TO THE BOARD OF DIRECTORS OF GEE LIMITED
Report on the Indian Accounting Standard (“Ind AS") Financial Statements for the year ended 31st March, 2024 OPINION
We have audited the financial statements of GEE Limited (“the Company"), which comprise the Balance Sheet as at 31 March 2024, and the Statement of Profit and Loss (including other comprehensive income), Statement of Changes in Equity and Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the financial statements").
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act 2013 (the “Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standard prescribed under section 133 of the Act read with the Companies (Indian Accounting Standard) Rules, 2015, as amended (Ind AS) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2024, the profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the financial statement in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the financial statements.
EMPHASIS OF MATTER
We draw your attention to Note No. 55.3 of the financial statement which states that the balance in trade receivables, trade payable, other receivables,
Loans & advances & deposits are subject to confirmation and reconciliation.The management however does not expect any material changes on account of confirmation/reconciliation.
We draw attention to Note No 55.1 that a petition was filed in NCLT, Mumbai Bench by Mr. Om Prakash Agarwal, Umesh Ramkishan Agarwal and Mrs.
Payal Agarwal, the whole time directors vide case no. CP/306(MB) 2023 of oppression and mismanagement against the Company, as the consequence of this petition the Ld. Judge has postponed the holding of Annual General meeting for adoption of annual audited financial statement and refer the matter to Hon'ble The Chief Justice (Retd.) , Shri Ramesh Deokinandan Dhanuka for mediation by his order dated 21.12.2023. After providing sufficient time to both the parties to settle the internal family disputes and come to a mutual settlement between them but the same was failed.
Further, by way of the said order, the Tribunal has dismissed and disposed of the Company Application being CA No.92 of 2024 filed by the Petitioners. Further, the Tribunal reserved Company Application being CA No.504 of2023 for orders and have directed to list the matter on 21st June,2024.
In relation to the petition filed against the company before the National Company Law Tribunal, Mumbai Bench (“Tribunal"), alleging acts of oppression and mismanagement in the Company, the NCLT has, partly allowed the Company Application being CA No. 90 of 2024 filed by the Petitioners therein thereby appointing Mr. Pradip Kumar Das, Retired Banker, as a non-executive Chairman of the Board of Directors of the Company. Further, Annual General Meeting of the Company for Financial year 2022-2023 was held and successfully conducted under the Chairmanship of Mr. Pradip Kumar Das on 12th April, 2024.
Subsequently, the Petitioner of the above case have moved to National Company Law Appellate Principal Bench, New Delhi (NCLAT) against the order dated 09.05.2024 passed in CA 90 of 2024 & CA 92 of 2024 in CP No 306/MB/2023 & the Order dated 21.05.2024 passed in CA 504 of 2023 in CP No. 306/MB/2023. Further NCLAT has admitted the above petition by order dated 12th July, 2024.
Our audit opinion is not modified with respect to this matter.
KEY AUDIT MATTERS
Key audit matters ('KAM') are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
|
Sr.
No.
|
Key Audit Ma tter
|
Auditor's Response
|
|
1.
|
Disputed excise duty matter - Rs. 2.07 Crores The Company had imported certain materials in the year 200809 where the excise authorities had demanded Rs. 4.02 Crores. Under the instructions from excise authorities the Company reversed under protest Rs. 3.09 Crores CENVAT credit availed during 2008-09. Thereafter the company filed an appeal with CESTAT claiming refund of Rs. 2.07 Crores. The appeal has been finally heard in January 2019. Based on legal and subject matter expert views, the company expects considerable amount as relief in the above appeal case with CESTAT. The Assistant registrar CESTAT Mumbai has allowed the appeal in company favour via order dated 18.10.2022 subsequently revenue has filed an appeal to higher forum. (Refer Note No. 41 - Contingent Liabilities and Commitments)
|
Our procedure in connection with company's claim regarding CENVAT Credit and refund of Rs. 2.07 Crores paid under protest involved examining the submissions made by the company's excise consultants. We also made independent enquiries with indirect tax experts who confirmed that this is a good case for contesting and they are of the opinion that the company can expect big relief in the matter.
