To the Members
Zodiac JRD MKJ Limited
Report on the Audit of Financial Statements
1. We have audited the accompanying financial statements of Zodiac JRD MKJ Limited("the Company") which comprise the Balance Sheet as at 31st March 2021 thestatement of Profit and Loss (including Other Comprehensive Income) the statement of Cashflow and the statement for changes in equity for the year ended on that date and notes tothe financial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis forQualified Opinion' section of our report the aforesaid financial statements give theinformation required by the Companies Act 2013 ("the Act') in the manner so requiredand give a true and fair view in conformity with the Indian Accounting Standardsprescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31st March2021 the profit and the total comprehensive income change in equity and its cash flowsfor the year ended on that date.
Basis for Qualified Opinion
2. We draw attention to Note 39 to the financial statements wherein the Company hasnot received confirmation from one of the vendor having outstanding balance of Rs.4932661/- for more than 3 years. Due to non-availability of confirmation of balance weare unable to quantify the impact if any arising from the same.
3. We conducted our audit of financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for theAudit of the Financial Statements' section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the financial statements under the provisions of the Act and the Rules madethereunder 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 qualified opinion on thefinancial statements.
Emphasis of Matter
We draw attention to:
4. Note 29 of the financial statements as regards to the management's evaluation ofCOVID-19 impact on the future performance of the Company.
5. Our opinion is not modified in respect of this matter.
Key audit matter
6. Key audit matter are those matter that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterwere 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 Matter to be communicatedin our report.
|Key Audit Matter ||Auditor's Response |
|1. Valuation of Inventory - || |
|The carrying value of Inventories amounted to Rs. 497742809/- as at March 31 2021. ||Our audit procedures over existence and valuation of Inventories included the following: |
|The Inventories mainly comprised of Cut & Polished Diamond in the Stock in trade & Finished goods. || We obtained an understanding evaluated the design and tested the operating effective- ness of key controls that the Company has in relation to Inventories process in particular we: |
|It also includes some quantity of CVD diamonds which has high risk of fall in value. Valuation of Inventories is at lower of cost and net realizable value. ||a. Observed the periodical count procedures performed by the management. |
|Significant portion of Inventories costs includes old stock of cut & polished which are subject to risk of changes in the market value. ||b. In respect of samples tested for physical verification by management we inspected the respective periodical cycle physical count reports for reconciliation of daily ending Inventories to the record in the Inventories system; |
|The assessment of net realizable value of Inventories is based on estimates and judgements by the management in respect of among others the economic condition sales forecast marketability of products and the quality of gold and diamonds used to make jewellery products. ||c. In respect of physical verification by management we read the in-house certificate of authenticity of diamond jewellery products; |
|Furthermore there is higher inherent risk of theft and pilferage given the high intrinsic value and portable nature o f individual inventory items. Considering the above w e concluded that existence and valuation of inventories as a key audit matter for our audit. || We have observed periodic Inventories counts and performed procedures of the Company as done by the management. |
| || We compared the net realizable values on sample basis of gold silver and platinum Inventories calculated based on the current market price with their carrying value of Inventories. |
| || We compared the results of independent gemological appraisal report to the weight and purity of diamond jewellery with records in the Inventories system. |
| || We evaluated the independence and objectivity of the gemologist appointed by management. |
|2. External Confirmations: || |
|This matter is considered to be key audit matter given the circumstances of the year-end confirmations under COVID-19 vis-a-vis non-COVID-19 scenario. || Our audit procedures included among others the following: |
|COVID-19 has i m p a c t e d t h e procedure of external confirmation request to vendors and customers at the yea r-end and therefore external confirmation request was sent through electronic m o d e b y t h e Company. || Revised assessed risk and modified our audit procedures to mitigate these risks; |
|In view of this we have performed alternative audit procedures. || Obtained a reliable assurance pertaining to transactions with confirming parties for accurate and complete process of routine and significant classes of transactions such as sales purchases etc.; |
| || Selected samples and tested the effectiveness of controls related to accuracy and completeness of transactions in totality considering the frequency and regularity of transactions; |
| || Obtained representations from the management regarding any impairment in the receivables |
Information Other than the Financial Statements and
Auditor's Report Thereon
7. The Company's management and Board of Directors are responsible for the preparationof the other information. The other information comprises the information included in theManagement Discussions and Analysis Director's Report including Annexures to Director'sReport Secretarial Audit Report Corporate Governance Report Business Committee Reportbut does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
8. 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 work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
9. The Company's management and Board of Directors are responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.
10. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
11. 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.
Auditors' Responsibilities for the Audit of the Financial
12. 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.
The description of the auditor's responsibilities for the audit of the financialstatements is given in "Appendix I" to this report.
