Tribunal Mumbai in respect of the closure of the contract companies viz. M/s. fine Gems Company M/s. Blue New Gems Company M/s. Blue Diamond Company pending before the Hon'ble Court of the Appellate Side. |
| ||Case was filed so that Workmen of these contract Companies can be absorbed in the Company. |
|6 ||Bombay High Court |
| ||Writ Petition No. 3080 of 3080 of 2005 filed by the trade union pending before Hon'ble Court. Case was filed in High Court (Original Side) against the closure of SEEPZ Unit of the Company. High Court has restored the Complaint after closing of the application due to non appearance of the applicant. |
|7 ||Labour Court |
| ||Reference (IDA) No. 597 of 2010 filed by one of the employees seeking reinstatement with full back wages and continuation of service w.e.f. 20/06/1998 now pending before the 11th Labour Court at Mumbai. |
|8 ||Borivali Court |
| ||Criminal Case No. 77/SW/2008 filed by one of the employee under the various Provisions of The CRPC and The IPC now pending before the 67th Metropolitan Magistrate Court at Borivali. |
| ||The case was filed charging that the company Managing Director and Labour Commissioner had hand in glove with each other to forge documents to obtain license to employ contract labours and hence cheated labourers. |
|9 ||Additional Commissioner of Customs (Bonds) Bangalore |
| ||The Additional Commissioner of Customs (Bonds) Bangalore has passed order against the Company and raised demand of Rs.17118759/- including penalties/fines. The Company had filed appeal to the Commissioner of Customs (Appeal) Bangalore against the above order and the Commissioner of Customs (Appeal) has passed order against the Company. The Company has filed further appeal with Custom Tribunal. |
Annexure 1 referred to in paragraph 8-1 titled as "Report on Other Legal andRegulatory Requirements" of the Auditors report to the members of Winsome Diamondsand Jewellery Limited for the year ended 31s* March 2017.
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As explained to us the fixed assets were being physically verified by themanagement at each branch in accordance with a phased programme of verification. The saidprocedure were being followed in the past and was reasonable considering the size andnature of its business and no material discrepancies were noticed in the past years.However during the previous year in case of some branches where the operations haveceased/suspended no verification was done. Similarly as the assets are under SARFAESINotice and under symbolic possession of the banks a physical verification of the assetshas not been carried out during the year at any of the branches. Material discrepanciesif any will be highlighted once the physical verification would be completed. (Refer tonote Nos. 6 & 7) Hence the question of any discrepancies being dealt with in the booksof accounts does not arise.
(c) According to the information and explanation given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties classifiedas fixed assets are held in the name of the Company
(ii) In June 2013 the banks had placed the stock of diamonds and pearls belonging tothe Head Office and the Mumbai Branch office of the Company valued at Rs. 393500031 inthe joint custody of the Company and the banks. The banks had done a test check valuationof the said stock as on 30th September 2013 where officers of the Company were alsopresent. The said valuation has been then forwarded to the company. Since November 2013the stocks of Chennai SEZ & Cochin SEZ were also valued and put in the joint custodyof the banks. Confirmation of the stocks lying with the bank has been confirmed by themanagement on the basis of the letter obtained from the bank as on that date. For thecurrent year under consideration the stock lying in joint custody of the banks at HOMumbai Cochin & Chennai the management has not carried out any physical verificationof such inventory. During the year at Goa and Bangalore factory the physical verificationwere carried out by consortiums of banks in presence of Company representative and thestocks of Goa were kept under joint custody at local PNB branch at Goa. The stock atBangalore is under joint custody with banks at factory premises.
Since majority of the inventory is held in the joint custody of the consortium of banksand as physical verification was not carried out the question of any materialdiscrepancies and they being dealt with in the books of accounts does not arise. Hence weare unable to comment on the stock of inventory as at the year ended 31stMarch 2017.
