winsome diamonds jewellery ltd share price Auditors report

To,

The Members of,

WINSOME DIAMONDS AND JEWELLERY LIMITED

1. Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of WINSOME DIAMONDS AND JEWELLERY LIMITED ("the Company"), which comprise the Balance Sheet as at 31^st March, 2017, the Statement of Profit and Loss, and Cash Flow Statement 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").

2. Managements Responsibility for the 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 and presentation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with relevant rules issued there under.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. 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 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 except as mentioned in disclaimer of opinion para to provide a basis for our audit opinion on the standalone Ind AS financial statements.

4. Basis for Qualified Opinion

A. The Company has made long term investments in Forever Precious Diamonds and Jewellery Ltd. (Forever) amounting to Rs. 141,17,10,802, thereby resulting in it holding a 49 % stake in the equity of that company. The said investments continue to be valued at cost. As stated in Note No. 8, in the view of the management, provision for diminution in value of investments as per the requirements of Ind-AS 28 - Investments in Associates and Joint Ventures is not considered necessary and hence not made. We have been provided with the financial statements of Forever for the year ended 31^stMarch 2017. We have observed that there are no significant business operations in Forever. Further the auditors of Forever have qualified the financial statements and termed the company as a non-going concern. In view of the above the Company should have provided the diminution in value of investments amounting to Rs. 141,17,10,801. Accordingly the loss for the year have been understated and investments overstated by Rs. 141,17,10,801.

B. The company has also made long term investment in Peakok Jewellery Limited amounting Rs.5012750/- at the average rate of Rs.286.44/- per share. As per the balance sheet as at 31^st March, 2016 the book value of the shares of the company is Rs.110.78/- per share. In the view of the management, provision for diminution in value of investments as per the requirements of Ind-AS 28 - Investments in Associates and Joint Ventures is not considered necessary and hence not made. In view of the above the Company should have provided the diminution in value of investments amounting to Rs.30,75,100/-. Accordingly the loss for the year have been understated and investments overstated by Rs.30,75,100/-.

5. Basis for Disclaimer of Opinion

A. In respect of Trade Receivables amounting to Rs. 5608,09,30,760/- (Valued at exchange rate as on 31/03/2017 under IndAS) the auditors have not received any confirmations from the overseas parties. The company has filed legal suit against its defaulting overseas customers for non-payment of its export bills at Sharjah Federal Court, Sharjah. The court has appointed an expert to look into the affairs of the companies based in Dubai/ Sharjah. The Court has confirmed the debts payable to the Company

and ordered the overseas customer to pay along with interest @5% p.a. However, the copies of the orders are not provided for verification. The overseas customers had filed an appeal against the judgment of the Sharjah Federal Court and the Sharjah Federal Appellate Court has passed order in favour of the Company and now the matter is pending for 1 case with the Sharjah Federal Appellate Court and 2 case with Sharjah Supreme court and their judgments are awaited. . During the year under review, state bank of Mauritius has entered in the One Time Settlement agreement with the company and overseas Customers of the company for settlement of its loan. Accordingly the Overseas customers agreed to pay US$ 1,050,833/- against the total outstanding bill of US$ 8,241,831.11/-. The balance amount receivable (Rs. 48,83,52,906/-) from overseas customers has been considered as impaired charged to profit and loss in FY 2016-2017. As per Ind-As - 109 (Financial Instruments) provides practical expedient to use a provision matrix to estimate Expected Credit Loss for trade receivables.

In view of these court orders pending legal proceedings, we are unable to comment on time frame of the realisability of the debts through provision matrix where all significant trade receivables past due by more than a year and any provision to be made for unrealisability in the remaining carrying amounts of these balances and the consequential impact, on the financial statements. (Refer Note 9, 11 and Note 34 to the financial statements)

B. As per Ind-AS -16(Property, Plant and Equipment), the depreciable amount of a tangible fixed asset should be allocated on a systematic basis over its useful life. The depreciation method should reflect the pattern in which the assets future economic benefits are expected to be consumed by the entity. Further, standard requires the depreciation method applied to an asset, residual value and useful life shall be reviewed at least at each financial year-end. Based on technical evaluation, the management believes that written down method of depreciation method and the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013 are best representative future economic benefits associated with tangible fixed assets. In absence of the technical report, we are unable to comment on reasonability of useful and method of depreciation and the consequential impact, on the financial statements. (Refer note 6 & 7)

C. As mentioned in Note No 1 regarding preparation of accounts on a Going Concern basis and the reasons stated therein and Note No.34 of the financial statements detailing the developments that have happened in the last 4 years, the Companys operating results have been materially affected due to various factors including non availability of finance in view of the consortium of bankers recalling the financial facilities granted. These events cast significant doubts on the ability of the Company to continue as a going concern since the business has stopped. The appropriateness of the going concern assumption is dependent on the Companys ability to raise adequate finance from alternate means and/or recoveries from overseas debtors to meet its short term and long term obligations as well as to establish consistent business operations.

