PC Jeweller LimitedReport on the Audit of the Standalone Financial Statements
1. We have audited the accompanying Standalone Financial Statements of PC Jeweller Limited (hereinafter referred to as 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 Cash Flow Statement for the year then ended and Notes to the standalone financial statements including a summary of significant accounting policies and other explanatory information (hereinafter referred to as 'the standalone financial statements').
2. Qualified opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements gives a true and fair view in conformity with the applicable Indian Accounting Standards ('Ind AS') prescribed under Section 133 of the Companies Act, 2013 ('the Act'), read with relevant rules issued there under, and other accounting principles generally accepted in India, of the standalone net loss and total comprehensive loss, change in equity and its cash flow for the year ended on that date and other financial information of the company for the year ended 31st March, 2024 except for the possible effects of the matter described in para 4 below.
3. We conducted our audit in accordance with the Standards on Auditing ("SAs") specified under Section 143(10) of the Companies Act, 2013 ("the Act"). Our responsibilities under those Standards are further described in 'paragraph 12 Auditor's Responsibilities' 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 ("the ICAI") together with the ethical requirements that are, relevant to our audit of the Standalone Financial statements for the year ended March 31st, 2024 under the provisions of the Companies Act 2013 and the Rules there under, 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 audit opinion.
4. Basis for Qualified opinion:
(i) As explained in Note No. 51 to the accompanying standalone financial statements, the company during
the financial year ended 31st March 2019 had provided discounts of ? 513.65 Crore to its export customers which had been adjusted against the revenues for the said year. The company had initiated the process to comply with the requirements of the Master Directions on Exports of Goods and Services issued by the Reserve Bank of India. Subsequently the company has obtained the approvals from the authorized dealer banks for reduction in receivables corresponding to discounts amounting to ? 330.49 Crore.
For the remaining discounts of ? 183.16 Crore, in the absence of requisite approvals and material evidence related to such transactions, we are unable to ascertain any consequential effect of the above, if any, on the accompanying Statement.
Auditor's opinion for the year ended 31st March 2019, 31st March 2020, 31st March 2021, 31st March 2022, 31st March 2023, were also modified in respect of this matter.
(ii) As explained in Note No. 52 of the accompanying standalone financial statements, with respect to provision for the expected credit loss / impairment relating to overdue overseas Trade Receivables of the company as required under Ind-As 109, Trade receivables as at 31st March 2024, inter alia, include outstanding from export customers net amounting ? 1467.61 crore. The export receivables have been outstanding for more than 9 months and have been restated as per the RBI exchange rate as on 31st March 2024. The Company has filed necessary applications with the requisite authority as per the regulations of the Foreign Exchange Management Act, 1999 for condonation of delays in repatriation of funds by its customers. However, as a mark of prudent accounting practices the company has computed and applied cumulative ECL on the outstanding export receivables of ? 263.68 crore as on 31st March 2024.
Due to no realization as per scheduled expected dates from the export receivables and considering the initiation of legal route for recovery during the year, we are unable to examine adequacy of the provision of expected credit loss and its consequential impact and adjustments on the accompanying statement.
Auditor's opinion for the year ended 31st March 2023, was also modified in respect of this matter.
(iii) The company' inventory lying at few locations is under court's custody with effect from January-23 as a consequence of order passed by the Hon'ble DRT/ DRAT and there is no change in the status as on the date of Balance Sheet date. Accordingly, the physical verification/ inspection of the inventory at these locations could not be conducted neither by the management nor by the auditors as on the Balance Sheet date. Hence the inventory valuation is based on determination of estimated net realizable value or cost which is lower in accordance with the Indian Accounting Standards. We have relied upon the valuation of the Inventory as certified and determined by the management which is in accordance with the Indian Accounting Standards.
In view of the above, we are unable to examine and express an opinion on inventory value and its consequential impact and adjustments on the accompanying standalone financial statements. Auditor's opinion for the year ended 31st March 2023, was also modified in respect of this matter.
5. Material Uncertainty Related to Going Concern
As explained in Note No. 50 of the accompanying standalone financial statements, the Company is currently dealing with legal actions from lenders, including notices under Section 13(2) of the SARFAESI Act 2002 and a writ petition filed by the company in the High Court of Delhi challenging SBI's actions for not adhering to the Principle of Natural Justice. Additionally, SBI had file an application for default in respect of the Credit Facilities seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Company. Later on, SBI withdrew the petition before the Hon'ble NCLT. The same was approved by the Hon'ble NCLT, resulting in the dismissal of petition and disposal of all related matters pertaining to insolvency.
To resolve the legal issue amicably, the Company proposed a One Time Settlement (OTS). The OTS received 'In-principle' approval from all consortium members of banks and subsequently accepted by the competent authorities of SBI, Axis Bank, and Karur Vysya Bank, and is under consideration of the remaining consortium members of banks.
Despite ongoing legal processes and uncertainties, the Company is optimistic about resolving these issues amicably and believes its status as a going concern remains intact. The Management is confident that, given its net asset position, the Company will be able to meet its liabilities and commitments and continue business operations as usual.