In light of the above, we assessed the adequacy of disclosures in financial statements.
|
|
2.
|
The company's scrutiny assessment for assessment year 201617 was completed in December 2018 and DCIT has raised tax demand of Rs. 70.96 lakhs against which the company has filed an appeal with CIT Appeals -1, Thane on 14 th January, 2019. The DCIT has disallowed the company's claim in respect of long term capital gain from sale of flat (property held for sale in books of accounts). The tax department's contention is that the period of capital gain is to be calculated from the date of registration of purchase agreement of the flat and not from the date of allotment letter given by the builder. The company's tax consultant has opined that there are several precedents confirming the company's claim and that they can expect a favourable outcome in this appeal matter. (Refer Note No. 41 -Contingent Liabilities and Commitments)
|
We have examined the grounds of appeal and statement of facts filed by the company with CIT Appeals -1, Thane in consultation with tax experts. We have also reviewed various judgments including High Court judgments which have gone against the revenue department in similar facts. There are few cases which have been determined in favour of the revenue department. The no. of judgments against the revenue department out-numbers the ones in their favour. We finally concluded that we should go by the Honorable Bombay High Court and ITAT decisions which have gone against the revenue department. In light of the above, the company's disclosure in this matter is adequate.
|
|
3.
|
Company has reclassified the lease hold land of Rs. 61.24 crore from Property Plant & Equipment to Right to use Assets in Financial year 2022-2023.
Leasehold land was stated at revalued amount on the basis of revaluation done in financial year 2016-2017.The Company has amortized the Right to use assets (Leasehold land) over the leftover useful life of the Assets on Straight Line Method (SLM). The amortization amount has been bifurcated on proportionate basis and amount of amortization on account of revaluation has been directly transferred to revaluation reserve and actual amortization on the cost is transferred to Statement of Profit & Loss account.
|
Our Procedure consisted of evaluating management methodology & key assumptions and included following audit procedures
- Evaluated management's internal control and change in accounting policies to amortise the Right to use assets over the remaining useful life of the assets.
- Verified the revaluation report on the basis of which the revaluation in lease assets have been conducted.
- Evaluated whether management has taken proper control and legal parameters if any required while determining the balance useful life of Leased Assets.
Verified whether the amortization is calculated on the basis of the identified parameters as calculated by the management.
|
|
4.
|
Impairment of Trade Receivables;
Company has reversed the Provision for Doubtful Debts created in financial year prior to FY 2023-2024 which amounts to Rs. 2.07 crores and made a new provision for Doubtful Debt amounting to Rs. 1.35 crore. Trade Receivables are mainly comprised of receivables from Private dealers. We have identified impairment of trade receivables as a significant audit matter on account of the significant judgment and estimate involved. These factors include customer's ability and
|
We have applied the following audit procedures in this area, among others to obtain sufficient appropriate audit evidence:
- Obtained an understanding of the systems, processes and controls implemented by the Company for measurement of impairment ofTrade Receivable.
- Evaluated the Company's measurement of impairment of trade receivable accounting policies by comparing with applicable accounting standards.
- We have evaluated the design of key internal financial controls and operating effectiveness of the relevant key controls with respect to trade receivables.
|
|
Sr.
No.
|
Key Audit Ma tter
|
Auditor's Response
|
| |
and willingness to pay the outstanding amounts, past due receivables, financial and economic difficulties of customers. This assessment is done for each customer resulting from possible defaults over the expected life of the receivables. Based on this assessment, Impairment in trade receivables is determined on the basis of trade receivables outstanding for more than 360 Days and assessment of individual Trade receivable separately by the management. (Refer note No 55.2)
|
- Tested manual journals posted to revenue and trade receivable during the year to identify unusual items.
- Scrutinized sales returns/reversals/credit notes recorded in the general ledger subsequent to year-end to identify any significant unusual items.
- Obtaining under-standing on how the Company establishes an allowance for doubtful debts and impairment represents its estimate of incurred losses in respect of trade receivable.
- We have evaluated the historical accuracy of impairment for trade receivables on a sample basis by examining the actual write-offs, the reversal of previous recorded allowance and new allowances recorded in the current year.
