| We have audited the accompanying standalone financial statements of
Jyoti Structures Limited ('the Company'), which comprise the Balance
Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash
Flow Statement for the year then ended and a summary of significant
accounting policies and other explanatory information in which are
incorporated returns for the year ended on that date audited by the
branch auditors of the Company's branches at Bangladesh, Bhutan, Dubai,
Egypt, Georgia, Kuwait, Kenya, Rwanda, South Africa, Tajikistan,
Tanzania, Tunisia and Uganda.
MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ('the Act') with respect
to the preparation of these standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flow of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies making judgments and
estimates that are reasonable and prudent and design, implementation
and maintenance of adequate internal financial controls, that were
operating effectively for ensuring the accuracy and completeness of
accounting records, relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on these standalone
financial statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require that
we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial control system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion on the
standalone financial statements.
BASIS OF QUALIFIED OPINION
a) As on 31st March, 2015, the trade receivables of the Company include
amount of Rs. 7,045.80 lacs outstanding from a joint venture company,
namely Lauren Jyoti Private Limited. Further an amount of Rs. 5,507.00
lacs was paid by the Company on account of Bank guarantee encashed by a
customer of Lauren Jyoti Private Limited, which is debited to the said
joint venture company. The other outstandings from Lauren Jyoti Private
Limited are Rs. 830.30 lacs. As informed to us, the financial statements
of the joint venture company are not available for the financial years
ended 31st March 2014 and 31st March, 2015. Considering the fact that
the financial statements of the joint venture company are not available
and it is not regular in payment of the above outstanding, we are not
able to comment on the recovery of the debt and impact of the same on
the financial statements of the Company for the year.
b) The Company has invested Rs. 500 lacs in 50 lacs equity shares of
Lauren Jyoti Private Limited. The financial statements of that company
for the financial years ended on 31st March 2014 and 31st March 2015 are
not made available to us. As per the financial statements for the year
ended on 31st March, 2013, the net worth of that company is fully
eroded. The Company has not made any provision for the diminution in
the value of this investment. Due to this non-provision, the loss of
the Company for the year is understated by Rs. 500 lacs and reserves of
the Company are overstated by the same amount.
QUALIFIED OPINION
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in the Basis for Qualified Opinion paragraph above, the
aforesaid standalone financial statements give the information required
by the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India,
of the state of affairs of the Company as at 31st March, 2015; and its
loss and its cash flows for the year ended on that date.
EMPHASIS OF MATTERS
a) We draw attention to clause 11 of note no. 31 to the financial
statements. The Company has made investment of Rs. 6,000.65 lacs in the
equity shares of its wholly owned subsidiary company, namely Jyoti
International Inc. As on 31st March, 2015, the Company has also
advanced loan of Rs. 9,861.35 lacs to Jyoti International Inc. Due to the
losses incurred, the net worth of that company is fully eroded on that
date. However, no provision for diminution in the value of the said
investment or no provision for other outstanding amounts is made as the
management is optimistic of turning around the business of that company
in the near future.
b) We draw attention to clause 13 of note no. 31 to the financial
statements. The Company has made investment of Rs. 419/- in the equity
shares of its subsidiary company, namely Jyoti structures Africa (Pty)
limited. As on 31st March, 2015, the Company has also advanced loan of
Rs. 3,581.91 lacs to Jyoti structures Africa (Pty) Limited and the
outstanding credit to that company is Rs. 3,277.65 lacs. Due to the
losses incurred, the net worth of that company is fully eroded on that
date. However, no provision for diminution in the value of the said
investment or no provision for other outstanding amounts is made as the
management is optimistic of turning around the business of that company
in the near future.
c) We draw attention to clause 14 of note no. 31 to the financial
statements stating that the company has paid managerial remuneration in
excess of the provisions of the section 197 of the Companies Act, 2013
read with Part II of Schedule V, for which approval of shareholders in
a general meeting and the permission of the Central Government is to be
obtained.
