divya jyoti industries ltd share price Auditors report


To,

The Members of Divya Jyoti Industries Limited Report on theAudit of Standalone Financial Statements

We have audited the accompanying standalone financial statements of Divya Jyoti Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2021, 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 notes to the financial statements, including a summary of the significant accounting 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 explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph of our report, 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 March 31, 2021, and its loss, total comprehensive loss, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion :

a) As mentioned in Note No.33 to the standalone financial statements, the Company has been referred to National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, and at present the business of the company is discontinued since FY 2018-19 due to severe losses. Net worth of the Company as on the reporting date is negative and it continues to incur losses. The Company has received notices for repayment of loans taken by it from the Banks/FIs and also the personal guarantees of promoter directors have been invoked. Since Corporate Insolvency Resolution Process (CIRP) is currently in progress, as per the Code, it is required that the Company be managed as going concern during CIRP. Accordingly, the standalone financial statements are continued to be prepared on going concern basis. However, there exists a material uncertainty about the ability of the Company to continue as a "Going Concern". The same is dependent upon the resolution plan to be approved by NCLT. The appropriateness of the preparation of standalone financial statements on going concern basis is critically dependent upon CIRP as specified in the Code.

b) As mentioned in Note No. 1 to the standalone financial statements, Solvent Extraction & Refinery of Soya Oil activity of the company has been suspended since FY 2018-19. According to management, there are indication of impairment loss. However, as per Note No.42, the Company has not assessed or reviewed the plant and machinery and other fixed assets related to the business for impairment. In respect of fixed assets, management has not carried out any assessment of impairment, and the impairment loss, if any, has not been ascertained. The consequent effect of the same is not ascertainable.

c) As mentioned in Note No. 38 to the standalone financial statements, the balance confirmations have not been received in respect of certain secured and unsecured loans, balances with banks, trade receivables, trade and other payables and loans and advances. The Company continues the process of obtaining confirmations and reconciliation of the balances of trade receivables, trade and other payables, short term borrowings other than from banks and loans and advances. The impact of the same is not ascertainable at present.

d) As mentioned in Note No. 33 to the standalone financial statements, pursuant to commencement of CIRP of the Company under Insolvency and Bankruptcy Code, 2016, there are various claims submitted by the financial creditors, operational creditors to the RP. Such claims can be submitted to the RP till the approval of the resolution plan by CoC.

The overall obligations and liabilities including interest on loans and the principal amount of loans shall be determined during the Corporate Insolvency Resolution Process (CIRP).

Pending final outcome of the CIRP, no accounting impact in the books of accounts has been made in respect of excess, short, or non-receipts of claims for operational and financial creditors.

e) Asmentioned in Note no. 3, Confirmation is not available in respect of equity shares shown in NonCurrent Investments.

f) As mentioned in Note No.7,it was observed that the company has receivables outstanding for more than three years and no provision for write off has been made in the financial statements against thesereceivables.

g) As mentioned in Note No.8, Cash in Hand amounting Rs.3,48,510 was not provided to us for physical verification.

h) As mentioned in Note No. 8, No Bank Statements from Balances held in currents accounts amounting to Rs. 12,43,135 has been furnished.

i) As mentioned in Note No.10, Bank Fixed deposits receipts has not been provided for physical verification and further no statement from the Bank has been furnished in respect of interest accrued during the year.

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. Information Other than the Standalone Financial Statements and Auditors Report thereon

The Companys management and Board of Directors are responsible for the other information. The other information comprises the information included in the Companys annual report, but does not include the financial statements and our auditors 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 and, in doing so, consider whether the other information is materially inconsistent with the standalone 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.

Managements Responsibility for the Standalone Financial Statements

The Honble National Company Law Tribunal, Indore bench at Ahmedabad ("NCLT") admitted an insolvency and bankruptcy petition filed by the financial creditor against the Company vide its order dated 4th December, 2020 ("the Order") and appointed Mr. Sajjan Kumar Dokania to act as Interim Resolution Professional ("IRP") who is subsequently appointed as Resolution Professional (RP). On the basis of the Order of the NCLT Mr. Sajjan Kumar Dokania in his capacity as IRP / RP has taken control and custody of the management and operations of the Company from 8th December 2020.

The Companys management and 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 state of affairs, profit and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) 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 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 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 and Board of Directors is responsible for assessing the Companys 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 management / RP is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities 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 auditors 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 thesestandalone financial statements.

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

- 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 internalcontrol.

- 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 managements 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 Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors 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 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 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.

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 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.

Other Matters

1. Modified Audit Procedures necessitated pursuant to outbreak of COVID-19 pandemic

Due to spread of COVID-19 pandemic and Nation-wide lockdown/ travel restrictions imposed by Central / State Government/ Local Authorities extended from time to time commencing from the first week of April 2020, the audit could not be carried by visiting the Office of the company. Accordingly, this extraordinary situation due to Covid-19 has necessitated modification of our audit procedures so as to carry out the audit remotely through online access/receipt of digital documents.