- We have verified the calculation done in determining the total Impairment loss on Doubtful Debts and advances
- We have checked the ageing analysis (including testing of information produced by entity-IPEs), on a sample basis and subsequent receipt of the trade receivables, to the source documents, including bank statements.
- Assessed the adequacy of the related disclosures in the Standalone financial statements with reference to trade receivable as per relevant accounting standards.
|
|
5.
|
Company has sold leasehold land named as "Sagar" in the FY 2020-21 which was revalued by the Company in the Month of March, 2017 by Rs. 1.67 crore. At the time of revaluation the revaluation amount was transferred to Revaluation Reserve and the same was ommitted to be reversed in the FY 2020-2021 at the time of sale by the Company. That omitted revaluation reserve was reversed in the current financial year and transferred to Retained Earning. (Refer Note No: 20)
|
We have applied the following audit procedures in this area, among others to obtain sufficient appropriate audit evidence:
- Obtained an understanding of the systems, processes and controls implemented by the Company for passing the entries in the accounting systems.
- Control of the management over the accounting entries and the hierarchy of the accounting team
- Cross checked the lease deed, valuation report and sale deed for getting a better picture of the matter in concern
|
|
6.
|
Valuation of Inventories
The Company is having Inventory of Rs. 8,920.16 lakhs as on 31 March 2024. Inventories are to be valued as per Ind AS 2. Inventories are carried at the lower of cost and net realisable value. The management applies judgment in determining the appropriate provisions against inventory of Stores, Raw Material, Finished goods and Work in progress based upon a detailed analysis of old inventory, net realisable value below cost based upon future plans for sale of inventory. To ensure that all inventories owned by the entity are recorded and recorded inventories exist as at the yearend and valuation has been done correctly, inventory valuation has been considered as Key audit matters.
|
We obtained assurance over the appropriateness of the management's assumptions applied in calculating the value of the inventories and related provisions by:
- Verifying the effectiveness of key inventory controls operating over inventories; including sample based physical verification.
- Verifying the effectiveness of key inventory controls operating over inventories; including sample based physical verification.
- Reviewing the document and other record related to physical verification of inventories done by the management during the year.
- Verify that inventories are valued in accordance with Ind AS 2
- Comparing the net realisable value to the cost price of inventories to check for completeness of the associated provision.
- Reviewing the historical accuracy of inventory provisioning and the level of inventory write-offs during the year.
|
Information Other than the Financial Statements and Auditor's Report thereon
The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report, but does not include the financial statements and our auditors' report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibility of Management and those charged with governance for the Financial Statement
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act. This responsibility also includes responsible the maintenance of the adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 the accounting records, relevant to the preparation and presentation of the financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit.We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the 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 auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. 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 best of 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 the Company so far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31st March, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March,2024 from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in“Annexure A"
(g) 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, as amended 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 of the financial statements.
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund.
iv) a) The management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities (“Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall: directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever (“Ultimate Beneficiaries") by or on behalf of the Funding Party or provide any guarantee, security or the like from or on behalf of the Ultimate Beneficiaries; and
b) The management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities (“Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall: directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever (“Ultimate Beneficiaries") by or on behalf of the Funding Party or provide any guarantee, security or the like from or on behalf of the Ultimate Beneficiaries; and
c) Based on such audit procedures as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub clause (i)(a) and (i)(b) contain any material misstatement.
v. The Company has not paid or declared any dividend during the year.
vi. Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended 31st March, 2024 which has a feature of recording the audit trail (edit log) facility and the same has not been enabled throughout year for relevant transactions recorded in the software's. So we are unable to comment as to whether accounting data has been tampered or not.
2. With respect to the matter to be included in the Auditor's Report under Section 197(16) of the Act:
In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be commented upon by us.
3. As required by the Companies (Auditor's Report) Order,2020 (“the Order") issued by the Central Government of India in terms of subsection (11) of section 143 of the Act, we give in the Annexure B, a statement on the matters specified in the paragraph 3 and 4 of the order, to the extent applicable.
For R Dokania & Co.
Chartered Accountants
FRN: - 322739E
Sandeep Agarwal
Partner
Memb. No: 064912
UDIN: 24064912BKDFOI3848
Place: Kolkata
Date: 30th May, 2024
|