To the members of Gitanjali Gems Limited
Report on the standalone Indian Accounting Standard ("Ind AS") Financial
Statements for the year ended 31st March, 2017
We have audited the accompanying Standalone Ind AS financial statements of Gitanjali
Gems limited ("the Company") which comprise the Balance Sheet as at 31st
March, 2017, the Statement of Profit and Loss (including Other Comprehensive Income),
Statement of Cash Flow and the Statement of Changes in Equity for the year then ended and
a summary of significant accounting policies and other explanatory information (herein
after referred to as "Standalone Ind AS financial statements ").
Managements Responsibility for the Standalone Ind AS financial statements
The Companys Board of Directors 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 Ind AS financial statements that give a true and fair view of the state
of affairs(financialposition), profit or loss (financial performance including other
comprehensive income), cash flows and changes in equity of the Company in accordance with
the accounting principles generally accepted in India, including the Indian Accounting
Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules
issued thereunder. This responsibility also includes maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding the assets of the
Company and for preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and maintenance of adequate internal
financial effectively for ensuring the accuracy and completeness of the accounting
records, relevant to the preparation and presentation of the Standalone Ind AS financial
statements that give a true and fair view and are free from material misstatement, whether
due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these Standalone Ind AS financial
statements based on our audit. We have taken into account the provisions of the Act, the
accounting and auditing standards and matters which are required to be included in the
audit report under the provisions of the Act and the Rules made there under. We conducted
our audit of the Standalone Ind AS financial statements in accordance with the Standards
on Auditing specified under Section 143(10) of the Act. Those Standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the Standalone Ind AS financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
the disclosures in the Standalone Ind AS financial statements. The procedures selected
depend on the auditors judgment, including the assessment of the risks of material
misstatement of the Standalone Ind AS financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal financial control
relevant to the Companys preparation of the Standalone Ind AS financial statements that
give a true and fair view in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of the accounting
policies used and the reasonableness of the accounting estimates made by the Companys
Directors, as well as evaluating the overall presentation of the Standalone Ind AS
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the Standalone Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations
given to us, the aforesaid Standalone Ind AS financial statements give the information
required by the Act in the manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India including the Ind AS, of the
state of affairs (financial position) of the Company as at 31st March, 2017,
and its profit (financial performance including other comprehensive income), its cash
flows and the changes in equity for the year ended on that date.
Emphasis of matter
We draw attention to following Notes to Standalone Ind that were operating AS financial
statements:
a. Note No. 45 A (a) relating to 12% Non-Convertible Debenture issued to LIC where the
company has not paid overdue principal and interest aggregating to Rs. 348.94 Lakhs.
Further, the company has not created liquid assets of Rs. 148 Lakhs as required
under Rule 18 (7) (c) of the companys (Share capital & Debenture) Rule 2014 in
respect of debentures installments maturing during the following year.
b. Note No. 45 A(b) relating to overdcue principal and Interest of ECBs:
i. Principal of USD 8.75 million (equivalent Rs. 5,674.38 Lakhs) and interest of
USD 0.97 million (equivalent Rs. 631.71 Lakhs) to ICICI ECB.
ii. Principal of USD 0.73 million (equivalent Rs. 474.99 Lakhs) to IDBI (BOB
portion) ECB.
c. Note No. 45 B relating to overdrawn position in the working Capital borrowing from
banks aggregating to Rs. 3,115.17 Lakhs as compared with sanctioned limit; and
d. Note no. 56 relating to Loans and Advances granted to its subsidiaries, Associates
and Others not in conformity with the Sec 186 of the Companies Act,2013 .
(As fully described in respective notes) Our opinion is not qualified in respect of
above matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2016 ("the Order")
issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure
A" a statement on the matters specified in paragraphs 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. in our opinion proper books of account as required by law have been kept by the
Company so far as appears from our examination of those books;
c. the Balance Sheet, Statement of Profit and Loss (including Other Comprehensive
Income) and Cash Flow Statement and 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 Ind AS financial statements comply with the
Indian Accounting Standards specified under Section 133 of the Act read with relevant
rules issued thereunder;
e. on the basis of written representations received from the directors as on 31st
March 2017, and taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March 2017, from being appointed as a director in terms
of sub section (2) of section 164 of the Act.