OTHER MATTERS
We did not audit the financial statements/ information of fourteen
branches incorporated in the standalone financial statements of the
Company, whose financial statements/ financial information refect total
assets of Rs. 20,812.13 lacs, as at 31st March 2015 and the total
revenues of Rs. 22,993.19 lacs, for the year ended on that date, as
considered in the standalone financial statements. The financial
statements/ information of these branches have been audited by the
branch auditors, whose reports have been furnished to us, and our
opinion, in so far as it relates to amounts and disclosures included in
respect of these branches, is based solely on the reports of such
branch auditors.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditors' Report) Order, 2015 ('the
Order'), issued by the Central Government of India in terms of
sub-section (11) of Section 143 of the Companies Act, 2013, we give in
the Annexure a statement on the matters specified in paragraphs 3 and 4
of the Order.
2. As required by Section 143(3) of the Act, we report that:
a. Except for the matters stated in clause (a) of Basis of Qualified
Opinion, We have sought and obtained all the information and
explanations which to the best of our knowledge and belief were
necessary for the purpose of our audit;
b. In our opinion except for the matters stated in clause (a) of Basis
of Qualified Opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books, and proper returns adequate for the purpose of our audit
have been received from the branches not visited by us;
c. The reports on the accounts of the branch Offices of the Company
audited under section 143(8) of the Act by the branch auditors have
been sent to us and have been properly dealt with by us in preparing
this report;
d. The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account and with the returns received from branches not
visited by us;
e. In our opinion, the aforesaid standalone financial statements comply
with the Accounting Standards specified under Section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules, 2014;
f. The matters described in the basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
the Company.
g. On the basis of written representations received from the directors
as on 31st March, 2015, taken on record by the Board of Directors, none
of the directors is disqualified as on 31st March, 2015, from being
appointed as a director in terms of Section 164(2) of the Act.
h. With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and 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
financial position in its financial statements as referred to in clause 2
of note no. 31 of the financial statements;
ii. the Company has made provisions as required under the applicable
law or Accounting Standards material foreseeable losses, if any, on
long term contracts including derivative contracts. Referred to clause
no. 10 of the note no. 31 of the Financial Statements;
iii. there were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company as at the end of
the year.
ANNEXURE TO AUDITORS' REPORT
Re: Jyoti Structures Ltd
The Annexure referred to in our Independent Auditors' Report to the
members of the Company on the standalone financial statements for the
year ended 31st March, 2015;
1) (a) The Company has maintained proper records showing full
particulars, including the quantitative details and situation
of fixed assets on the basis of available information.
(b) As explained to us, the fixed assets have been physically verified by
the management in a phased periodic manner during the year, which in
our opinion is reasonable having regards to the size of the Company and
the nature of the assets. No material discrepancies have been noticed
on such verification.
2) (a) The inventories have been physically verified during the year by
the management at reasonable intervals. In our opinion,
the frequency of verification is reasonable.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and nature of its business.
(c) On the basis of our examination of the records of inventories and
according to the information and explanations given to us, we are of
opinion that the Company has maintained proper records of inventories.
As explained to us, the discrepancies noticed on verification of
inventories have been properly dealt with in the books of accounts.
3) As per the information and explanations given to us, the Company has
not granted any loans, secured or unsecured to companies, firms or other
parties covered in the register maintained under Section 189 of the
Companies Act, 2013. Therefore, the provisions of paragraph 3(iii) of
the Order are not applicable to the Company.
4) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and nature of its business with regard to
purchase of inventory and fixed assets and for sale of goods and
services. We have not observed any continuing failure to correct any
weakness in internal control system except in case of sale of bought
out components during the year for which the company has taken
corrective measures and steps to strengthen the control. During the
course of our audit, we observed that SAP software installed by the
Company is still to be stabilized.
5) The Company has accepted deposits from public during the previous
year. As per the information and explanation given to us and based on
the records examined by us, we are of the opinion that the directives
issued by Reserve Bank of India and provisions of section 73 to 76 and
other relevant provisions of the Companies Act, 2013 and the rules
framed there under, as applicable, have been complied with; except for
a small delay of two days in making deposit required to be made as per
the provisions of section 73(2)(c) of the Companies Act, 2013. As per
the information and explanation given to us, no order has been passed
by Company Law Board or National Company Law Tribunal or Reserve Bank
of India or any court or other tribunal against the Company in respect
of the deposits.
