You are here » Home » Companies » Company Overview » Jagatjit Industries Ltd

Jagatjit Industries Ltd.

BSE: 507155 Sector: Consumer
NSE: JAGAJITIND ISIN Code: INE574A01016
BSE 00:00 | 24 Apr Jagatjit Industries Ltd
NSE 05:30 | 01 Jan Jagatjit Industries Ltd
OPEN 24.00
PREVIOUS CLOSE 24.00
VOLUME 116
52-Week high 46.30
52-Week low 18.10
P/E
Mkt Cap.(Rs cr) 111
Buy Price 23.00
Buy Qty 5.00
Sell Price 24.00
Sell Qty 6.00
OPEN 24.00
CLOSE 24.00
VOLUME 116
52-Week high 46.30
52-Week low 18.10
P/E
Mkt Cap.(Rs cr) 111
Buy Price 23.00
Buy Qty 5.00
Sell Price 24.00
Sell Qty 6.00

Jagatjit Industries Ltd. (JAGAJITIND) - Auditors Report


Notice: Undefined variable: pattern in /usr2/unibs/application/modules/live-market/views/scripts/company/annual-report.php on line 72

Company auditors report

To the Members of Jagatjit Industries Limited Report on the Standalone FinancialStatements

Qualified Opinion

We have audited the accompanying standalone financial statements of Jagatjit IndustriesLimited (“the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date andnotes to the standalone financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as“the standalone financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us except the effects of matter described in the Basis for Qualified Opinionsection of our report the aforesaid standalone financial statements give the informationrequired by the Companies Act 2013 as amended (“the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019its loss including other comprehensive loss changes in equity and its cash flows for theyear ended on that date.

Basis for qualified opinion

(1) In the opinion of the management Trade Receivable and Loans and Advances have avalue on realisation in the ordinary course of business at least equal to the amount atwhich they are stated in the Balance Sheet

Company has a policy of providing for (a) all debts outstanding beyond 3 years or (b)where recovery is considered doubtful irrespective of the fact that legal action has beeninitiated or not instead the method prescribed under Ind AS 109. The company does nothave effective system of obtention of confirmation from Trade Receivable Trade payableand other Advances. The financial impact of these are not ascertainable and to that extentwe cannot comment upon the adequacy of provision for doubtful debts and advance. Howevernon - moving debts outstanding beyond 1 year are to the extent of Rs. 1135 Lacs which isstatic balance and for which confirmations and reconciliations are not available and havenot been provided for The system of obtaining confirmations and reconciliation need to bestrengthened.

Further Trade payables Loan & advance and trade receivable (other than above) aresubject to reconciliation & confirmation.

The financial impact of all this is not ascertainable and to the extent we do not haveany information in respect of such balances.

(2) In the books of accounts of the Company an amount of Rs. 1803 Lacs is outstandingas on March 31 2019 (' 2970 Lacs as on March 31 2018) being an advance to its whollyowned subsidiary M/s S.R.K. Investments Pvt. Ltd. since 2010-11. Subsequent to March 312019 the Company has further received a sum of Rs. 300 Lacs. Similarly an advance of Rs.185 Lacs has been outstanding (more than 10 years) in the name of L P Investment Ltd(Subsidiary Company) and investment of Rs. 1020 Lacs (since 2012-13) is made in the samesubsidiary making total exposure of Rs. 1205 Lacs.

The Company's management based on internal assessments and evaluations haverepresented that the balance outstanding advance and investment are recoverable andrealisable and that no accrual for diminution of advances/ investment is necessary as atbalance sheet date. The company has received confirmation from the aforementionedsubsidiaries on March 31 2019.

The Company has not created a provision against the advances/investment in its books ofaccounts. In our opinion there is significant uncertainty and doubt about the recovery/realisability of the advance/investment as considerable period of time has elapsed fromgrant of advances/ investment and therefore a provision for doubtful advance/ investmentshould have been accounted for in the financial statements for the year ended March 312019.

Consequently the loss for the year ended March 31 2019 is understated and Reservesand Surplus (other equity) as at March 31 2019 are overstated to the extent of Rs. 3843Lacs.

It may be noted that modified opinion was given in respect of the advance and tradereceivable matters by us on the Financial Statements for the period ended March 31 2018.We have also given modified opinion vide report (dated May 30 2019) in pursuance ofRegulation 33 of SEBI (listing obligations)

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Standalone Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of

Ethics issued by the Institute of Chartered Accountants of India (ICAI) together withthe independence requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our qualified opinion on the standalone financialstatements.