f. with respect to the adequacy of the internal financial controls over financial
reporting of the Company and the operating effectiveness of such controls, refer to our
separate Report in "Annexure B"; Our report expresses an unqualified
opinion on the adequacy and operating effectiveness of the Companys internal financial
controls over financial reporting;
g. 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 according to the explanations given to us:
i) The Company has disclosed the impact of pending litigations on its financial
position in its standalone Ind AS financial statements. As represented by the company the
group does not expect any cash outgo and there will be no impact on the financial position
of the group Refer Note no. 38 to the standalone Ind AS financial Statement
ii) As represented by the company, there are no foreseeable material losses in respect
of long-term contracts including derivative contracts. Refer Note No. 23 to the standalone
Ind AS financial statement.
iii) There has been no delay in transferring amount required to Investor Education and
Protection Fund by the Company. Refer Note No. 61 to the standalone Ind AS financial
Statement.
iv) The Company has provided requisite disclosures in its Standalone Ind AS financial
statements as to holdings as well as dealings in Specified Bank Notes during the period
from 8th November, 2016 to 30th December, 2016. Based on audit
procedures performed and the representations provided to us by the management we report
that the disclosures are in accordance with the books of account maintained by the company
and as produced to us by the Management Refer Note No. 51 to the Standalone Ind AS
financial statements.
For FORD RHODES PARKS & CO.LLP
Chartered Accountants
ICAI Firm Registration No.102860W/W100089
A.D. Shenoy
Partner
Membership No.11549
Place: Mumbai
Date : May 30, 2017
ANNEXURE A
[Referred to in paragraph pertaining to "Report on Other Legal and Regulatory
Requirement" of our Report of even date to the members of Gitanjali Gems Limited on
the Standalone Ind AS financial statements for the year ended 31st March, 2017]
i. a) The company is maintaining proper records showing full particulars,
including quantitative details and situation of fixed assets.
b) Fixed assets are physically verified by the management at reasonable intervals. The
discrepancies between the book records and the physical inventory are not material and
have been adjusted in the books. In our opinion, the frequency of verification is
reasonable.
c) According to the information and explanations given to us and the records
examined by us, in case of properties earlier held by merged entity namely Gitanjali
Exports Corporation Limited we report that the title deeds of immovable properties are yet
to be transferred in the name of the company. In respect of few land pieces procedure for
transfer in the name of the company are yet to be completed. The company has clear title
in respect of other immovable properties
ii. The inventory has been physically verified by the management during the year as
well as at year end. In our opinion, the frequency of verification is reasonable. On the
basis of our examination of the inventory records, in our opinion, the company is
maintaining proper records of inventory and there is no material discrepancies noticed on
physical verification of inventory.
iii. The Company has granted unsecured loans, to companies, firms, Limited Liability
Partnership or other parties covered in the register maintained under Section 189 of the
Companies Act, 2013. These loans are Interest free and there are no stipulation as to
repayment of the loan. In our opinion and according to the information and explanation
given to us, the terms and conditions of the loans given by company are prima facie not
prejudicial to the interest of the company for the reasons fully explained in Note No. 35
and 48 to the standalone Ind AS financial statements
iv. In our opinion and according to information and explanation given to us, the
company has complied with the provision of Section 186 of the Act with respect to its
Investments. The company has given guarantees and security in compliance with section 185
and 186 of the Act. The company has granted Loans and advances u/s. 185 and 186 of the Act
which as per the information and explanations given by the company to us and as described
in the financial statements are interest free and given to promote the interest of the
company are not in conformity of the provision of Section 186 of the Companies Act 2013.
We are informed that, due to bad financial position, some of these subsidiaries are unable
to regularize the advances given earlier as described in Note No 48 to the standalone Ind
AS financial statements.
v. The Company in earlier year has accepted deposits from the public, within the
meaning of Sections 73 to 76 of Companies Act 2013 and the rules framed there under. In
our opinion and according to the information and explanations given to us the company has
complied with the provision of Section 73 to 76 of the Companies Act 2013 and the
Companies (Acceptance of Deposits) Rules 2014. There are no further deposit accepted by
the Company.
vi. Reporting under clause 3 (vi) of the order is not applicable to the company as the
companys business activities / products are not covered by the companies (cost records
and audit) Rule 2014 as prescribed under section 148 of the Company Act 2013.
vii. a) According to the information and explanation given to us and records of the
company examined by us, in our opinion, the Company is generally regular in depositing
undisputed statutory dues including Provident Fund, employees state insurance fund,
wealth tax, custom duty, excise duty, cess and any other statutory dues with the
appropriate authorities. There are no undisputed statutory dues payable for a period of
more than six month from the date they become payable as at 31st March 2017.