Accordingly, we modified our audit procedures as follows:

a) The company has provided/shared with us the records, scanned copy of documents etc. through digital medium such as emails, access to Accounting Software. To this extent, the audit processes were carried out on the basis of verification of such books of accounts, records, scanned copy of documents etc. made available to us through digital medium as above, which were relied upon as audit evidence for conducting the audit and reporting for the current period.

b) We have made enquiries and gathered necessary audit evidence including resolution of our audit observations through digital medium, dialogues and discussions over phone calls, emails and similar communication channels instead of a face-to-face interaction with the designated-officials.

c) We have also relied upon and performed our audit procedures in accordance with the Advisories and Key considerations issued by the Institute of Chartered Accountants of India on the various Accounting and Auditing aspects impacted by COVID-19.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report ) Order, 2016 (the Order) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure A, a statement in the paragraph 3 and 4 of the order.

2. 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

b. except for the possible effects of the matters described in the Basis of Qualified opinion paragraph above, 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, the Cash Flow Statement and the Statement of Changes in Equity dealt with by this report are in agreement with the 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 Companies (Indian Accounting Standards) Rules, 2015 as amended, except requirement of Ind AS 26 on Impairment of Assets and Ind AS 37 on Provisions, Contingent Liabilities and Contingent Assets with regard to matters described in the Basis of Qualified Opinion paragraph above.

e. We have not received any written representations from the directors as on March 31, 2021 with regard to disqualification from being appointed as a director in terms of Section 164(2) of the Act. However, All the Directors of the company have been suspended and power has been delegated to IRP/RP in terms of provision of IBC, 2016.

f. The matters described under the basis for qualified opinion paragraph and Material Uncertainty relating to Going Concern paragraph above in our opinion, may have an adverse effect on functioning of the Company and on the amounts disclosed in standalone financial statements of the Company.

g. 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 and

h. With respect to the other matters to be included in the Auditors 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 explanations given to us:

(i) The Company has disclosed the impact of pending litigations on the financial position in its Standalone financial statements.

(ii) The Company did not have any long term contracts including derivatives contracts for which there were any material foreseeable losses.

(iii) There has been no delay in transferring amounts, whenever required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE "A TO INDEPENDENT AUDITORS REPORT

The annexure referred to in Independent Auditors Report on the Standalone financial statements for the year ended on 31st March 2021, we report that:

i. (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. However, some fixed assets not in the name of the company also continue to appear in FAR.

(b) We have been informed that a physical verification and valuation of fixed assets has been carried out by the management. However, we havenot been providedany report of physical verification of its fixed assets. Hence, we are unable to comment as to whether there are any material discrepancies on physical verification.^ our opinion; the frequency of verification is not satisfactory, having regard to the size of the Company and nature of its business

(c) According to the information and explanation given to us by us, company has held title deeds of immovable property in its own name.

ii. According to the information and explanation given to us, the physical verification of inventory has been conducted at reasonable intervals by the management. The procedure of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

iii. The company has not granted loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

iv. The company has not given any loans, investments, guarantees and security under the provisions of section 185 and 186 of the Companies Act, 2013.

v. The company has not accepted any deposits from the public.

vi. According to the information and explanation given to us and verified by us broadly the company has maintained the cost records as prescribed by the central government under sub section 1 of section 148 of the Companies Act ,2013. However, we have not made a detailed examination of Cost records with a view to determine whether they are accurate or complete.

vii. (a) According to the information and explanation given to us and on the basis of our examination of records of the company, the company is regular in depositing undisputed statutory dues including TDS, Provident fund, professional tax and employees state insurance, Income tax and any other statutory dues to the appropriate authorities wherever applicable.

(b) According to the information and explanation given to us, following dues of central tax, value added tax and entry tax have not been deposited by the company on account of disputes -

Name of the Statute Nature of dues Amount (in Lacs) Period to which the Amount relates Forum where dispute is pending
M.P. Commercial Tax Act, 1994 Commercial Tax 6.51 2004-05 Reference Application filed to Appellate Tribunal, Bhopal
M.P. Commercial Commercial 2.39 2005-06 Reference Application filed to
Tax Act, 1994 Tax Appellate Tribunal, Bhopal
M.P. Entry Tax Act, 1976 Entry Tax 0.26 2005-06 Reference Application filed in Jabalpur High Court
M.P. Entry Tax Act, 1976 Entry Tax 0.79 2006-07 Writ Petition filed at Indore High Court
M.P. Central Tax Act, 1956 Central Tax Sales 57.85 2003-04 Writ Petition filed at Jabalpur High Court
M.P. Central Tax Act, 1956 Central Tax Sales 181.46 2004-05 Writ Petition filed at Jabalpur High Court
M.P. Value Added Tax, 2002 Value Added Tax 52.44 2006-07 Appeal filed at Appellate Authority ,Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Tax Sales 39.59 2008-09 Appeal filed at Appellate Authority, Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Tax Sales 29.17 2010-11 Appeal filed at Appellate Authority, Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Tax Sales 386.62 2011-12 Appeal filed at Appellate Authority, Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Tax Sales 85.43 2012-13 Appeal filed at Appellate Authority, Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Tax Sales 25.48 2014-15 Appeal filed at Appellate Authority, Commercial Tax, Indore

Following are the Income Tax Demands raised on the company, for which appeal is being made by the company.

