JAI BALAJI INDUSTRIES LIMITED
Report on the audit of the Standalone Financial Statements
Opinion
We have audited the accompanying Standalone Financial Statements of Jai Balaji Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and a summary of the material accounting policies information and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone 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 Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015, as amended ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2024, and its profit, total comprehensive loss, its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor's Responsibility for the Audit of the Standalone 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 (ICAI) together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules made 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 obtained by us is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.
Key Audit Matter
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
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S.
NO.
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THE KEY AUDIT MATTERS
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HOW THE MATTER WAS ADRESSED IN OUR AUDIT
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1
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BORROWINGS
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OUR AUDIT PROCEDURES INCLUDE THE FOLLOWING:
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(Refer Note 20 to the Standalone Financial Statements)
The Company has satisfied rupee loan from asset reconstruction company.
The Company has been sanctioned a Term Loan of H519,00 lakhs and working Capital Demand Loan of H40,00 lakhs from Tata Capital Financial Services Limited and term loan further has been refinanced by Piramal Enterprises Limited against rupee term loan aggregating H100,00 lakhs, Arca Fincap Limited against rupee term loan aggregating H50,00 lakhs, Tourism Finance Corporation of India Limited against rupee term loan aggregating H50,00 lakhs and Aditya Birla finance Limited against rupee term loan aggregating H10,000 lakhs.
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We reviewed and examined the relevant agreements.
We obtained the understanding of these refinancing schemes through meetings with management and review of the minutes of the Board of Directors.
We have also verified the related compliances including creation of Charge with Registrar of Companies.
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S.
NO.
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THE KEY AUDIT MATTERS
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HOW THE MATTER WAS ADRESSED IN OUR AUDIT
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2
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THE COMPANY'S EXPOSURE TO LITIGATION RISK
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OUR AUDIT PROCEDURES INCLUDE THE FOLLOWING:
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(Refer Note 35A to the Standalone Financial Statements)
The Company is exposed to different laws, regulations and interpretations thereof and hence, there is a litigation risk. Consequently, the Company has significant litigation cases pending with Custom Authorities, Excise Authorities, Service tax Authorities and Income tax Authorities. Given the nature and amounts involved in such cases and the appellate forums at which these are pending, the ultimate outcome and the resultant accounting in the financial statements is subject to significant judgement, which can change over time as new facts emerge and each legal case progresses, and therefore, we have identified this as key audit matter.
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We obtained details of completed tax assessments and demands for the year ended March 31,2024 from management.
We assessed the process and relevant controls implemented to identify legal and tax litigations and pending administrative proceedings.
We examined the assumptions used in estimating the tax provision and the possible outcome of the disputes.
We considered legal precedence and other rulings in evaluating management's position on these tax positions.
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3
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THE COMPANY HAS ISSUED CONVERTIBLE SHARE WARRANT DURING THE YEAR
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OUR AUDIT PROCEDURES INCLUDE THE FOLLOWING:
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(Refer Note 17 to the Standalone Financial Statements.)
The Company had issued and alloted 5,00,00,000 warrants on preferential allotment basis on 27 th May,2022.The warrant holders had paid balance 75% of total consideration of H52/- per warrant i.e, H 39/- per warrant on 1,50,00,000 warrants amounting to H5,850.00 lacs as application money against the above warrants.
As on 16th October,2023 entire warrants issued on 27th May,2022 have been converted into equivalent number of Equity Shares.
Further,The Company had issued and alloted 2,20,00,000 warrants on preferential allotment basis to Companies falling under Promoter group carrying a right to convert each warrant into an Equity Share of H 45/- each within a period of 18 months from the date of allotment i.e. 20th January,2023.The warrant holders had paid balance 75% of total consideration of H 45/- per warrant i.e. H 33.75 per warrant on 32,00,000 warrants amounting to H 1,080.00 lacs as application money against the above warrant.
Out of total allotted 2,20,00,000 warrants the company had converted 32,00,000 warrants into Equity Shares during the year ended 31st March,2024.
As the conversion of Share warrants by the company during the financial year 2023-2024, has the effect on enhancement of the Equity of the Company the same is considered to be a key audit matter.