6) We have broadly reviewed the cost records maintained by the Company
pursuant to the Companies (Cost Records and Audit) Rules, 2014
prescribed by Central Government under Section 148(1)(d) of the
Companies Act, 2013 and are of the opinion that, prima facie, the
Company has made and maintained such accounts and cost records. We have
however, not made a detailed examination of the cost records with a
view to determine whether they are accurate or complete.
7) (a) According to the records of the Company and as per the
information given to us, the Company is regular in depositing
undisputed statutory dues including Sales Tax, Wealth Tax, Service Tax,
Duty of Custom, Duty of Excise, Value Added Tax, Cess and other
statutory dues with the appropriate authorities, wherever applicable
during the year, except for Provident Fund, Employees' State Insurance,
Income Tax and Octroi where in the deposits are not regular.
(b) As per the information and explanations given to us and the records
examined by us, the details of undisputed statutory dues which are
outstanding as at the last day of the concerned financial year for more
than six months from the date they become payable are as under.
Sr.
No. Particulars Amount due .Lacs
1. Octroi 39.35
2. Income Tax - Tax Deducted at Source 216.58
3. Income Tax - Self Assessment Tax 2,480.57
4. Corporate Dividend Tax 30.95
(c) As explained to us and according to the records of the Company, the
outstanding disputed statutory dues on account of Income Tax, Sales
tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value
Added Tax or Cess are as follows.
Type of the Statute Nature of Dues dis- Amount (in Rs..
pute is pending Lacs )
Sales Tax Tax and Interest 32.68
Entry Tax Tax and Interest 18.86
Commercial Tax Tax and Interest 333.59
Commercial Tax Tax and Interest 70.34
Income Tax Tax and Interest 304.59
Income Tax Tax and Interest 8.96
Types of the Statue Financial year to
which the Forum where dispute is
amount relates pending
Sales Tax Various years between Appellate Tribunal
1995-96 to 1998-99
Entry Tax 2004-05 and 2005-06 Appellate Tribunal
Commercial Tax 2005-06 Appellate Tribunal
Commercial Tax 2006-07 Revision Board
Income Tax 2005-06 and 2006-07 Commissioner of Income
Tax- (Appeals)
Income Tax 2007-08 ACIT (Rectification)
(d) According to the records of the Company, there are no amounts that
are due to be transferred to the Investors Education and Protection
Fund in accordance with the relevant provisions of Companies Act, 1956
and rules made there under.
8) The Company does not have accumulated losses as at 31st March, 2015
but it has incurred cash losses in the financial year ended on that date
and it has not incurred cash losses in the immediately preceding
financial year.
9) According to the information and explanations given to us and based
on the documents and records examined by us, taking into consideration
the Master Restructuring Agreement for the restructuring of debt and
outstanding interest, in our opinion, the Company has defaulted in
repayment of loans due to financial institutions, banks and debenture
holders. The details of the same are as follows.
Particulars Period Amount.Lacs
Bank - Repayment of Principal
and Interest September, 2014 to March,
2015 1,559.87
Debenture Holders - Payment
of Interest Various periods 333.73
10) According to the information and explanations given to us, the
Company has given corporate guarantees for loans taken by two of its
wholly owned subsidiaries and a joint venture company from banks. We
are of opinion that the terms and conditions thereof are not prima
facie prejudicial to the interest of the company.
11) According to the information and explanations given to us and on
the basis of examination of the relevant records, prima facie, it
appears that the term loans are applied for the purpose for which they
are obtained.
12) According to information and explanations given by the management,
we report that no fraud by the Company or no material fraud on the
Company has been noticed or reported during the year.
For R. M. AJGAONKAR & ASSOCIATES
Chartered Accountants
Firm Registration No.117247W
KOMAL SEVAK
Partner
Membership No. 143685
Place : Mumbai
Date : 30th May, 2015. |