Our conclusion is not modified in respect of this matter.
6. Emphasis of Matter
We draw attention to:
(i) As per Note No. 52 of the accompanying standalone financial statements, there is delay in receipt of proceeds denominated in foreign currency against export of goods made by the company to its overseas customers net amounting ? 1467.61 Crores as on 31st March 2024 beyond the timelines stipulated under the Foreign Exchange Management Act, 1999. The management of the company has filed the necessary applications with the appropriate authority for condonation of such delays to regularize the default. Pending condonation of such delay by the appropriate authority, management is of the view that the possible penalties that may be levied are currently unascertainable and would not be material; accordingly, no consequential adjustments have been made to the accompanying statement with respect to such delay/default. Nonetheless, as a precaution, and on prudent practice the company has computed the cumulative ECL (expected credit loss) on the outstanding receivables of ? 263.68 Crores as on 31st March 2024.
(ii) As per Note No. 8 of the accompanying standalone financial statements, due to recurring losses company has not recognized Deferred Tax assets (On net Basis).
Our conclusion is not modified in respect of these matters.
7. Key Audit matters
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 in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matters described in the Basis for Qualified Opinion as mentioned in para 4 section and material uncertainty related to the going concern as mentioned in para 5 section, we have determined that there are no other key audit matters to be communicated in our report.
8. information other than the Standalone Financial Statements and auditor's Report thereon
The Company's Board of Directors is responsible for the preparation of other information. The other information comprises the information included in the management discussion and analysis, Boards Report, but does not include the standalone financial statements and our auditor's report thereon.
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 identified above when it becomes available 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 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.
9. Responsibilities of Management and those charged with Governance for Standalone Financial Statements
The Company's Board of Director 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 flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian accounting standard specified under section 133 of the Act.
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 the 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 is free from material misstatement, whether due to fraud or error.
10. In preparing the Standalone Financial Statements, the Board of Directors 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
11. The Board of Directors are also responsible for overseeing the financial reporting process of the Company.
12. Auditor's ResponsibilitiesAudit of the Standalone financial Statements for the year
ended march 31st, 2024
a) Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements for the year ended March 31st, 2024 as a whole is 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 this Standalone Financial Statements.
b) As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit we also: -
i. Identify and assess the risks of material misstatement of the Annual 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.
ii. 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 Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate financial controls with reference to Standalone Financial Statements in place and the operating effectiveness of such controls.
iii. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management.
iv. Conclude on the appropriateness of the 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 ability of the Company to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor report to the related disclosures in the Statement 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.
v. Evaluate the overall presentation, structure and content of the Annual Standalone Financial Statements, including the disclosures, and whether the Annual Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
vi. Obtain sufficient appropriate audit evidence regarding the Annual Standalone Financial Statements of the Company to express an opinion on the Annual Standalone Financial Statements.
Materiality is the magnitude of misstatements in the Annual Standalone Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Annual 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 Statements of our work; and
(ii) to evaluate the effect of any identified misstatements in the Annual 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.
13. Report on Other Legal and Regulatory Requirements
1. As required by section 197(16) of the Act, based on our audit and to the best of our information and according to the explanations given to us, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limit prescribed under Schedule V of the Act.
2. 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 the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
3. 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 purpose of our audit of the accompanying standalone financial statements, and 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 the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act except for the matter described in the Basis for Qualified Opinion section in para 4.
b. The Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Changes in equity and the Standalone Cash Flow Statement dealt with by this report are in agreement with the books of accounts;
c. On the basis of the written representations received from the directors and 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;
d. t he qualifications relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion section.
e. With respect to the adequacy of the internal financial controls over financial reporting the company and the operating effectiveness of such controls, refer to our Report in "Annexure B"
f. The management has represented that, to the best of its knowledge and belief, MSME creditors will be paid within regulatory time limits and that any necessary adjustments will be made accurately. In case of late payments, management must apply interest charges as required by regulations or agreements, ensuring fair compensation for delays. Management is also responsible for monitoring payment schedules and addressing any issues promptly.
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, as detailed in Note 44 of the standalone financials' statements, has disclosed the impact of pending litigations on its financial position as at 31st March 2024;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31st March 2024.
iii. There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the company during the year ended as at 31st March 2024.
4. a. The Management has represented that, to the best of its knowledge and belief, no funds 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 entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall whether:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or
b. 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, 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 whether:
a. 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
b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
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 mis-statement.
5. No dividend has been declared or paid during the year by the company.
6. The reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is applicable from 1st April 2023.
Based on our examination which included test checks, the Company has used accounting software's for maintaining its books of account for the financial year ended 31st March 2024, which have 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. Further, during the course of audit, we did not come across any instance of the audit trail feature being tampered with.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31st 2024.
For A H P N and Associates
Chartered Accountants (FRN: 009452N)
Sd/-
FcA navdeep Gupta
Partner M.No.: 091938
Place: New Delhi
Dated: 30/05/2024
UDIN: 24091938BKCAAN9249
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