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Our audit procedure includes gaining an understanding of the
process of issue of share warrants followed by the company, to
include amongst others:
1. Authorization by the Memorandum and Articles of Association of the Company;'
2. Passing of resolution in a validly convened and constituted Board meeting of the company.
3. Passing of resolution in a validly convened and constituted general meeting of the company and necessary regulatory filing done by the Company. Obtaining permission from the NSE/BSE Ltd. under SEBI (Listing obligations and Disclosure requirements) Regulations, 2015.
4. We assessed the adequacy of disclosures in the financial statements.
5. We checked that allotment money are received in full and in a separate bank account. Also, checked that funds are flowing from the bank account of allottee on the same date.
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4
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ACCOUNTING SOFTWARE AND AUDIT TRAIL
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OUR AUDIT PROCEDURES INCLUDE THE FOLLOWING:
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Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014.
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We have examined that the company is using customised software and audit trail is enabled but the software and its trail need to be strengthen more.
The Company is in process of implementing more advance and latest ERP Software which will prove to be more efficient and effective for the company.
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Emphasis of Matter
1. We draw attention to Note no. 54 to the Standalone Financial Statements in relation to outstanding balances of trade receivables, trade payables and loans and advances which are subject to confirmation and subsequent adjustments, if any. Our report is not modified in respect of this matter.
2. We draw attention to Note no. 18 to the Standalone Financial Statements in relation to redemption of 87,39,685 zero coupon unsecured unlisted non-convertible debentures at Rs 100.
3. We draw attention to Note no. 49 to the Standalone Financial Statements where the company has provided for the diminution in the value of investment in two joint ventures companies as the Hon'ble Supreme Court vide its order date 24th September, 2014 has cancelled number of coal blocks allotted to the companies. These included two coal blocks under development viz. Andal East in West Bengal and Rohne in Jharkhand allocated to the company jointly with the other parties. However the company had submitted claims w.r.t the cancellation of coal blocks which are still pending
Our opinion is not modified in respect of this matters.
Other Matter
The statement of the company for the year ended March 31, 2023 was audited by another auditor whose report dated May 30, 2023 expressed an unmodified opinion on that statement.
Our opinion is not modified in respect of this matters.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Board's Report including Annexures to Board's Report and Shareholder's Information but does not include the Standalone Financial Statements and our auditor's report thereon. The Board's report including annexures to the Board's report and Shareholder's Information is expected to be made available to us after the date of this auditor's report.
Our opinion on the Standalone 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 Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements, or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
When we read Annual Report, if we conclude that there is a material misstatement there in we are required to communicate the matter to those charged with Governance.
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 Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance, total comprehensive income, Statement of Changes in Equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. 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 the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Standalone 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 Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone 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 Standalone Financial Statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Q Identify and assess the risks of material misstatement of the Standalone 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.
Q Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3X0 of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Q Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Q 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 Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Q Evaluate the overall presentation, structure, and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
Q Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the Consolidated Financial Statement. We are also responsible for the direction, supervision and performance of the audit of othe Consolidated Financial Statements of such entities included in the Consolidated Financial Statement of which we are the independent auditors. For the other entities included in the Consolidated Financial Statement, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits out by them. We remain solely responsible for our audit opinion.
Materiality is the magnitude of misstatements in the Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating
the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Standalone Financial Statements.
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 Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's 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 the Companies (Auditor's Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in "Annexure A", a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by section 143(3) of the Act, based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the 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, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.
d) In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the directors as on 31st March 2024 taken on record by the Board of Directors, none of these 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 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 which would impact financial position. (Refer Note 35A to the financial statement)
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
iv. (a) The Management has represented that, to the
best of its knowledge and belief, other than as referred to Note No. 6 to the Financial Statement, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in
Place: Kolkata Date: 25.04.2024
any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The Management has represented, that, to the best of its knowledge and belief, other than as referred to Note No. 23 to the Financial Statement, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(c) Based on the audit procedures that have been 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) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement
v. The company has not declared divided in the previous year and nor during the current year ended March 31, 2024, therefore the company is not required to comply with section 123 of Companies Act, 2013.
vi. Based on our examination which included test check , the company has used and accounting software for maintaining its books of accounts which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software.
As proviso to Rule 3 (1) of the Companies (Accounts) Rules, 2014is applicable from 1st April, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirement for record retention is not applicable for the financial year ended 31st March, 2024.
For Das & Prasad Chartered Accountants
Firm Registration No. - 303054E
Sd/-
CA Sweta Shah
Partner M.No. 067564 UDIN:24067564BKAPON8276
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