Report on Other Legal and Regulatory Requirements
13. 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 Act we give in the "Annexure A" statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
15. 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 Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and Statement of Cash Flows dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended.
e) On the basis of written representations received from the directors as on 31 stMarch 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 with reference to financial statements of the Company and theoperating effectiveness of such controls refer to our separate Report in "AnnexureB". Our report expresses unmodified opinion on the adequacy and operativeeffectiveness of the Company's internal financial controls with reference to financialstatements.
g) 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 director during the year iswithin the limit laid down in 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 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements. (Refer Note no. 30 to the financial statements)
ii. The Company did not have any long term contracts including derivative contracts forwhich there were any materials foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE A TO INDEPENDENT AUDITORS' REPORT
IN RESPECT OF THE MATTERS COVERED IN CARO 2016 REPORT WE CONFIRM THE FOLLOWING:
1. In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situations of all the fixed assets.
b) The fixed assets of the Company are physically verified as per the program approvedby the management for such verification. As per the information and explanation providedby the management due to COVID-19 lockdown the aforesaid verification could not beundertaken by the Company as at the end of the current financial year. The managementexplanation that considering the past trend and having regard to the size of the Companyand nature of its assets and related internal controls there is unlikely to be anymaterial discrepancy for the current financial year has been relied upon. Further themanagement has informed that post COVID-19 lockdown an interim physical verificationshall be conducted for the next financial year.
c) According to the information and explanations given to us the title deeds ofimmovable properties are held in the name of the Company.
2. As per the information and explanation provided by the management due to COVID-19lockdown the physical verification of Inventory undertaken by the Company withIndependent gemological (except lying with the third party which are confirmed) as on 15thJune 2021 for the inventory held at the end of the current financial year which isreasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
3. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies Limited Liability Partnershipsfirms or other parties covered in the register maintained under Section 189 of theCompanies Act 2013. Accordingly clause 3(iii)(a) to 3(iii)(c) are not applicable to theCompany.
4. According to the information and explanations given to us the company has notgiven/made any loans investments guarantees and security accordingly provisions ofsection 185 and 186 of the Companies Act 2013 are not applicable.
5. The Company has not accepted any public deposits within the meaning of sections 73to 76 of Companies Act 2013 and rules framed there under;
6. As the Company is not a manufacturing concern the clause 3(vi) of the Orderregarding maintenance of cost records under sub-section (1) of section 148 of theCompanies Act 2013 is not applicable to the Company.
7. a) In our opinion and according to the information and explanations given to us theCompany is generally regular in depositing applicable undisputed statutory dues includingprovident fund employees' state insurance income tax sales tax goods and service taxcess and any other statutory dues with the appropriate authorities during the period underaudit and no such dues are outstanding for more than six months from the date they becamepayable.
b) As at 31st March 2021 according to the records of the Company and the informationand explanations given to us disputed dues payable by the Company on account of IncomeTax/Sales Tax/Wealth Tax/Service Tax/Duty of Custom/Duty of Excise are as under: -
|Name of statute ||Nature of Dispute ||Amount (in Rs.) ||Period to which it relates ||Forum where the dispute is pending |
|1 Income Tax Act 1961 ||Income Tax ||5117180 ||2014-15 ||CIT-Appeal |
8. In our opinion and according to the information and explanations given to us theCompany has not borrowed any money from financial institutions banks or Debentureholders. Accordingly the provision of clause 3(viii) of the Order is not applicable tothe Company.
9. According to the information and explanations given to us the Company has notraised any fund by way of public offer further public offer (including debt instruments)and term loans. Accordingly the provisions of Clause 3(ix) of the order are notapplicable to the company.
10. During the course of our examination of the books of accounts carried out inaccordance with the generally accepted auditing standards in India and according to theinformation and explanation given to us we have not come across any instance of fraud bythe company or any fraud on the Company by its officers or employees either noticed orreported during the year on or by the Company.
11. According to the information and explanations given to us and based on ourexamination of the records of the Company the managerial remuneration has beenpaid/provided in accordance with the requisite approval mandated by the provision ofsection 197 of the Act read with Schedule V to the Act.
12. The Company is not in the nature of a Nidhi Company as defined under section 406 ofthe Act.
13. According to the information and explanations given to us all transactions withthe related parties are in compliance with sections 177 and 188 of Companies Act 2013where applicable and the details have been disclosed in Note 32 of the financialStatements as required by the applicable accounting standards.
14. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year.
15. According to the information and explanations given to us the company has notentered into any non-cash transactions with directors or persons connected with him andhence clause 3(xv) of the Order is not applicable to the Company.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE - B TO INDEPENDENT AUDITORS' REPORT
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OFSECTION 143 OF THE ACT
1. We have audited the internal financial controls over financial reporting of ZodiacJRD MKJ Limited ("the Company") as of 31st March 2021 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls 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 (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
3. 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 deemed to be prescribedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutadequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
5. 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
6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting 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
7. 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.
8. In our opinion to the best of our information and according to the explanationgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting with reference to the financial statements andsuch internal financial controls over financial reporting with reference to thesefinancial statements were operating effectively as at 31st March 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For M/s. CHOKSHI AND CHOKSHI LLP Chartered Accountants |
| ||FRN 101872W/W100045 |
| ||Priyank Ghia |
|Place : Mumbai ||Partner M. No.155778 |
|Dated : 28th June 2021 ||UDIN: 21155778AAAAOQ4521 |