Emphasis of Matter

• Attention is drawn to Note No. 3(iv) regarding installation of plant &machinery Note No. 4(vii) regarding fair value of investment properties Note No. 7 (i)regarding realisation of security deposit of Sikandrabad and Sahibabad Plant Note No. 8(i) regarding MAT credit Note No. 8(iv) & Note 38 (iii) regarding provision made foradvance to director in earlier year Note No. 11 (i) regarding unconfirmed bank balanceNote No. 12 (i) & (ii) regarding security deposits and loans and advances toemployees Note No. 13 (ii) regarding commercial advance of Rs. 63 Lacs to a company NoteNo. 14 (i) regarding interest free advance for business purposes and pending receipt ofbills for advances made for business purposes Note No. 15 regarding assets held for saleNote No. 18(v) regarding pending finalisation of terms and conditions related to intercorporate loan Note No. 21(ii) regarding provision service tax Note No. 22 (i) and23(iii) regarding interest payable to MSME Note No. 23(iv) regarding amount payable toemployees pending full & final settlement Note No. 23(v)

(a) regarding provision of sales promotion pending credit to parties on account ofreconciliation Note No. 24(i) regarding amount received from customer pendingreconciliation Note No. 24(iii) regarding provision for service tax Note No. 34B(i)regarding deferred tax and Note No. 43 regarding various risks.

• Without qualifying our opinion we draw attention to Note 2.1 (iv) in thefinancial statements which indicates that the Company has been suffering losses for thelast six years and incurred a net loss of Rs. 6627 Lacs during the year ended March 312019 and as of that date the company's current liabilities exceeding the total assets byRs. 10171 Lacs. These conditions along with other matters as set forth in Note 2.1 (iv)indicate the existence of a material uncertainty that may cast significant doubt about thecompany's ability to continue as a going concern. Company has disclosed the mitigatingfactors vide the said Note and we have relied upon the same.

• The Internal Audit system of the company needs to be substantially strengthenedin scope coverage and compliance in respect of Hamira Plant and Head Office operations.

Our opinion is not qualified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance 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 financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. In addition to the matter described in the basis ofqualified opinion section we have determined the matters described below to be the KeyAudit Matter to be communicated in our report. For each matter below our description ofhow our audit addressed the matter is provided in that context.