In absence of any convincing audit evidences, non recovery of trade receivables on due date, non-payment of liabilities including statutory dues, financial difficulties faced by the company due to recalling of bank finance facilities and in view of multiple uncertainties as stated above, we are unable to determine the possible effects on the financial statements. We are also unable to conclude on the ability of the company to carry on as a going concern.

D. The Reserve Bank of India issued notice to the Company under FEMA for non-realization of foreign exchange from exports made during 2012-13 to overseas customers of Rs.636.14 crore. The Company has already informed time to time Reserve Bank of India about default made by overseas customers and the status of legal cases.

E. Some of the lending banks have declared the Company as Willful Defaulters, and have filed complaints with investigating agencies and the same are in progress. The Company is extending its full co-operation to the Investigating agencies. The Enforcement director has passed order against the Company under PMLA and all the properties are under provisional attachment by ED. The matter is now with the Enforcement Director, New Delhi and the order is awaited.

F. The company has not worked out the interest provision @ 12.5% on the following current accounts having credit balances. Hence, effect of interest on financial statement cannot be determined:

Bank Name	Outstanding amount in Rs.
CBI	11,116,796
PNB	1,801,490
PNB C/A 1937	73,220
VIJAYA BANK	6,636,350
TOTAL	19,627,856

6. Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph, specifically relating to the multiple uncertainties created due to factors such as non recovery of trade receivables on due dates, non payments of liabilities including statutory dues, financial difficulties faced by the Company due to recalling of bank finance, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements.

7. Emphasis of Matter

A. The Company has not carried out any valuation of the stocks which are lying with them/in the joint custody with the banks. To that extent the increase or decrease in the value of-inventories as at year end, as required to be done as per the requirements of Ind-AS -2 (Inventories), has not been done. The impact on the profit/loss of the company due the said non valuation has not been determined. Refer note no. 10.

B. There is difference of Rs. 3,46,88,692/- in the outstanding balance of advances obtained from the bankers. In absence of details made available by the bankers, the company is not in a position to reconcile the difference. Which may lead to understatement of liability and its consequential effect in the book result if any.

C. Due to the defaults of the Company to the banks, the Companys accounts have been classified as NPAs by the banks. Most of the banks have not charged interest on the Companys borrowings/loans, while some banks have been charging interest at higher rates. The board of directors of the Company in its meeting held on 30^th May 2015 had decided not to provide Interest. Now the directors in its meeting dated 29^th May 2017 have decided to provide for Interest to comply with Ind-AS. The Company has provided Interest @ 12.5 % of the outstanding amount being the average rate of rupee export finance as worked out by the Directors. Moreover, The Debt recovery tribunal has passed order dated 09.12.2016 determining the total amount payable Rs.4,687,0404,315/- along with the simple interest @ 14% p.a. from the date of filing of original application with DRT till the date of realization of dues. However, the company has not passed any effect relating to the above mention order as the detailed calculation of Bank wise liability is not available and in that concern liability of the company cannot be determined.

D. The company has received summons from Serious Fraud Investigation Office of Ministry of Corporate Affairs dated 05.07.2016 u/s 217 of The Co. Act, 2013 and investigation under section 212 of The Companies Act, 2013 dated 01.08.2016. The company has complied for the same. However, no quantification of any financial liability arises out of the same in the opinion of the Board.

8. 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 subsection (11) of section 143 of the Act, we give in the Annexure 1, a statement on the matters specified in paragraphs 3 and 4 of the said order to the extent applicable.

2) As required by section 143(3) of the Companies Act 2013, we report that:

(a) As described in the Basis for Disclaimer of Opinion Paragraph, we were unable to obtain 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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account

(d) Except for the effects of the matter described in the Basis for Qualified/Disclaimer Opinion/Emphasis of Matter paragraphs in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with relevant rule issued there under.

(e) On the basis of written representations received from the directors as on 31^st March, 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March, 2017, from being appointed as a director in terms of Section 164(2) of the Act.