A.Y. Notice/Order Date Demand
2012-13 24.12.2019 108611190/-
2016-17 06.03.2020 4368770/-
2017-18 08.03.2020 4648320/-

Note: The Contingent liabilities have been reported on the basis of information available with us at the time of reporting.

The amount due has been shown as net of amounts paid.

The amount does not include the interest claimed and not yet quantified.

(viii) The company has defaulted in repayments of loans or borrowings to following banks: -

Bank Name Cash Credit Limit
Amount
Bank of Baroda (Erstwhile Dena Bank) 18,58,82,738/-
Punjab National Bank (Erstwhile Oriental Bank of Commerce 15,39,72,889/-
(OBC)
Saraswat Co-operative Bank Ltd. (SCBL) 12,53,62,805/-

The above Cash Credit Loan Amount has been reported as NPA by the banks on different dates during the year. In Note No. 17 of Balance Sheet pertaining to Working Capital Loans from the Bank, the amount includes the interest till the date the account has became NPA. The company has no other borrowings from financial institutions, bank, government or debenture holders.

(ix) The company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the order is not applicable.

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

(xi) According to the information and explanation given to us and based on our examination of the records of the company, the company has not paid or provided managerial remuneration to any of its director.

(xii) In our opinion and according to the information and explanation given to us the company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the order is not applicable to the company.

(xiii) According to the information and explanation given to us by the management, transactions with related parties are in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable and the details have been disclosed in the notes to the financial statements.

(xiv) According to the information and explanation given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanation given to us and based on our examination of records of the company, the company has not entered into non cash transaction with directors or persons connected with him. Since all the Directors are suspended accordingly, paragraph 3(xv) of the order is not applicable.

(xvi) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

Date : June 30, 2021

For Anubhav Pradhan and Co. Chartered Accountants

FRNo. 013822C

Place : Indore

CA. Anubhav Pradhan,

Partner Membership No.: 113980

Annexure B to the Independent Auditors Report on Standalone Financial Statements

Report on the Internal Financial Controls under Clause (i) of sub- section 3 of Section 143 of Companies Act, 2013(the Act)

We have audited the internal financial controls over financial reporting of Divya Jyoti Industries Limited (the Company) as of 31st March, 2021 in conjunction with our audit of the Standalone financial statements of the company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India(ICAI).These responsibilities include the design, implementation and maintenance of adequate internal controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial controls over financial reporting (the Guidance Note) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal financial Controls, and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls systems over financial reporting and their operating effectiveness. Our audit of internal financial controls system over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing risk that a material weakness exists, and testing and evaluating the design an operating effectiveness of internal financial controls based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

Subject to non-provision of documents mentioned in basis of Qualified opinion, We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys Internal Financial Controls system over financial reporting.

Meaning of Internal Financial Controls with reference to Standalone Financial Statements

A companys internal financial control over financial reporting is a process design to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles. A companys internal financial controls over financial reporting include those policies and procedures that:

(i) Pertain to the maintenance of records, in reasonable details, accurately and fairly reflects the transactions and dispositions of the assets of the company.

(ii) Provide reasonable assurance that transaction are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorization of the managements and the directors of the company and

(iii) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls with reference to Standalone Financial Statements

Because of Inherent limitations of internal financial controls of financial reporting, including the possibilities of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial controls over financial reporting may become inadequate because of changes in condition, or that the degree of compliance with the policies or procedures may deteriorate.

Disclaimer

According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified in the operating effectiveness of the Companys internal financial controls over financial reporting as at March 31, 2021:

(i) The confirmations and reconciliation of balances of certain secured and unsecured loans, balances with banks, trade receivables, trade and other payables and loans and advances are not being taken and reconciliations are pending.

(ii) The Company has not made any assessment of impairment of the fixed assets, loans and advances and other assets as at the balance sheet date.

We have considered material weakness identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2021 standalone financial statements of the Company and these material weaknesses affect our opinion on standalone financial statements of the Company for the year ended March 31, 2021 [our audit report dated June30, 2021, which expressed a qualified opinion on those standalone financial statements of the Company].

For Anubhav Pradhan and Co. Chartered Accountants FRNo. 013822C

Date : June 30, 2021

Place : Indore

CA. Anubhav Pradhan, Partner

Membership No.: 113980