(iii) The Company has not granted loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Hence the question of reporting under sub clauses (a) (b) &(c) of the clause 3(iii) of the Order does not arise.
(iv) The Company has not granted any loans or advances under section 185 except toForever Precious Jewellery and Diamonds Ltd made any investment provide any guarantee orsecurity under section 186. Hence the question of reporting under clause 3(iv) of theOrder does not arise.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits and hence the question of compliance with thedirectives issued by the Reserve Bank of India and the provisions of sections 73 to 76 orany other relevant provisions of the Act and the rules framed there under is not apply.We are informed by the Management that no order has been passed by the Company Law Boardor National Company Law Tribunal or Reserve Bank of India or any court or any otherTribunal in this regard.
(vi) The Central Government has not prescribed the maintenance of cost records underSection 148(1) of the Act in respect of Company's products. Accordingly clause 3 (vi) ofthe Order is not applicable to the Company.
(vii) (a) According to the records of the company undisputed statutory dues includingprovident fund employees state insurance income-tax sales tax service tax duty ofcustoms duty of excise value added tax cess and any other statutory dues applicablehave generally been paid though delayed. In some cases specially towards the end of theyear there have been delay in the same being deposited with the appropriate authorities.The details of arrears of outstanding statutory dues as on the last date of the financialyear outstanding for a period of more than 6 months are as below :
|Service Tax at Surat ||Rs. 107567/- |
|Value Added Tax at Surat ||Rs. 231878/- |
|VAT at Bangalore ||Rs. 250145/- (Assessment Order for FY2007-08) |
|CST at Bangalore ||Rs. 262963/- (Assessment Order for FY2009-10) |
(b) According to the information and explanations given to us the particulars ofstatutory dues that have not been deposited on account of disputes are as under:
|Name of the Statute ||Nature of dues ||Amount(Rs.) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act1961 ||Income Tax ||114704/- ||A.Y 2005-06 || |
|Income Tax Act1961 ||Income Tax ||531411/- ||A.Y 2009-10 || |
|Income Tax Act1961 ||Income Tax ||4031050/- ||A.Y 2010-11 || |
|Income Tax Act1961 ||Income Tax ||4413120/- ||A.Y 2011-12 ||CIT(A) |
|Income Tax Act1961 ||Income Tax ||15210152/- ||A.Y 2012-13 ||Rectification filed and case is pending at CIT(A) |
|Income Tax Act1961 ||Income Tax - TDS ||206903/- ||A.Y 2013-14 ||CIT(A) |
|Total demand || ||24507340/- || || |
|Tax payable || ||Nil || || |
|Central Sales Tax Bangalore ||CST ||5768542/- ||F Y 2008-09 ||Rectification request filed with A.O. |
(viii) The Company has defaulted in payment of loans to banks during the precedingyears and the defaults have continued in this financial year. The details of such defaultsare as under:
|Bank Name ||Total Amount Defaulted ||Date Default started |
|Axis Bank - Term Loan ||7918400 ||08/04/2013 |
|Axis Bank ||474155520 ||02/04/2013 |
|Bank of India ||906139200 ||06/04/2013 |
|Bank of Maharashtra ||2937920826 ||02/04/2013 |
|Canara Bank ||6722236193 ||18/03/2013 |
|Central Bank of India ||7465886346 ||28/03/2013 |
|EXIM Bank ||714743985 ||05/04/2013 |
|I D B I Bank ||1147875362 ||06/04/2013 |
|Oriental Bank of Commerce ||1636021974 ||08/04/2013 |
|Punjab National Bank ||10521187766 ||26/03/2013 |
|Standard Chartered Bank ||4061589537 ||25/03/2013 |
|State Bank of Hyderabad ||1277706509 ||08/04/2013 |
|State Bank of Mauritius* ||463330128 ||18/04/2013 |
|Union Bank of India ||2803341974 ||21/03/2013 |
|Vijaya Bank ||1448174130 ||02/04/2013 |
|TOTAL ||42588227850 || |
The above defaults are the primary amounts as on the date of the defaults continuingfrom the previous years. The said defaults do not consider any levies of interest andpenal interest charged by the banks/provided by the company after the date of the defaultsor its subsequent reversals by some banks. The payments made by the company to the banksafter the above dates are also not considered as we are not in a position to ascertainwhether the repayments are against interest/penalty or primary defaults. Some of the Bankshave not confirmed the balances outstanding to them even after writing to them and in somecases the banks have stopped issuing physical bank statements and the company and theauditors have relied on e-statements generated from the web portals of the banks.