(f) The matter described in Basis of Disclaimer of opinion in Paragraph 5 above, in our opinion may have an adverse effect on the functioning of the company.

(g) With respect to the adequacy of internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in Annexure 2.

(h) With respect to 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) Total pending litigations which would impact the standalone Ind AS financial position of the company are enclosed herewith in Annexure A. The management is unable to ascertain the amount of liabilities to the company on the said litigations.

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

(iii) During the year under consideration there is no pending amount which is required to be transferred to the Investor Education and Protection fund.

(iv) The Company has provided requisite disclosure in its Standalone INDAS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016 and these are in accordance with the books of accounts maintained by the Company. Refer Note 40 to the standalone INDAS financial statements.

	For NAUTAM R. VAKIL & CO.
	CHARTERED ACCOUNTANTS
	FRN:106980W
	MANAN VAKIL
	PARTNER
Ahmedabad: 29th May, 2017	MEMB. NO. : 102443

 

	Annexure - A
Sr. No.	Details of Litigation
1	Debt Recovery Tribunal, Mumbai
	Axis Bank has filed Original Application No. 89 of 2015 against the Company, with regard to recovery of outstanding dues for Term loan granted for Windmill installed at Gujarat.
2	Sharjah Federal Court, Sharjah
	The company has filed legal suit against its defaulting overseas customers for non-payment of its export bills at Sharjah Federal Court, Sharjah. The court has appointed an expert to look into the affairs of the companies based in Dubai/ Sharjah.
	The Court has confirmed the debts payable to the Company and ordered the overseas customer to pay along with interest @5% p.a. The overseas customers had filed an appeal against the judgment of the Sharjah Federal Court and the the Sharjah Federal Appellate Court has passed order in favour of the Company and now the matter is pending for 1 case with the Sharjah Federal Appellate Court and 2 case with Sharjah Supreme court.
3	Bombay High Court
	Company has filed Defamation Suit Case No . S/512/2014 against Chaim even Zoharc, Tacy Limited, Mr. Eli Chen, Mr. Rachel Segal for carrying the Article Unraveling Jatin Mehtas Hidden Synthetics Empire in the magazine Diamond Intelligence Briefs edition 5th February, 2014 Vol. 29 No 797 published by Tacy Limited.
4	Bombay High Court
	Writ Petition No. 1432 of 2007 filed by the trade union challenging the order of the Industrial Court dated 23-04-2007 passed in Complaint (ULP) No. 1411 of 1999 in respect of the closure of the Goregaon factory of the Company, pending before the Division bench of the Original Side, High Court, Bombay.
5	Bombay High Court
	Writ Petition No. 2594 of 2008 (Civil side) filed by the trade union challenging Award dated 6-2-2008 passed by Industrial Tribunal, Mumbai in respect of the closure of the contract companies viz. M/s. fine Gems Company M/s. Blue New Gems Company M/s. Blue Diamond Company, pending before the Honble Court, of the Appellate Side.
	Case was filed so that Workmen of these contract Companies can be absorbed in the Company.
6	Bombay High Court
	Writ Petition No. 3080 of 3080 of 2005 filed by the trade union, pending before Honble Court. Case was filed in High Court (Original Side) against the closure of SEEPZ Unit of the Company. High Court has restored the Complaint after closing of the application due to non appearance of the applicant.
7	Labour Court
	Reference (IDA) No. 597 of 2010 filed by one of the employees seeking reinstatement with full back wages and continuation of service w.e.f. 20/06/1998 now pending before the 11th Labour Court at Mumbai.
8	Borivali Court
	Criminal Case No. 77/SW/2008 filed by one of the employee under the various Provisions of The CRPC and The IPC, now pending before the 67th Metropolitan Magistrate Court at Borivali.
	The case was filed charging that the company, Managing Director and Labour Commissioner had hand in glove with each other to forge documents to obtain license to employ contract labours and hence cheated labourers.
9	Additional Commissioner of Customs (Bonds), Bangalore
	The Additional Commissioner of Customs (Bonds), Bangalore has passed order against the Company and raised demand of Rs.171,18,759/- including penalties/fines. The Company had filed appeal to the Commissioner of Customs (Appeal), Bangalore against the above order and the Commissioner of Customs (Appeal) has passed order against the Company. The Company has filed further appeal with Custom Tribunal.

Annexure 1 referred to in paragraph 8-1 titled as "Report on Other Legal and Regulatory Requirements" of the Auditors report to the members of Winsome Diamonds and Jewellery Limited for the year ended 31^s* March, 2017.