The Key Audit Matter How to the matter was addressed in our audit
(a) Litigation Matters: Reviewing the outstanding litigations against the Company for consistency with the previous years. Enquire and obtain explanations for movement during the year.
The company operates in various states within India exposing it to a variety of different Central and State Laws regulations and interpretations thereof. In this regulatory environment there is an inherent risk of litigation and claims. Discussing the status of significant known actual and potential litigations with the Company's in-house officials and other senior management personnel who have knowledge of these matters and assessing their responses.
Consequently provisions and contingent liability disclosures may arise from direct and indirect tax proceeding legal proceedings including regulatory and other government/department proceedings as well as investigations by authorities and commercial claims.
At March 312019 the Company's contingent liabilities for legal matters were Rs. 1148 Lacs (refer Note 36 to the standalone financial statement) and provision for service tax aggregated 407 Lacs (refer Note 21(A) & Note 24(iii)). The most significant contingent liability pertains to service tax of Rs. 389 Lacs and sales tax of Rs. 562 Lacs. Reading the latest correspondence between the Company and the various tax/legal authorities and review of correspondence with / legal opinions obtained by the management from external legal advisors where applicable for significant matters and considering the same in evaluating the appropriateness of the Company's provisions or disclosures on such matters.
Management applies significant judgment in estimating the likelihood of the future outcome in each case when considering whether and how much to provide or in determining the required disclosure for the potential exposure of each matter. This is due to the highly complex nature and magnitude of the legal matters involved along with the fact that resolution of tax and legal proceedings may span over multiple years and may involve protracted negotiation or litigation. These estimates could change substantially overtime as new facts emerge as each legal case progresses. Given the inherent complexity and magnitude of potential exposures across the Company and the judgment necessary to estimate the amount of provisions required or to determine required disclosures this is a key audit matter. Examining the Company's legal expenses and reading the minutes of the board meetings in order to ensure that all cases have been identified.
With respect to tax matters involving our tax specialists and discussing with the Company's tax officers their views and strategies on significant cases as well as the related technical grounds relating to their conclusions based on applicable tax laws.
Assessing the decisions and rationale for provisions held or for decisions not to record provisions or make disclosures.
For those matters where management concluded that no provisions should be recorded considered the adequacy and completeness of the Company's disclosures.
(b) Loan to employees: Company has given loan of Rs. 894 Lacs to its senior employees in earlier years. Stipulation of repayment is not laid out. Management has represented that the amount will be recovered during the course of time without specifying the time frame. Our procedures included: We have perused the detail and have verified the repayments made by employees during the year.
We have verified balance confirmation.
We have advised the company to specify the time frame for recovery of the same.
We have disclosed the issue in the emphasis of matter paragraph.
(c) Advance to supplier:
Company had made an interest free advance of Rs. 270 Lacs in 2017-18 towards supply of sales promotion articles. Vide letter dated 06.06.19 the Company has not approved the samples and has requested for refund of the amount. Management has obtained the confirmation from the supplier. We have perused the confirmation letter of the supplier and relied upon the assertion of Management that the amount will be recovered. We have disclosed the issue vide emphasis of matter paragraph
(d) Interest to MSME Supplier:
Other current liabilities include Rs. 217 Lacs towards interest accrued and payable to MSME as per MSMED Act 2006. Company has initiated the exercise of identification of enterprises to whom this amount is payable and has informed that once identification is done the payment will be made. We have applied the relevant audit procedures and have disclosed the issue in Emphasis of matter in our report.
(e) Balance with Govt. Authorities:
Other non-current assets include Rs. 67 Lacs as deposit with revenue authorities. Management has informed that the amount represents deposit in earlier years as pre condition for filing appeals against various demands under different statutes. Management has initiated an exercise of reconciliation and adjustment if any will be made on completion of exercise We have perused contingent liabilities of the company and have gone through various correspondences. We have relied upon the assertion of Management and have disclosed the issue vide note 8 (ii) of Notes to the financial statements
(f) Other current assets include MAT credit of Rs. 968 Lacs u/s115JB of the Act. Company continues to suffer losses however company is of the view that in view of mitigating factors adopted by company to curtail losses there would be sufficient Tax profits in future to avail MAT credit for the period of 5 to 7 years. We have perused details of MAT credits in earlier years. No further credit for C.Y loss is created. We have relied upon the management assertion and disclosed the issue vide emphasis of matter para in our report.
(g) Revenue recognition from sale of products:
Revenue from sale of products is recognised when control of products has transferred to the customer and there is no unfulfilled obligation that could affect the customer's acceptance of products. Revenue from the sale of products is measured at the fair value of the consideration received and receivable net of returns and allowances discounts and incentives. Our audit procedures included amongst others assessing the Company's revenue recognition accounting policy including those relating to allowances discounts and incentives.
We understood evaluated and tested the operating effectiveness of internal controls over recognition of revenue discounts and incentives.
Significant judgment is required in estimating accruals relating to allowances discounts and incentives recognised in relation to sales made during the year. We performed test of details on a sample basis and inspected the underlying documents relating to sales and accrual of discounts and incentives.
We tested sales transactions near year end date as well as credit notes issued after the year end date.
We discussed and evaluated management assessment of estimates relating to allowances discounts and incentives.
We assessed the disclosures in the standalone financial statements in respect of revenue.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and our auditor'sreport thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors are responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Charged with Governance are also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained a material uncertainty existsrelated to events or condition that may cast significant doubt on the Company's ability tocontinue as going concern. We draw attention to Note 2.1 (iv) in the financial statementswhich indicates that the The Company has been suffering losses for the last six years andincurred a net loss of Rs. 6627 Lacs during the year ended March 312019 and as of thatdate the company's current liabilities exceeding the total assets by Rs. 10171 Lacs.These conditions along with other matters as set forth in Note 2.1 (iv) indicate theexistence of a material uncertainty that may cast significant doubt about the company'sability to continue as a going concern. Company has disclosed the mitigating factors videthe said Note and we have relied upon the same.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe 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 2016 (“the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the “Annexure A” a statement on the matters specified inthe paragraph 3 and 4 of the order.

2. With respect to matter to be included in the Auditor's Report under section 197(16)of the Act;

I n our opinion the managerial remuneration for the year ended March 312019 has beenpaid/provided by the Compnay to its directors in accordance with the provisions of section197 read with Schedule V to the Act;

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 bestof our knowledge and belief were necessary for the purposes of our audit.

(b) i n our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) the balance sheet the statement of profit and loss including other comprehensiveincome statement of changes in equity and the statement of cash flow dealt with by thisReport are in agreement with the books of account;

(d) in our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 1 33 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended.

(e) on the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct;

(f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in “Annexure B”; and

(g) with respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financialposition in its financial statements;

ii. the Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. there has not been delay in transferring amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.

for Madan & Associates

Chartered Accountants

Firm's registration number: 000185N

M. K. Madan
Date: August 14 2019 Proprietor
Place: New Delhi Membership number: 082214
UDIN: 19082214AAAABT8938

Annexure A to The Independent Auditors' Report of even date on the Standalone FinancialStatements of Jagatjit Industries Ltd.