b) According to the information and explanations given to us and the records of the
Company examined by us, there are no dues of income tax, service tax, customs duty and
cess as at 31st March 2017 which has not been deposited on account of dispute,
except the following:-
| Period |
Rs. in Lakhs |
Remark |
Authority where appeal is pending |
| INCOME TAX |
|
|
|
| AY 2006-2007 |
587.73 |
Section 143(3) r.w.s 153 A |
CIT (A) |
| AY 2007-2008 |
610.79 |
Section 143(3) r.w.s 147 |
CIT (A) |
| AY 2007-2008 |
334.96 |
Section 143(3) r.w.s 147 (Amalgamating company) |
CIT (A) |
| AY 2008-2009 |
6,065.15 |
Section 143(3) r.w.s 153 A |
CIT (A) |
| AY 2008-2009 |
713.62 |
Section 143(3) r.w.s 147 (Amalgamating Company) |
CIT (A) |
| AY 2009-2010 |
1,381.85 |
Section 143(3) r.w.s 153 A |
CIT (A) |
| AY 2009-2010 |
885.74 |
Section 143(3) r.w.s 147 (Amalgamating Company) |
CIT (A) |
| AY 2009-2010 |
3,768.74 |
Section 143(3) r.w.s 147 |
CIT (A) |
| AY 2009-2010 |
25.95 |
Section 271(1) (amalgamating company) |
CIT (A) |
| AY 2010-2011 |
5,020.32 |
Section 143(3) r.w.s 153 A |
CIT (A) |
| AY 2010-2011 |
550.79 |
Section 143(3) r.w.s 147 (Amalgamating Company) |
CIT (A) |
| AY 2010-2011 |
5861.02 |
Section 143(3) r.w.s 147 |
CIT (A) |
| AY 2010-2011 |
530.90 |
Section 271(g) |
CIT(A) |
| AY 2011-2012 |
8,411.78 |
Section 143(3) r.w.s 153 A |
CIT (A) |
| AY 2011-2012 |
1,789.60 |
Section 143(3) r.w.s 144C (Amalgamating company) |
CIT (A) |
| AY 2011-2012 |
9654.74 |
Section 143(3) r.w.s 147 |
CIT (A) |
| AY 2011-2012 |
594.63 |
Section 271(g) |
CIT (A) |
| AY 2012-2013 |
1,072.36 |
Section 143(3) r.w.s 144C (Amalgamating company) |
CIT (A) |
| AY 2012-2013 |
1,115.59 |
Section 271(g) |
CIT (A) |
| AY 2013-2014 |
850.41 |
Section 143(3) r.w.s 144C |
CIT (A) |
| AY 2013-2014 |
1,074.38 |
Section 143(3) r.w.s 144C (amalgamating company) |
CIT (A) |
| AY 2013-2014 |
1,760.18 |
Section 271(g) |
CIT (A) |
| AY 2013-2014 various years |
815.57 |
Section271(g) (Amalgamating company) |
CIT (A) |
|
17.97 |
Tax demand as per TRACES |
Rectification pending to file |
| Various years |
580.54 |
Appeal filed with Service tax authorities |
Commissioner of Service tax and CESTAT |
| 18.04.2006 to |
|
|
|
| 31.03.2011 |
22.21 |
Service tax (Amalgamating company) |
Appeal pending before commissioner |
| 01.05.2006 to |
|
|
|
| 31.03.2011 |
13.01 |
Service tax (Amalgamating company) |
Appeal pending before commissioner |
| 2011-12 |
5.76 |
Service tax (Amalgamating company) |
Appeal pending before commissioner |
| FY 2005-2006 |
1,746.32 |
VAT Assessment |
Deputy Commissioner of Sales Tax (Appeals) |
| FY 2005-2006 |
22.33 |
CST Assessment |
Deputy Commissioner of Sales Tax (Appeals) |
| FY2010-2011 |
104.94 |
CST Assessment |
Joint commissioner of Sales Tax (Appeals) |
| FY2010-2011 |
51.33 |
VAT Assessment |
Joint commissioner of Sales Tax (Appeals) |
| FY2012-2013 |
154.48 |
CST Assessment |
Appeal to be filed |
| FY 2012-2013 |
344.49 |
VAT Assessment |
Appeal to be filed |
viii. Based on our audit procedures and as per the information and explanation given to
us by the management, during the year there has been delay in timely repayment of its dues
to banks for ECB and to financial institution for debentures. In respect of working
capital facilities from Banks there has been over drawings in the accounts during the year
as well as at year end. Accounts were overdrawn by Rs. 3,115.17 Lakhs as at 31st
March 2017. Following amounts which were due during the year are outstanding as at 31st
March 2017:
| Lender |
Due Date |
Nature |
Currency |
Amount |
Remark |
| LIC |
30/03/2017 |
Interest |
INR |
11,493,939.00 |
Fully paid till signing date |
| LIC |
22/02/2017 |
Principal |
INR |
11,700,000.00 |
Fully paid till signing date |
| LIC |
22/03/2017 |
Principal |
INR |
11,700,000.00 |
Unpaid |
| ICICI ECB |
31/03/2017 |
Principal |
USD |
$ 8,750,000.00 |
$ 1,950,000 paid till signing date |
| ICICI ECB |
31/03/2017 |
Interest |
USD |
$ 974,108.01 |
Fully paid till signing date |
| BOB ECB |
31/03/2016 |
Principal |
USD |
$ 732,440.47 |
Unpaid |
ix. During the year the Company has not raised any Initial Public Offer or further
public offer. The Company has raised term loan from a financial institution during the
year. The Company has External Commercial Borrowing from foreign branch of Indian banks in
earlier years. The Term loan and ECB proceeds has been utilized for the purpose for which
they were availed.