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the fixed assets were being physically verified by the management at each branch in accordance with a phased programme of verification. The said procedure were being followed in the past and was reasonable considering the size and nature of its business and no material discrepancies were noticed in the past years. However during the previous year in case of some branches where the operations have ceased/suspended, no verification was done. Similarly as the assets are under SARFAESI Notice, and under symbolic possession of the banks, a physical verification of the assets has not been carried out during the year at any of the branches. Material discrepancies, if any will be highlighted once the physical verification would be completed. (Refer to note Nos. 6 & 7) Hence the question of any discrepancies being dealt with in the books of accounts does not arise.

(c) According to the information and explanation given to us and on the basis of our examination of records of the Company, the title deeds of immovable properties classified as fixed assets are held in the name of the Company

(ii) In June 2013, the banks had placed the stock of diamonds and pearls belonging to the Head Office and the Mumbai Branch office of the Company valued at Rs. 39,35,00,031 in the joint custody of the Company and the banks. The banks had done a test check valuation of the said stock as on 30th September, 2013 where officers of the Company were also present. The said valuation has been then forwarded to the company. Since November 2013 the stocks of Chennai SEZ & Cochin SEZ were also valued and put in the joint custody of the banks. Confirmation of the stocks lying with the bank has been confirmed by the management on the basis of the letter obtained from the bank as on that date. For the current year under consideration, the stock lying in joint custody of the banks at HO, Mumbai, Cochin & Chennai, the management has not carried out any physical verification of such inventory. During the year at Goa and Bangalore factory, the physical verification were carried out by consortiums of banks in presence of Company representative and the stocks of Goa were kept under joint custody at local PNB branch at Goa. The stock at Bangalore is under joint custody with banks at factory premises.

Since majority of the inventory is held in the joint custody of the consortium of banks and as physical verification was not carried out the question of any material discrepancies and they being dealt with in the books of accounts does not arise. Hence we are unable to comment on the stock of inventory as at the year ended 31^st March, 2017.

(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 Act. Hence, the question of reporting under sub clauses (a), (b) & (c) of the clause 3(iii) of the Order does not arise.

(iv) The Company has not granted any loans or advances under section 185 except to Forever Precious Jewellery and Diamonds Ltd, made any investment, provide any guarantee or security under section 186. Hence, the question of reporting under clause 3(iv) of the Order does not arise.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits and hence the question of compliance with the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under, is not apply. We are informed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other Tribunal in this regard.

(vi) The Central Government has not prescribed the maintenance of cost records under Section 148(1) of the Act, in respect of Companys products. Accordingly, clause 3 (vi) of the Order is not applicable to the Company.

(vii) (a) According to the records of the company, undisputed statutory dues including provident fund, employees state insurance, income-tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues applicable have generally been paid though delayed. In some cases specially towards the end of the year there have been delay in the same being deposited with the appropriate authorities. The details of arrears of outstanding statutory dues as on the last date of the financial year outstanding for a period of more than 6 months are as below :

Service Tax at Surat	Rs. 107,567/-
Value Added Tax at Surat	Rs. 231,878/-
VAT at Bangalore	Rs. 250,145/- (Assessment Order for FY2007-08)
CST at Bangalore	Rs. 262,963/- (Assessment Order for FY2009-10)

(b) According to the information and explanations given to us, the particulars of statutory dues that have not been deposited on account of disputes are as under:

Name of the Statute	Nature of dues	Amount(Rs.)	Period to which the amount relates	Forum where dispute is pending
Income Tax Act,1961	Income Tax	1,14,704/-	A.Y 2005-06
Income Tax Act,1961	Income Tax	5,31,411/-	A.Y 2009-10
Income Tax Act,1961	Income Tax	40,31,050/-	A.Y 2010-11
Income Tax Act,1961	Income Tax	44,13,120/-	A.Y 2011-12	CIT(A)
Income Tax Act,1961	Income Tax	1,52,10,152/-	A.Y 2012-13	Rectification filed and case is pending at CIT(A)
Income Tax Act,1961	Income Tax - TDS	2,06,903/-	A.Y 2013-14	CIT(A)
Total demand		2,45,07,340/-
Tax payable		Nil
Central Sales Tax, Bangalore	CST	57,68,542/-	F Y 2008-09	Rectification request filed with A.O.