Statement of the matters specified in paragraph 3 and 4 of the Companies (Auditor'sReport) order 2016 ('the order')

(i) In respect of fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a programme of annual verification of fixed assets which in ouropinion is reasonable having regard to the size of the company and the nature of itsassets. Pursuant to the said programme fixed assets were physically verified by theManagement during the year. On reconciliation of physical verification report with assetsrecord it is observed that certain fixed assets are not physically available which in theopinion of management are not significant.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company and certificate provided by the Company thetitle deeds of immovable properties are held in the name of the Company except in respectof Immovable property (4th and 5th Floor Bhandari House Nehru Place Delhi) having grossbook value of Rs. 103 Lacs (Original Cost) and Net book value of Rs. 91 Lacs.

Title deeds in respect of Immovable Properties as mentioned in Note No. 18 are held bythe lenders as Equitable Mortgage against the borrowing. Confirmations from the banks arenot received.

Company has provided photocopies of the title deeds/ lease deeds in respect ofLeasehold Land situated at Sikandrabad (U.P.) and Sahibabad (U.P.) as the originals areheld by Uttar Pradesh State Industrial Development Corporation (UPSIDC).

(ii) In respect of its inventories:

(a) As explained to us inventories have been physically verified during the year bythe Management at reasonable intervals other than stock of Rs. 757 Lacs lying with portauthorities.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

(iii) (a) According to Information and explanation given to us the Company has grantedloan to its subsidiary and advance to associate company covered in register maintained u/s189 of the Companies Act 2013 in earlier years. No loan was granted to any entity coveredin the register maintained u/s 189 of the Companies Act 2013 during the current year.

(b) I n respect above advances no terms and conditions and stipulation regardingpayment of principal amount or interest have been laid out. Advance to associate companyhas been received during the year.

(c) In respect of overdue advance of Rs. 1988 Lacs given to subsidiary companies thematter has been qualified by us vide paragraph 2 of basis for qualified opinion of ouraudit report.

(iv) (a) In our opinion and according to the information and explanations given to usthe Company has not given any loans and made any investment within the meaning of section185 & 186 of the Act. Thus paragraph 3(iii) of the Order is not applicable to theCompany.

(b) Company has represented before us that provision of section 185/186 are notapplicable for advances given prior to Companies Act 2013 and are still outstanding.

(v) According to the information and explanation given to us the company has notaccepted any deposits during the year except advance from customers of Rs. 12065085/-outstanding more than 365 days. Company is of the view that the amount is not advance fromcustomers but needs to be adjusted against debit balance of receivables. Pendingreconciliation amount is shown as advance from customers and hence claimed exempteddeposits. Pending reconciliation we are unable to comment upon this. Company is of theview that provision of Section 74(1)(b) of the Act are complied with in pursuance of Rule19 of the Acceptance of Deposits Rules 2014. It is also confirmed by the company that noorder has been passed by the Company Law Board or National Company Law Tribunal or ReserveBank of India or any court or any other tribunal.

(vi) According to the information and explanations given to us and certified by themanagement provision of Section 148(1) of the Companies Act 2013 for maintenance of Costrecords are not applicable as products manufactured by the company as specified in TableA/Table B under rule 3 of Companies (Cost Records & Audit Rules) 2014 represents aby-product and no cost is incurred for the same.

(vii) In respect of statutory dues:

(a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the company has generally been regular indepositing undisputed statutory dues including provident Fund Employees State insuranceincome tax sales tax wealth tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues applicable to it with the appropriateauthorities. There were no undisputed amounts payable in respect of the aforesaidstatutory dues in arrears as at 31.03.2019 for a period of more than six months from thedate they became payable except service tax payable of Rs. 54 Lacs which representdifference on provision made in respect of Royalty income on accrual basis and paymentmade on actual receipt for which identification of parties and reconciliation thereof isunder process as certified by the management.