x. Based upon the audit procedures performed and information and explanations given by
the management, we report that we have not come across any instances of fraud by the
company or any material fraud on the company by its officers or employees that have been
noticed or reported during the year nor have we been informed of such a case by
management.
xi. In our opinion and according to information and explanation given to us, the
company has paid / provided Managerial remuneration during the year as per the Board
resolution which is subject to approval by the shareholders in the forthcoming meeting, as
fully explained in Note No 52 to the standalone Ind AS financial statements.
xii. The Company is not a Chit Fund Company/or Nidhi/ mutual benefit fund/society.
xiii. In our opinion and according to information and explanation given to us, all
transactions with the related parties are in compliance with sections 177 and 188 of
Companies Act, 2013 where applicable and the details have been disclosed in the standalone
Ind AS Financial Statements as required by the applicable accounting standards.
xiv. The Company had issued fully convertible warrants in earlier year on receipt of
25% of the consideration as the subscription money. These warrants were issued on
preferential basis to persons other than promoters. During the year the company has issued
equity shares in respect of warrants against which balance amount has been received, as
fully described in note no 16(H)). Requirement of Section 42 of the Companies Act 2013 has
been complied and amount raised was used for purpose for which it was raised.
xv. In our opinion and according to the information and explanation given to us, during
the year company has not entered into non-cash transactions covered by Section 192 of
Companies Act, 2013 with directors or persons connected with him. Hence the provision of
section 192 is not applicable to the company.
xvi. The company is not engaged in the business of non-banking financial institution
(NBFI) and not required to obtain a Certificate of Registration (CoR) from Reserve Bank of
India to commence/ carry on business of NBFI in terms of Section 45-IA of the RBI Act,
1934.
For FORD RHODES PARKS & CO.LLP
Chartered Accountants
ICAI Firm Registration No.102860W/W100089
A.D. Shenoy
Partner
Membership No.11549
Place: Mumbai
Date : May 30, 2017
ANNEXURE B
[Referred to in paragraph pertaining to "Report on Other Legal and Regulatory
Requirement" of our Report of even date to the members of Gitanjali Gems limited on
the standalone Ind AS financial statements for the year ended 31st March, 2017]
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143
of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting ofGitanjali
Gems Limited ("the Company") as of March 31, 2017 in conjunction with our
audit of the standalone Ind AS financial statements of the Company for the year ended on
that date.
Managements Responsibility for Internal Financial Controls
The Companys management is 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 (IFCOFR)
issued by the Institute of Chartered Accountants of India. These responsibilities include
the design, implementation and maintenance of adequate internal financial controls that
were operating effectively for ensuring the orderly and efficient conduct of its business,
including adherence to 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 an 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 was 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 system over financial reporting and their operating
effectiveness.
Our audit of internal financial controls over financial reporting included obtaining an
understanding of internal financial controls over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. The procedures selected
depend on the auditors judgments, including the assessment of the risks 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 to
provide a basis for our audit opinion on the Companys internal financial controls system
over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of standalone Ind AS financial statements for external purposes in accordance
with generally accepted accounting principles. A companys internal financial control over
financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of standalone
Ind AS financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorisations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorised acquisition, use, or
disposition of the companys assets that could have a material effect on the financial
statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financial
reporting, including the possibility 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 control
over financial reporting may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion to the best of our information and according to explanation given to us,
the Company has, in all material respects, an adequate internal financial controls system
over financial reporting and such internal financial controls over financial reporting
were operating effectively as at March 31, 2017, 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.
For FORD RHODES PARKS & CO.LLP
Chartered Accountants
ICAI Firm Registration No.102860W/W100089
A.D. Shenoy
Partner
Membership No.11549
Place: Mumbai
Date : May 30, 2017
+91-9892691696