(viii) The Company has defaulted in payment of loans to banks during the preceding years and the defaults have continued in this financial year. The details of such defaults are as under:

Bank Name	Total Amount Defaulted	Date Default started
Axis Bank - Term Loan	7,918,400	08/04/2013
Axis Bank	474,155,520	02/04/2013
Bank of India	906,139,200	06/04/2013
Bank of Maharashtra	2,937,920,826	02/04/2013
Canara Bank	6,722,236,193	18/03/2013
Central Bank of India	7,465,886,346	28/03/2013
EXIM Bank	714,743,985	05/04/2013
I D B I Bank	1,147,875,362	06/04/2013
Oriental Bank of Commerce	1,636,021,974	08/04/2013
Punjab National Bank	10,521,187,766	26/03/2013
Standard Chartered Bank	4,061,589,537	25/03/2013
State Bank of Hyderabad	1,277,706,509	08/04/2013
State Bank of Mauritius*	463,330,128	18/04/2013
Union Bank of India	2,803,341,974	21/03/2013
Vijaya Bank	1,448,174,130	02/04/2013
TOTAL	42,588,227,850

The above defaults are the primary amounts as on the date of the defaults continuing from the previous years. The said defaults do not consider any levies of interest and penal interest charged by the banks/provided by the company after the date of the defaults or its subsequent reversals by some banks. The payments made by the company to the banks after the above dates are also not considered as we are not in a position to ascertain whether the repayments are against interest/penalty or primary defaults. Some of the Banks have not confirmed the balances outstanding to them even after writing to them and in some cases the banks have stopped issuing physical bank statements and the company and the auditors have relied on e-statements generated from the web portals of the banks.

The Company does not have any outstanding dues by way of debentures.

*During the year, State Bank of Mauritius (one member bank of consortium of banks) has entered into one time settlement agreement with Overseas Customer of the Company for their outstanding dues from the Company. The bank is agreed to settle the total dues by accepting 1050833 US$ against the total due of 8241831.11 US$ receivable from the overseas customer by the company. The Overseas Customer have agreed to pay settlement amount directly to State Bank of Mauritius.

(ix) The Company has not raised any monies by way of initial public offer or further public offer (including debt instruments) during the year. The term loans raised in the past years by the Company were applied for the purpose for which they have been raised

(x) We have been informed by the management, that the Banks who have lent funds to the Company, outstanding as at the balance sheet date amounting to Rs. 41,26,89,99,617, have lodged complaints against the Company and some of its ex directors, with the Central Bureau of Investigation (CBI), Mumbai Police and Enforcement Directorate (ED). On the basis of the said complaints and subsequent F.I.R.s, the CBI, Mumbai Police and ED have been carrying out investigations, which are in progress. The Company has been subjected to searches by the CBI. The Company is yet to be served with a copy of the F.I.R.

(xi) The managerial remuneration has been paid in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) The Company is not a chit fund or a Nidhi company. Hence, the question of reporting under clause 3(xii) of the Order does not arise.

(xiii) The Company has complied with the provisions of sections 177 and 188 of the Act in respect of transactions with the related parties and the details have been disclosed in the standalone Ind AS Financial Statements etc., as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) The Company has not entered into any non-cash transactions with directors or persons connected with him covered under the provisions of section 192 of the Act.

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

	For NAUTAM R. VAKIL & CO.
	CHARTERED ACCOUNTANTS
	FRN: 106980W
	MANAN VAKIL
	PARTNER
Ahmedabad: 29th May, 2017	MEMB. NO. : 102443

Annexure 2 referred to in Paragraph 8 (2)(f) titled as "Report on Other Legal and Regulatory Requirements" of the Auditors report to the members of Winsome Diamonds and Jewellery Limited for the year ended 31^s* March, 2017.

We have audited the internal financial controls over financial reporting of WINSOME DIAMONDS AND JEWELLERY 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 issued by the Institute of Chartered Accountants of India (ICAI). 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 judgement, including the assessment of the risks of material misstatement of the standalone Ind AS 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 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 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

The system of internal financial controls over financial reporting with regards to the company except to the extent mentioned on Note No 1 to 5 of the financial statements, were not made available to us to enable us to determine if the company has established adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2017.

We have considered the disclaimer reported above in determining the nature timing and extent of audit test applied in our audit of the standalone financial statement of the company and the disclaimer has affected our opinion on the financial statements of the standalone company and we have issued a qualified and disclaimer of opinion on the financial statements.

	For NAUTAM R. VAKIL & CO.
	CHARTERED ACCOUNTANTS
	FRN: 106980W
	MANAN VAKIL
Ahmedabad:	PARTNER
29th May, 2017	MEMB. NO. : 102443