The Company does not have any outstanding dues by way of debentures.
*During the year State Bank of Mauritius (one member bank of consortium of banks) hasentered into one time settlement agreement with Overseas Customer of the Company for theiroutstanding dues from the Company. The bank is agreed to settle the total dues byaccepting 1050833 US$ against the total due of 8241831.11 US$ receivable from the overseascustomer by the company. The Overseas Customer have agreed to pay settlement amountdirectly to State Bank of Mauritius.
(ix) The Company has not raised any monies by way of initial public offer or furtherpublic offer (including debt instruments) during the year. The term loans raised in thepast years by the Company were applied for the purpose for which they have been raised
(x) We have been informed by the management that the Banks who have lent funds to theCompany outstanding as at the balance sheet date amounting to Rs. 41268999617 havelodged complaints against the Company and some of its ex directors with the CentralBureau of Investigation (CBI) Mumbai Police and Enforcement Directorate (ED). On thebasis of the said complaints and subsequent F.I.R.s the CBI Mumbai Police and ED havebeen carrying out investigations which are in progress. The Company has been subjected tosearches by the CBI. The Company is yet to be served with a copy of the F.I.R.
(xi) The managerial remuneration has been paid in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) The Company is not a chit fund or a Nidhi company. Hence the question ofreporting under clause 3(xii) of the Order does not arise.
(xiii) The Company has complied with the provisions of sections 177 and 188 of the Actin respect of transactions with the related parties and the details have been disclosed inthe standalone Ind AS Financial Statements etc. as required by the applicable accountingstandards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year.
(xv) The Company has not entered into any non-cash transactions with directors orpersons connected with him covered under the provisions of section 192 of the Act.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For NAUTAM R. VAKIL & CO. |
| ||CHARTERED ACCOUNTANTS |
| ||FRN: 106980W |
| ||MANAN VAKIL |
| ||PARTNER |
|Ahmedabad: 29th May 2017 ||MEMB. NO. : 102443 |
Annexure 2 referred to in Paragraph 8 (2)(f) titled as "Report on Other Legal andRegulatory Requirements" of the Auditors report to the members of Winsome Diamondsand Jewellery Limited for the year ended 31s* March 2017.
We have audited the internal financial controls over financial reporting of WINSOMEDIAMONDS AND JEWELLERY LIMITED ("the Company") as of March 312017 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Controls
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 (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such 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 judgement 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 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material 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.
The system of internal financial controls over financial reporting with regards to thecompany except to the extent mentioned on Note No 1 to 5 of the financial statements werenot made available to us to enable us to determine if the company has established adequateinternal financial controls over financial reporting and whether such internal financialcontrols were operating effectively as at March 31 2017.
We have considered the disclaimer reported above in determining the nature timing andextent of audit test applied in our audit of the standalone financial statement of thecompany and the disclaimer has affected our opinion on the financial statements of thestandalone company and we have issued a qualified and disclaimer of opinion on thefinancial statements.
| ||For NAUTAM R. VAKIL & CO. |
| ||CHARTERED ACCOUNTANTS |
| ||FRN: 106980W |
| ||MANAN VAKIL |
|Ahmedabad: ||PARTNER |
|29th May 2017 ||MEMB. NO. : 102443 |