(b) (i) According to the information and explanations

given to us there are no dues of income tax sales tax wealth tax service tax dutyof customs duty of excise value added tax cess which have not been deposited as at31.03.2019 on account of any dispute except as follows:

Sr. No. Name of Statute Nature of Dues Amount m Period for which the amount relates Forum where dispute is pending.
SERVICE TAX
1 The Finance Act 1994 Wrong availment of Service Tax Cenvat Credit 5382166 October 2003 to September 2007 CESTAT Chandigarh
2 The Finance Act 1994 Penalty in the above matter 5382166 October 2003 to September 2007 CESTAT Chandigarh
3 The Finance Act 1994 Wrong availment of Service Tax Cenvat Credit 6970632 October 2007 to March 2008 CESTAT Chandigarh
4 The Finance Act 1994 Penalty in the above matter 6970632 October 2007 to March 2008 CESTAT Chandigarh
5 The Finance Act 1994 Demand and Penalty towards Management maintenance and Repair Services 1797534 June 2005 CESTAT Chandigarh
6 The Finance Act 1994 Demand and Penalty towards conversion charge for SMP & Ghee under category of Supply of Tangible Goods 6221720 May 2008 to April 2010 CESTAT Chandigarh
7 The Finance Act 1994 Penalty in the above matter 6221720 May 2008 to April 2010 CESTAT Chandigarh
SALES TAX
8 Sales Tax under Telangana VAT Act Demand and Penalty on account of VAT on Royalty Income 10300000 2012 - 13 to November 2014 Appellate Deputy Commissioner Hyderabad
9 Sales Tax under Punjab VAT Act & Central Sales Tax Act Demand and Penalty on account of disallowance of VAT input credit on Rice Husk 21967703 2010 - 11 Deputy Excise and Taxation Commissioner (Appeals) Jalandhar
10 Sales Tax under Haryana VAT Act Demand and Penalty on account of disallowance of VAT input credit on Rice Husk 3969900 2011 -12 Joint Excise & Taxation Commissioner (A) Rohtak
11 Sales Tax under Jharkhand VAT Act Demand in respect to VAT assessment 2032974 2013-14 Commissioner (Appeals) Ranchi
12 Sales Tax under Punjab VAT Act & Central Sales Tax Act Disallowance of ITC on purchase of Rice Flour 10754088 2011 -13 VAT Appellate Tribunal
13 Rajasthan VAT Act. Demand in respect of VAT 4544581 2015-16 & 2016-17 VAT Commissioner Rajasthan
14 Jharkhand VAT Act Demand in respect of VAT 397965 2014-15 Commissioner (Appeals) Ranchi
15 Andhra Pradesh VAT Act Demand in respect of VAT 2297671 2012-13 Appellate Deputy Commissioner

(ii) Company made provision for service tax of Rs. 353 Lacs demanded by Orissa StateBeverages Corporation Ltd. against their liability to service tax in earlier year. Thematter is pending before Service Tax Terminal Orissa.

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowing to a financial institution bank Governmentduring the year.

(ix) In our opinion and according to the information and explanation given to us theterm loans have been applied by the company during the year for the purposes for whichthey were obtained.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/ provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and on the basis ofLegal opinion (regarding maintenance charges of Rs. 211 Lacs paid to corporate facilitymanagement) (refer Note No. 38B(iii)(c)) obtained by the company and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

for Madan & Associates

Chartered Accountants Firm's registration number: 000185N

M. K. Madan
Date: August 14 2019 Proprietor
Place: New Delhi Membership number: 082214
UDIN: 19082214AAAABT8938

Annexure B to The Independent Auditors' Report of even date on the Standalone FinancialStatements of Jagatjit Industries Ltd.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (‘the Act')

Qualified Opinion

We have audited the internal financial controls with reference to standalone financialstatements of Jagatjit Industries Limited (“the Company") as of March 31 2019in conjunction with our audit of the standalone financial statements of the Company forthe year ended on that date.

In our opinion the Company generally has in all material respects an adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls over financial reporting were generally operating effectivelyas at March 31 2019 except in respect of trade receivable reconciliation/ confirmationprovision for bad and doubtful debts and accounts payable reconciliation/confirmationwhere controls were found to be ineffective and in respect of various areas namelyPhysical availability of fixed assets record updating of status of contingentliabilities Rolling Cash Plan (HO) recovery of loan & advances fromemployees/suppliers Full & Final settlement of employee Filling of VAT return(Behror) Revenue recognition of royalty income from franchise operation (Head office &Hamira) revenue recognition of third party supply agreement revenue recognition ofdistribution income where controls were effective but need to be strengthened based on theinternal control with reference to standalone financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India (the “Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal financial controls with reference to standalonefinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditing asprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with the ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls with reference to standalone financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to standalone financial statements.

Meaning of Internal Financial Controls with reference to standalone financialstatements

A company's internal financial control with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to standalonefinancial statements

Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

for Madan & Associates

Chartered Accountants

Firm's registration number: 000185N

M. K. Madan
Date: August 14 2019 Proprietor
Place: New Delhi Membership number: 082214
UDIN: 19082214AAAABT8938